Any disruption in the economy will show weaknesses or vulnerabilities in our business, whether it’s an expense structure that’s unsustainable or too few revenue streams or narrow sales channels. Today, Stephen Krausse talks about how we can take care of ourselves in terms of revenue streams. Whatever crisis or disruption we may currently face, you don’t want to miss this episode to get some ideas on how you can build revenue streams and manage your business through serious problems.
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Let’s Build A Revenue Stream | Up And To The Right | Episode 035
Anytime there’s a disruption in the economy or our economic environment, it will show weaknesses or vulnerabilities in our business. A major disruption or crisis will drive that point home showing us weaknesses in our business, whether it’s an expense structure that’s unsustainable or too few revenue streams or narrow sales channels. It’s time to roll up our sleeves and get to work. The reason this whole idea of sales channels and revenue streams came to mind for me was the concept of the closed economy.
I’ve talked about this in the last episode or two, but you can’t close the market economy. I’m not sure where people’s heads are at when they talk about this. I understand that we need to take responsible action to protect the people and stop the spread of the pandemic. A market economy doesn’t work unless money is moving. Money has to move. When we talk about closing the economy, what we should be talking about is finding ways to continue operation that are safe for both our employees, coworkers and families, but also customers and population at large.
What needs to happen when we talk about closing the economy is changing the way that we interact to conduct business. That’s where our revenue streams in sales channels come to be at risk in an environment like this, where a lot of the standard ways we do business have been set aside. Businesses aren’t prepared for that. That’s why I came to this point where we need to talk about revenue streams and sales channels. The general media is using language that isn’t helpful when we talk about closing the economy. We need to find alternative ways to conduct business. If they’re not going to do it and not going to talk about it the right way, that’s fine. As entrepreneurs and business owners, we need to take care of ourselves.
Revenue Streams And Sales Channels
That’s what I want to talk about. How do we take care of ourselves in terms of revenue streams? This is not going to be something that is related to this specific crisis. This is related to how we conduct business and how we manage our businesses overtime forever. The maximum time between crises for my professional career was eight years. The maximum time between major economic disruption is eight years. If you want to operate a single business longer than that, you have to figure out a way to manage through serious problems. One of those things is to have a broad range of revenue streams and sales channels. I didn’t name this particular episode revenue streams or build a revenue stream, but I’m going to talk a little bit about sales channels as well.
I still don’t quite get the controls right for 10,000 hours. I’ve done 11 or 12 live streams. They’re each about 30 minutes, so that’s 20,000 live streams I’ve got to do before I get it. There are lots of responsibilities and challenges to overcome. I wanted to talk about what a sales channel is versus what a revenue stream is first. A sales channel is specifically the same product sold through a different venue. If you’ve got retail, online, representation or distribution, if I sell a grilled cheese sandwich at my restaurant retail, that’s a sales channel. If I take that same grilled cheese sandwich and I sell it through a partnership agreement with a convenience store, it becomes distribution. It’s still the same product, it’s just a different sales channel for that product.No amount of marketing is going to make an idea fly if it’s not going to fly. Click To Tweet
Those are important in terms of goods that can be distributed that way. It is important that we talk about and have sales channels that work in a variety of situations. You can see where that would work in this specific economic environment. We have restaurants that are offering their products through take-out instead of dine-in. That is a good example of saying, “This sales channel dine-in won’t work in this environment pandemic, how else can we continue to operate and find revenue? Take-out or delivery. The sales channel is taking the same product, but making it available in a different way. The revenue stream is a little vaguer, but it’s a unique source of income. A product, your grilled cheese sandwich can be a revenue stream. If we continue with the restaurant analogy, having the food products that you sell, that’s a revenue stream, whether it’s a grilled cheese sandwich or pancakes.
Instead of selling the sandwich, what if you made the recipe available online? For a restaurant owner, maybe you don’t want your secret recipe to be available online for $5. I understand that, but what if you made a product or a recipe online available for a unique way to have a grilled cheese sandwich when you’re socially distancing? That would be a different revenue stream because it’s not the same product. It’s a unique product. Even if you sold the same recipe, it’s still a distinct product because it’s the recipe, not the actual tangible edible sandwich. That’s the general idea that we’re going to talk about in terms of what is a revenue stream. It’s going to be a distinct, unique product and source of income. That can be a service or a product as well.
