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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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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

Reference

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