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Entrepreneur Corner: 5 Ways to Generate and Preserve Revenue Streams in Your Startup

Entrepreneur Corner: 5 Ways to Generate and Preserve Revenue Streams in Your Startup

On average, approximately 90% of startups fail to become successful. Most common reasons for failure include insufficient funding, low break-through rate, too many expenses, poor revenue streams. Being in one of the following markets gets you a higher chance to survive: IT, finance, real estate, education, health, services, and wholesale. Over 50% of businesses in these industries seem to still be active after 4 years(Tech.co: Startup Failure Rates Industry 2016). But don’t give up if you’re in a more challenging market. In support of young entrepreneurs, here are five ways to generate and preserve revenue streams in your startup, to meet day’s end.

Freelance Work and Independent Contracts

With freelancing as an emerging trend and more legal backing up, this type of work can prove helpful in the early days of a startup. As a Founder, you have many responsibilities including the financial well-being of your employees. Your Facebook or LinkedIn account may read “CEO”, but it’s more of a “title” with a leadership role than it is a financial bliss. Living off dividends takes about a year, literally, so freelancing and independent work can be a great solution to cover your own expenses and generate extra revenue for other purposes. Many stories among entrepreneurs start with “I did freelancing work while also working on my startup company,” so there is nothing to feel ashamed of. It is a great way to enhance our skills, acquire new ones, get a deeper understanding of the business world and, last, but not least, build a personal brand.

Search for opportunities in the market consisting of consulting contracts that pay a good hourly fee, or even short-term projects with fixed payment terms, locally or remotely. Services and products are a great way to generate extra income and form long-lasting relationships with clients which might prove beneficial for your startup’s future, as well.

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Creative Finance: Selling Items That Have a Story

There has been an increased demand on the market in the past few years for vintage items, from watches to diamonds and unique jewelry. Perhaps a Hollywood or VIP-inspired trend, second-hand expensive items are a great way to generate an additional revenue stream, especially if they have a story to back them up. Here’s how you can do it:

  1. Sell your items to a pawnshop or jewelry retail store. When selling locally, shop around various stores to see who can offer more.
  2. Sell your items on eBay, online. Good chance to get a good price if the buyer is knowledgeable and the seller knows how to pitch the right angle, plus present the uniqueness and quality of the item.
  3. Sell on Craig’s List. Similar to eBay, but with the probability of encountering more scammers, since the platform isn’t as reliable as it used to be. Same conditions apply: knowing the exact worth of your item, plus solid negotiation skills.
  4. Sell your items to an “expert buyer”, directly. While you can sell your diamonds, jewelry and watches on platforms such as Craigslist or Ebay, selling to online diamond buyers such as WP Diamonds is a faster and safer option. Transactions are done fast, usually, in less than 48hrs and the agency covers the FedEx fee for shipping your items to their store.

Please note that this is an alternative way to generate additional revenue, and not necessarily a long-term solution. However, in the early stages of startup life, it can be your hidden Superman.

Smart Renting, Even Smarter Subletting

We all heard about the success story of AirBnB. Following the example of the founders, you can make use of renting spaces and apartments or rooms to generate more revenue. As a local, you have access to cheaper prices if the contract allows and not restricts you to sublet a venue or an apartment (in case you don’t own it). Tips:

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  • rent or own an apartment or venue in a centrally-located area; it is more attractive to potential guests and preferred by most travelers and nomads;
  • either rent the whole apartment (see real estate laws in your area) or just one room for 1-to-3 months. This can get you to at least cover the monthly costs for the place, and even generate some profits;
  • rent a venue or an office for your startup that allows 24/7 access. Sublet to nomads or freelancers who prefer to work during the night. I.e. If you’re based in the US, but have clients from Europe, the 7-9hrs time difference can be covered if you work during night-time when it is daytime over there;
  • Allow small groups to organize weekend events in your space;
  • Organize networking events yourself – great way to generate additional income and meet people;
  • Synchronize your holidays and vacations, so that no one is really at the office. Sublet the office space during your travels;
  • Work from home with your entire team 2-3 days per week. Apply the same strategy when no one is around at the office;
  • Share your office space with another startup and split the costs. Ideally, a company that offers different services, which you can both combine.