Building A Revenue Stream
Let’s build a revenue stream. I broke this down. I had started a spreadsheet that I was going to make available as a download. I got through about six columns and then I said, “I’m overdoing this. It’s too much. We need to make it simple.” What I want wanted to do is to give people an easy way to break down how we’re going to do this. How do you look at a revenue stream? How do you look at opportunities to create new revenue streams? For the rest of the time we spend together, I’m not going to talk about the difference between a sales channel and a revenue stream because both have value.
It’s important to understand for you and your business what those differences might be as you go through this in the future. Don’t get too caught up with, “Is this a sales channel or a revenue stream?” At this point, either might have equal value and we need to go through it. The thing I did was I said, “Let’s talk about how do we create value and break it down into three simple things. What can I do with my knowledge and skills? What equipment and resources do I have available? Who do I know?” We can’t necessarily always do everything especially in a situation like this. We might find that we have a revenue stream idea for something that would bring value to customers in this environment, but we don’t have all the pieces, whether those pieces are intellectual or resources.
The Low Hanging Fruit
How can we then take that to the market? What if we might need some help? Who do we know that can help? We’ll look at those three things. What can I do, what do I have, and who do I know? The first thing that we’ll talk about is a low hanging fruit. It’s the stuff where there is already an obvious revenue stream or distribution channel that you can adopt that you haven’t. Let’s go back to our grilled cheese sandwich. If you’re a restaurant, we’ve already seen a lot of restaurants turn to carry-out and delivery. That’s what I would call low-hanging fruit.
If you have a tangible product, how do you sell that in a way that still allows you to maintain a safe working environment for your team and your customers so that they’re not put at risk? It’s a no-brainer, but that’s the first thing we want to get in place. If there’s something obvious, let’s do that first, but then it’s less obvious once we’ve done that if you’re not in a market where you can immediately do something or immediately make that change. We now have to start putting on our thinking caps and that’s okay. One example is if you have a physical good or a “low-hanging” fruit idea of, “Let’s get it on the internet. Let’s open a shopping cart.” It is relatively low-hanging fruit in terms of getting it done.
You’d take a picture of your product, write a description and you upload it. If you have 1,000 products in your catalog, that’s going to take you some time, whether you do those and who’s going to take the photos. You can set up a sheet, some lights in a room in your house, shoot photos and probably get serviceable ones for the short-term. That could work, but it could take some time to get that up and running in 2 or 3 weeks, but that’s okay. The downside is it’s not a magic bullet because despite the movie reference, just because you build it doesn’t mean they will come. You now have to drive traffic to that shopping cart.
That is another sales channel. We can use it and we should if it’s appropriate. It may not be a quick answer to generate equivalent or even close to equivalent revenue for your business compared to selling your products at your store, but it is important to consider. When we talk about things like low-hanging fruit, understand that they might not be immediately as successful as your traditional business model has been in the past. It doesn’t mean we don’t want to try them. We need to try things and figure out what works. The next thing after we take those three things, what can I do, what resources do I have, and who do I know, start looking at gaps in the market. If you already fill them, that’s fine. Start looking at them with fresh eyes saying, “The constraint that I have is I can’t deliver this good in person. It’s not safe for myself, my family and my team.”
How do we do it differently than that? What problem are you already solving in the marketplace? That’s one place to look. Start looking at other problems in the marketplace that you might want to address. When I started thinking about it, why did I learn the skills that I have? Why did I buy the equipment that I own? How can I combine those things or ideas with solutions for the marketplace? Every single piece of equipment that I own in the studio in the lab for directed energy was purchased with purpose in mind. There was a reason we bought them.
What problems do those solve and how can I combine those things in unique ways to create solutions for maybe a completely different market or a complementary market to my normal services? If I have part of the answer, how do I bring in somebody external to myself or my organization so that they can participate in that and help me create something new? They might even have equipment that is complementary. We start to look at the resources available to us, whether it’s knowledge, equipment, skills and the solutions to problems. Why did we buy that equipment in the first place? Why did I learn how to do live streaming? Is there a place for that knowledge in a different revenue stream?Small business owners are the primary engine in the economy. Click To Tweet
Once we’ve gone through that, with the knowledge and equipment that I have at my disposal and the people I have access to, what problems can I solve in a way that’s unique, interesting, and helpful in a market where I can’t go shake people’s hands and do this in person? How can I be of service in a different way? The next thing is we have to drop self-doubt aside. We’ve got to pick the low-cost things and start testing them. Pick the things that we believe have a high probability of success and start testing them. Don’t discount your value because we don’t have time to waste money and we don’t have money to waste. We also don’t have time to second guess everything and come up with a perfect answer. We’re going to come up with the best answer we can, in the time that we can come up with a solution. We’re then going to start trying things and seeing what breaks and what sticks.
