We often hear the phrase, “Revenue is at the center of every business.”
It’s the core from where your business’s strength to explore avenues, survive challenges, and establish a footing in the market originates.
The better your core, the more prosperity and longevity it adds to your business’s lifespan.
Yet, even after acknowledging revenue’s vital role, around 82% of small businesses fail partially due to poor cash flow management. 60% of small businesses struggle with cash flow management.
In this blog, we will break down the concept of revenue streams first and then discuss the various streams that exist today, which businesses can tap into for their growth.
What is a Revenue Stream?
It’s like oxygen that keeps your business alive and growing in the long term.
In simple words, a revenue stream is where you earn money from.
To have a revenue stream, you must first have an asset.
However, an “asset” isn’t just a physical product but anything that can bring value to your business — like a skill, service, or even intellectual property (IP).
Let’s say I own an extra house.
I can sell it, rent it to a family, turn it into a guesthouse, or lease it to a business.
Each revenue stream represents a distinct growth opportunity.
Similarly, a business can tap into multiple assets.
For instance, if you lease or rent wedding venues you own, you can create another revenue stream by leveraging your in-house expertise or partnerships to offer consultations for dresses, venue themes, and catering.
How Many Revenue Streams Should a Business Have?
While every business has different goals and capabilities, one well-defined revenue stream is a stable safety net for early-stage ventures.
However, relying entirely on one source can be risky. You should try various permutations and combinations to diversify your revenue streams and be prepared for sudden market shifts.
You have to start small. Generate initial revenue through one stream and strategically add another based on customer feedback without overdiluting your resources.
A well-diversified portfolio isn’t just about survival – it’s key to thriving in competitive markets.
Even though there will be good number of revenue streams that your business can leverage from, let’s pick 6 common/frequently looked upon Revenue Streams that you can consider for your business
- Product Sales
It is exactly how it sounds – getting an influx of cash through the sale of goods.
Whether it’s a cozy pair of socks or cutting-edge software, the potential for selling physical and digital goods is immense.
The secret to growth lies in broadening your focus solely on product sales and complementary services like warranties or customization options or diversifying it through freemiums or subscriptions, which we will discuss in the latter part of this blog.
For instance, you sell team management software to mid and big-size companies.
You have a product, a revenue stream out of it, and an opportunity to integrate more strategically.
You can additionally look at giving out value-added services like a training guide from onboarding to exit of users, periodic maintenance and updates option for the software, and of course; customization options as well for all users.
This revenue stream is a favorite for consumer-facing businesses like IKEA (retailers) or Mamaearth (e-commerce platforms).
- Service & Consulting
Consulting and services aren’t just extensions of your product—they have the potential to be a standalone revenue stream. You use your indispensable asset, your team, to add value.
For instance, if you own a brand marketing agency, you can offer services such as content marketing, advertising, strategy, etc.
The best part of this stream is that you can provide services individually or bundle them into tailored packages, creating a win-win situation for both clients and you.
It’s a goldmine for businesses looking to monetize existing in-house skills without investing in developing new products. You need a vision, a roadmap, and insights from your customer’s behavior and pain points to drive profits.
However, here, the extent of accountability and delivering outcomes is higher than selling products.
With your team’s strengths at the forefront, you create not only a sustainable revenue stream today but also a fortress for your firm’s reputation in the long term.
- Subscription
Taking the business world by storm, it’s a revenue stream that strikes a perfect synergy with products and services.
Customers perceive this positively as they can access your product/services and enjoy an experience through a small recurring fee without bearing the burden of owning the product.
Now, there’s something in it for you as well. While customers love the convenience and special treatment they get, you can establish a steady revenue by eventually acquiring and converting them.
A few brands whose lifeline is subscription streaming are Netflix, Slack, and The New York Times.
If you are a pet care brand, you could offer a monthly subscription box with pet food, grooming essentials, toys, and apparel.
To hit a higher notch with experience, you can place a card with a QR within that gives them a discount on vet visits or exclusive pet-care training.
You have delivered what they asked for and surprised them by giving the unexpected, taking a step closer to building long-lasting relationships.
- Freemium
Companion of subscription stream, it’s another disruption in defining how we can gain value from customers.
Here, you remove a barrier for your audience by offering basic services for free, letting them savor them, and then saving “that” last bite for premium.
While a percentage of your audience will convert to premium, the rest will certainly associate with your brand and become a voice with unmatched value in today’s noise clutter.
