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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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Published on October 8, 2018

13 Incredibly Useful Tactics to Help You to Stick to Your Family Budget

13 Incredibly Useful Tactics to Help You to Stick to Your Family Budget

Are you having trouble sticking to a family budget? You aren’t alone.

Budgeting is difficult. Creating one is hard enough, but actually sticking to it is a whole other issue. Things come up. Desires and cravings happen. And the next thing you know, budgets break.

So how can you stick to a family budget? Here are 13 tips to make it easier.

1. Choose a major category each month to attack

As the saying goes, “Rome wasn’t built in a day.” With that in mind, one approach to help you get into the habit of sticking to a budget is simply starting slow.

Spend too much on Starbucks runs, eat out too often, and have an out-of-this-world grocery bill? Choose one bad habit and attack.

By choosing one behavior to focus on, you’ll prevent yourself from being overwhelmed. You’ll also experience small victories, which help you gain positive momentum. This momentum can then carry over into your overall budget.

2. Only make major purchases in the morning

If you’re making large purchases in the evening, there’s a good chance you’re doing so after a long day and you’re probably tired.

Why does this matter? Because our judgement tends to be off when tired – our willpower is compromised.

Instead, only make major purchasing decisions in the morning when you’re energized and refreshed. Your brain will be firing on all cylinders and your resolve will be high. You’re less likely to give in and settle at this point.

3. Don’t go to the grocery store hungry

Have trouble with impulse buys at the grocery store? If so, there’s a good chance you’re going grocery shopping while hungry.

The problem here is that when you’re hungry, everything looks good. So you’re more likely to make split decisions on things that aren’t on your grocery list.

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Instead, make sure you eat prior to your grocery store trip. Then take your list, along with your full stomach, and go shopping. Notice how food doesn’t look quite so good when you’re not fighting cravings.

4. Read one-star reviews for products

Is there a product you just have to have (but maybe not really)? Check out the one-star reviews.

By reading all the horrible reviews, you may be able to basically trick yourself into deciding that the product isn’t worth your time and money.

Next thing you know, you didn’t make the purchase, you saved the money, and you feel good about the decision.

5. Never buy anything you put in an online shopping cart until the next day

If you are making a purchase online, it’s typically a two-step process. First, you click “Add to Cart” and then you go in to review your cart and pay.

The problem is that there not typically much reviewing during step two. It’s generally click pay and there you go. However, this is the perfect point to stop for reflection.

Once you add to your cart, your best bet is to step away until the next day. Let the item sit there and grow cold, so to speak.

This gives you a night to “sleep on it” and decide if you really want and need to spend that money. If you wake up the next day and still find the purchase viable, then perhaps it’s time to go for it.

6. Don’t save your credit card info on any site you shop on

One of the other pitfalls of shopping online is that fact that most sites ask you to save your credit card information.

While the sites will frame it as a method of convenience, the truth is they know you’ll spend more money in the long run if your credit card information is saved.

The “convenience” takes away one last decision-making point in the purchasing process. True, it’s a pain to get out your credit card and enter the information every time. But guess what? That’s the point. If that inconvenience helps you stay on budget, then it’s worth it. Which leads into the next tip.

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7. Tape an “impulse buy” reminder to your credit card

Credit cards make spending much easier than cash. When you spend cash, you can literally see your wallet emptying. A credit card comes out, then goes back in. No harm, no foul.

That’s why it’s a good idea to tape a reminder to your credit card. Customize a message that is something along the lines of “do you really need this?” or “does it fit the budget?”

That way when you pull out the card, you get one last reminder to help you question your decision and stick to your budget.

8. Only use gift cards to shop on Amazon

Amazon is probably the easiest place online to blow money. It’s just so easy to click and buy. However, one way you can slow the process down is buy only using gift cards. Here’s how it works.

If you plan on making a purchase on Amazon, go to the grocery store and purchase a pre-loaded Amazon gift card of the proper amount. There’s no convenience fee, so you literally pay for the money you’ll spend.

Now take that gift card home and load it to your Amazon account. There’s your money to spend.

Why does this help? It makes you have to purposely go to the score and purchase the card in order to purchase the item. That’s a pretty deliberate thing that takes some time, commitment, and thought.

This process will effectively kill the impulse buy.

9. Budget using cash and envelopes

As mentioned earlier, it’s a lot harder to spend cash than swipe a credit card. You can take this even farther by using only cash, and separating that cash by budget category.

Create an envelope for each category and stick the cash in there at the beginning of each month. When the envelope is empty, no more spending on that category, unless you borrow from another (be careful of that approach).

This can be pretty helpful for people that have a hard time following transactions in their checking account, or keeping a budgeting spreadsheet.

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The envelopes simplify the tracking process, leaving no room for error. Nothing hides from you because it’s tangible in the envelopes in front of you.

10. Join a like-minded group

Making the decision to stick to something like budgeting is difficult. It takes long-term commitment.

You’re going to feel weak sometimes. And sometimes you may fail. That said, support from others can help strengthen resolve.

Support can come from a spouse or a friend, but they won’t always have the exact same goal in mind. That’s why it’s a good idea to join a support group that’s likeminded.

No need to pay here, as there are tons of free communities that fit the bill online.

For example, reddit has multiple subreddits that deal with budgeting and frugal living. You can follow, subscribe, and get active in those communities.

This will open your eyes to new tips and strategies, keep your goal fresh on your mind, and help you realize there are others dealing with the same struggles and being successful.

11. Reward Yourself

When you set a budget, it’s usually with a large goal in mind. Maybe you want to be debt free, or perhaps you want to see $10,000 in your savings account.

Whatever the case, the end goal is great, but the end is often far away, making it hard to see the end of the tunnel.

With that in mind, it’s a good idea to set mini-goals along the way. This helps you still look at the big picture but have something that’s attainable in the short-term to help with momentum.

But don’t stop there – set rewards for yourself when you reach that small goal. Maybe it’s an extra meal out. Or a new pair of shoes.

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Whatever the case, this gives you something in the near future to look forward to, which can help with the fatigue that can result in pursuing long-term goals.

12. Take the Buddhist approach

You don’t have to be a Buddhist to recognize some of the wisdom in the teachings. One of the tenets of the philosophy involves accepting that we can’t have everything we want. And that’s okay.

Sometimes you won’t feel good. Sometimes you’ll have cravings. You can’t deny them. But you can recognize them, accept them, and let them pass by. Then you move on.

Apply this to the times you want to do things that will break your budget. You’re going to have the desire to eat out when you shouldn’t. You might want to stay out and spend too much at happy hour with your work friends.

The feelings will come. Recognize them, accept them, but let them go.

13. Set up automatic drafts to savings

If you wait until you’ve spent all your budgeted money to deposit money into savings, guess what? You probably aren’t going to put any money into savings.

It’s too easy to see that as extra money and end up using it to treat yourself.

Instead, set up automatic savings withdrawals. That way, the money is marked and gone before you can even think about it. It becomes a non-issue. It’s no longer “extra.” It’s just savings.

Conclusion

Sticking to a budget can be difficult. No one is denying that.

However, if you can do a few things to set yourself up for success, and put some practices in place to curb impulse buys, then you can (and will!) be successful sticking to your family budget.

Featured photo credit: rawpixel via unsplash.com

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