Warning: Pay attention for the legal part. Some real estate property contracts do not allow you to sublet your venue or your apartment, partially or fully to another party unless you notify the actual landlord.

Safety Measures for Your Business Contracts

This is more about preserving revenue streams. Newsflash: the US government’s tech budget is 8 times that of Apple. Translation: there’s a huge interest in Federal funding for tech startups, with a special cater towards cyber security. Big players in Federal IT contracts in 2016, apart from the Defence Department, include CSRA Inc., Lockheed Martin, HP Enterprise, Booz Allen Hamilton and Accenture(Bloomberg Government: Tech Startups Struggle to Tap 82 Billion in Federal Contracts). Tech&IT is a good industry to be part of and everybody can get a slice from this cake. But don’t worry, other industries are profitable if you know how to tie loose ends.

Independent of the industry, there are always risks: bad clients, dishonest employees, dried funds etc. How can you protect your business from all this? While being aware and cautious can save a few sweats, there’s no service that covers all risks in one go. But specific services cover certain risks. For example, a good lawyer will be a great asset when dealing with risky contracts. A handy accountant will know exactly what to do to prevent huge financial losses. An experienced Business Development Manager can help you in getting good clients and keep a nice clean client portfolio.

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There is also a way to keep your clients and your business safe from employee dishonesty, which is not easily detectable by HR, Talent Acquisition or Occupational Health departments. A coverage called fidelity bond that has your back, so to speak. This infographic by JWSuretyBonds explains the costs involved with each coverage plan. While fidelity bonds imply a flat cost based on the amount of coverage amount needed and the number of employees, other types of bonds have flexible fees, influenced by personal credit history, financial expertise in the company (good accountant, as mentioned before), equity left in your company and more.

Crowdfunding for New Products and Services

Why crowdfunding, when everybody does it, nowadays? Well, there’s a right way to crowdfund your product and it’s called “pre-ordering”. In my brief experience with this strategy, I learned that perks are everything. People want to know what they are donating for. Just giving them “a thanks” for $5 won’t cut it. Give them a signed handwritten letter or custom postcard from you, then that might be worth the $5. The best way is to give your community the chance to pre-order the service or product. Be in a book, course, physical product, online or offline service. Doesn’t matter. What matters is this simple principle of “what you pay is what you get”, taken to a different level. Crowdfunding is a great way to get you covered, and not a way to generate profit or revenue. This strategy purely helps you cover specific costs and preserve the revenue you already have.

There’s a lot to cover about crowdfunding. From experience, the pre-campaign can generate up to 30% of your funding goal in the first 3 days. And to prepare for that, you need about 6 to 8 weeks in advance, campaign booster services, a pool of influencers and thought leaders that are backed by a community.

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Resources you can use to document the process include Crowdfunding PR, Donor Search, CrowdCrux’s list of influencers in Crowdfunding you can connect with via Twitter, IgnitionDeck and more. I found BackerCamp to be the only honest campaign booster service, the Founder responded to my email in a time fashionable manner and told me it was too late to do anything for one of the campaigns my friends and I launched this year on Indiegogo. Other campaign booster companies were thrilled with the idea and went straight for the money.

Final Thoughts…

Keep going forward, no matter how hard it is to generate or preserve the revenue you already have for your startup. Use any of the 5 ways mentioned above, and even a combination of two or more. See what works best and continue implementing the improvement process. Maybe freelancing is a good option for you. Or selling your grandma’s old jewelry. Perhaps renting and subletting can save you more than just a few pennies. Or use surety bonds and crowdfunding to keep the funds you already have and secure a better relationship with your clients and your community. Bottom line: don’t give up!

Entrepreneurship is one challenging ride, but if you’re cut for it, it’s worth every sweat.

 

Featured photo credit: StevePb via pixabay.com

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Roxana Nasoi

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

More About Thinking Smart

Featured photo credit: Austin Distel via unsplash.com

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