If it breaks, don’t get upset about it. Don’t even think about it twice. Move on to something else. There’s an interesting thing if you follow a specific topic. I’m going to use YouTube as an example. I follow photographers and videographers more than anything else because I’m interested in the topic. For example, I took a few minutes out to look at Loupedeck CT, which is a video, audio and photography editing control platform. It’s a glorified mouse, a hardware interface specifically designed for photo and video editors. If you do a search on YouTube for that product, you’re going to get hundreds of videos that people have done around that product. It would be easy to say, “I don’t have any place doing something like that because there’s already all of this content out there.”
There are a couple of problems with that. First of all, you have your style and perspective to add to the conversation and because you’re not this influencer, it doesn’t mean you don’t have a perspective that would be valuable to somebody. Each of those people that did all of those videos have their own perspective and expertise, but they also have their own frame of mind when it comes to the use of a specific product. When you say, “What do I have to add?” You have yourself and your own perspective about what this thing does for you. I’m not suggesting everybody go out and do product reviews. The idea is that just because 1, 10 or 100 people are doing something, doesn’t mean that you don’t add value to that specific space.
Each of those people has a following and you have your own customer base. Whatever you choose to do, the next step is, how do I communicate with my customer base with my unique product offering or perspective? That’s the long reason why you have to try stuff and don’t discount an idea just because other people are doing it, so if they’re doing it, I’m not going to have a place there. If other people aren’t doing it, there must be no value or it’s possible that nobody tried or did it your way. Nobody did it in your environment with your audience. Pick the low-cost items and the high probability of success items. Those are both guesses. Take the guess and run with it.
If something starts to work, great, put energy into that. If it doesn’t work, don’t get tied up in trying to tweak it and say, “If I message people on Twitter every 44 minutes, then all of a sudden, this product line or this revenue stream would take off.” No amount of marketing is going to make an idea fly if that’s not going to fly. You try it, get the information out to the market, and if nobody’s interested, don’t put more energy into it. If you put up a shopping cart, nobody buys anything, I’m not saying take it down. There could still be value there that you might address in the future, but don’t obsess about making that a success. Take the next item and run with it. Take the leap and see what happens.
I took the idea of this whole thing for myself and said, “What is my low-hanging fruit?” Before it started, I was starting to think about how can we do a few different marketing things for the studio space. I did do a video about it on the website. This space isn’t full most of the time. The studio space isn’t being used 40 hours a week. It gets used 4 to 6 hours a week and the rest of the time, it’s fairly empty. I said, “That’s a waste and there are a lot of business owners out there who might get value out of being able to come into a professional setup.” Do something unique for their own business, walk out, and not have to invest in the time and the expense of getting all this stuff put together. I was starting to create an environment where customers could come in and do that. I launched it and I can’t take any customers because of social distancing. I can’t have people coming into space. That was low hanging fruit because I already had everything set up. It was something I could offer quickly to the market and it occurred to me that I should try it.
Some low-hanging fruit isn’t going to work out, but that’s the thing that you might find in your own environment, where you have resources available that you can make a product out of. In this case, it doesn’t work well because I can’t bring people into the studio, but that’s something that we could do. Another thing that I was working on before this was I’m doing some focused online courses. That is a valuable revenue stream because that is something I can continue to offer. I’m putting energy into getting the first of those wrapped up. For me, those were the low hanging fruit items. When I started to do a deeper dive, I had to go through and say, “What can I do, what do I own, and who do I know?”
I didn’t write specific names for privacy, but I did write some ideas of where to go. You have your friends and family. Maybe someday I’ll do a show about working with friends and family because there’s a lot that goes into that. You have to be sensitive and careful about those kinds of relationships when it comes to business. I went back and said, “Who are your LinkedIn contacts? Are you in a networking group? Are you in a professional organization? Do any of those people have skills or access to resources that you don’t?” Probably they all have the skills and resources that you don’t.