Spotify is a brand strongly associated with freemium. You are free to enjoy music across generations and boundaries but with ads.
The premium lets you get rid of the ads and offers further features like offline playback.
It’s evident that two revenue streams originate from this approach: paid subscriptions and ad revenue from brands. The next section covers ad revenues.
If you think you’re a yoga brand, your app could have free tutorials for common goals like stress relief or weight loss.
The premium will then bring the “personalization” angle through consultations and live classes to assure your audience of the value they receive from upgradation.
5. Advertising
As we emphasized earlier, your product isn’t the only asset capable of bringing in revenue to your business.
Your app, podcast, or website that boasts significant traffic or a loyal audience can be the source of a lucrative revenue stream for selling ad spaces to brands, similar to the TV commercials that appear during prime-time shows.
For example, a content creator who vlogs about her cats could naturally integrate endorsements into her videos – like unboxing a treat bag at snack time or promoting a vacuum that empowers her to clean up after rigorous grooming sessions.
Such partnerships add a layer of authenticity without sacrificing your audience’s trust.
But advertising comes with a responsibility; the brands you sell the ad space to are the ones you will be associated with, so do ensure you have synergy, a correlation with them, there’s no conflict of interest, and avoid overwhelming your audience with frequent ad posting.
6. Leasing and Renting
A magical amalgamation of two polar opposites: commitment to purchasing a product and flexibility of subscriptions, giving rise to another revenue stream for a business.
For instance, if you are a premium clothing brand, you can rent out elegant dresses for special occasions, allowing customers to experience your products and return them after a specified time or even buy them.
Alternatively, you can start a subscription service where clients receive a curated collection of dresses monthly, which changes every month.
This strategy doesn’t make customers justify long-term purchases and empowers you to connect with them on a closer level. On the flip side, there’s a risk of potential damage or loss from the client side.
Hence, implementing robust rental policies and quality checks will ensure there’s a win-win situation for both.
How to Choose the Right Revenue Stream for Your Business
When deciding on revenue streams, consider these factors:
- Ask Your Audience: Which purchase style do they value most?
For instance, customers may prefer to rent a car but own personal items like cosmetics. - Analyze Your Competitors: Which revenue streams are most of them relying on?
You can use this insight to know your audience’s choices and even differentiate your brand.
If everyone uses a subscription model, you can use a freemium or leasing model to stand out. - Look into Your Skills: What skills does your team have to utilize a revenue stream fully? If your team has consulting expertise, you can add a service stream alongside a product.
- Spot Future Trends: You must observe the shift in your market or consumers’ preferences to stay ahead.
Take the car industry as an example. Today, people prefer to rent or subscribe to a car service rather than own a car, so instead of developing a car, you can focus on these areas.
Closing Note
While it’s good to diversify your revenue streams early on however, it should be done seamlessly and thoroughly.
Aim to have streams that individually add a unique value to your brand and customers while complementing each other.
Lastly, don’t go with revenue streams that aren’t in sync with your vision or purpose.
For instance, if you promise an ad-free customer experience, selling ad spaces to brands isn’t the right choice.
That’s all. I hope you find this blog insightful.
Which revenue streams do you think are must-haves for brands today? Share in the comments.
If you want to go through some of my other blogs in the same BMC series, they are list down here:
- https://www.linkedin.com/posts/milikataria_impact1founderaday-businessconsulting-businessconsultant-activity-7264970861705592834-bKfu?utm_source=share&utm_medium=member_desktop – 6 Marketing Strategies for Every Business To Try
- https://www.linkedin.com/posts/milikataria_impact1founderaday-bmc-businessmodelcanvas-activity-7259901870809219072-y0Yi?utm_source=share&utm_medium=member_desktop – 6 Media Channels for Every Business To Have
- https://www.linkedin.com/posts/milikataria_impact1founderaday-consulting-consultant-activity-7224054468651184129-Q0mY?utm_source=share&utm_medium=member_desktop – How to Build an Ideal Customer Profile
- https://www.linkedin.com/posts/milikataria_impact1founderaday-businessmodelcanvas-omnichannel-activity-7232006217773068288-djTi?utm_source=share&utm_medium=member_desktop – Omnichannel Strategy: 4 Steps to Build one for your Brand
- https://www.linkedin.com/posts/milikataria_impact1founderaday-consulting-brandmarketing-activity-7214599906349522945-e9gj?utm_source=share&utm_medium=member_desktop – Value Proposition & How to Craft a Compelling One for your Brand
