Multiple revenue streams are often the key to ensuring a cash flow that can weather dry spells. The issue with developing multiple revenue streams, though, is that it can lead to distraction and dilution of your efforts. Which stream should you be working most, which should you invest in, how do you open new streams and close old ones?
We’ve all seen complimentary revenue streams in action; clothing stores that sell cosmetics, car dealers with mechanic shops, bookstores with coffee shops. We often miss the opportunity within our own business because we feel we don’t know enough about the complimentary product or service, or because we are focused on our primary business.
The Power of Partnerships
Knitting together service offerings through partnerships can allow you to create a one-stop-shop for your clients. It’s hardly a new concept, yet it is so overlooked by small businesses that it might as well be.
Instead of only focusing on what you are good at, think of your business from the perspective of your customers. If there were no barriers, what would your customers really want from your business? What additional products or services might they want to purchase from you because of your primary business?
If you have a physical store, why not lease space to another product producer? The space could be as small as display space or as large as a section of floor space. This is a very attractive proposition to a small business that is just getting started and is looking to get their product attention.
The benefit for you is that you have no production costs, no stocking issues — these are the headaches that your provider has. Instead you can generate revenue in the form of a lease fee and a percentage of sales.
If you are a service provider, finding partners that offer services you don’t is a benefit to both you and your clients. Reciprocal finder fees are a great way to both broaden your offering and increase revenue. Find a company that offers a service that works well with your offerings but doesn’t compete, and create an agreement that gives you either a fee for referral or a percentage of the business generated. In turn, have the same agreement in place for business that your partner sends to you.
Of course, there is a process to finding these partners, and you should make sure that you conduct detailed interviews and involve an attorney in the actual agreement. However, these are small hurdles when you consider the potential returns that this type of arrangement can generate.
As a small business owner, the more problems you solve for your customers and the more solutions you offer to potential customers, the more likely they will be to contact you first when they have a need arise.
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