If you come up with something intriguing, they might be interested in working with you on something new because they’re probably facing the same trouble that you are. I went through it and said, “What can I do? I’m an operations management guy. I can organize, business management, scuba diving, photography, photo editing, video editing.” I didn’t stick with, “What are the principal business activities that I work with?” It’s about combining things in ways that are new. It’s not trying to do the same thing. I’m not going to go try and be a portrait photographer because my business is down in business coaching, but that skill may apply to another product offering.
I want to have it in my head while I’m doing this. When I said, “What resources do I have?” We have video equipment, video capability, a conference room that remains largely empty and unused, recording equipment and a studio. For the directed-energy side of my businesses, we’ve got electrical test equipment, power supplies, electronic testing and work area, test ovens, and some FLIR and thermal cameras. I brainstormed all the major resources that I had available. I then went through and said, “What are some of the things that I can do differently?” One of them is I can do Skype or Zoom for business coaching. That’s not a whole lot different than normal, but I liked to be on the ground with somebody in their space. It helps me understand how they do business for real, rather than talking to them on Zoom or Skype, but you can still add a tremendous amount of value with those kinds of tools.If you can diversify the things you depend on to create value and distribute that value, you are better suited to weather storms. Click To Tweet
Another revenue stream that came to mind were seminars. I had to put that aside because we can’t do in-person seminars. That’s where the online courses come in. I then thought about, could you do online workshops or seminars? I think you could. I’m still thinking through what that might look like and how you could make it valuable to participants in a way that’s interesting and not chaotic. I’m not sure what that would look like, but it’s an idea that I put in my head. My point is don’t make this a complicated activity. We don’t have time to go through all kinds of complexity. We have to get to a place where we can start testing things and find out what new revenue streams and sales channels might work for us.
I said those three things across the top, what can I do, what resources do I have, and who do I know? In the middle section, the low hanging fruit answers that you might have and then some of the other solutions you might come up with. What you could use this section for is to start adding problems that need solving. That goes back to the question, why did I buy that equipment in the first place? What can that equipment do? Why did I learn this skill in the first place? What can that skill do? Those are the ideas that I came up with on my worksheet. Another one that might work in my particular case, are there PDF products or spreadsheet templates that I could put sometime into and make available to customers as well? That’s possible. Those are the things that I’m thinking about.
You have to take the concept into your own business and say, “What does that look like for my sandwich shop? What does that look like for my auto mechanic business?” Auto mechanics are considered essential in most places, but what if you’re a nail salon? How do you bridge that gap? Unless you’ve got cash to go 3 or 4 months without revenue, you’ve got a problem. What do you do in those cases to figure out ways to generate revenue? That’s where the exercise comes into play. It is figuring out what you can offer to create value and then finding a sales channel to deliver the product or service in a way that’s meaningful under the circumstances that we’re in. That’s all I want to talk about in this episode. I wanted to get the idea out there that we need to be looking at revenue streams differently.
This is not something that an exercise that we should do once because we’re having a problem. You could make a strong argument that if you’re in the midst of a crisis, is it’s a difficult time to start creating a new revenue stream. Sometimes you don’t have any choice. We’re going to have to do it. After this, can we generate new revenue or keep those revenue streams moving or continue the process of refining and engaging new revenue streams? We can have a broader group of sales channels and revenue streams because we have to have social distancing, the prices of raw material change so much that it becomes expensive. Whatever the case, business and economic situations change constantly. Being able to handle those changes in a way that doesn’t disrupt your business to the point of losing 60% or 70% of your revenue or all of your revenue, that helps us as small business owners.
Small business owners are the primary engine in the economy. We’re important to our families and customers but as a single business owner, you might not feel like you’re important to the whole nation at large when you’ve got all these big companies talking about billions of dollars in revenue. The reality is we are a legion, and we are an important and powerful part of the economy. We need to be prepared to handle situations like this. One of the ways we can do it is to make sure that we have a number of revenue streams and sales channels that don’t depend on the same things across the board. If we can diversify the things we depend on to create value and distribute that value, then we are better suited to weather storms like this.
You can subscribe to the Beyond 50 Percent YouTube channel. If you click the little bell, you’ll be notified if we’re doing any new content and when we go live. If you read this and thinking, “I could do some new revenue streams, but I need a little help to make that happen,” visit our website or give me a call. I’d be happy to help you with that. If you have questions specifically about creating revenue streams or identifying sales channels, please email at [email protected]. I’ll be happy to answer shorts questions. Thank you for reading. I hope that everybody stays safe. We’ll see you next time.
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