In our last 2 Minute Business Coaching session you learned how to demystify business models. You can listen to that free business coaching session here if you missed it.
Now that we’re clear on the three basic business models, let’s look at revenue streams.
The odd thing about revenue streams is people tend to focus only on one stream. The problem with that is if one stream is slow, there’s nothing to fall back on.
Look at your business as 3 streams of revenue.
1. Active: For work you do day in and day out. This is sometimes called trading time for dollars.
2. Passive: Income you generate without having to be personally involved. You have access to an asset and generate revenue from it.
3. Residual: Income that generates ongoing for work you accomplished once. An example is setting up a Web site that sells a product once and earning money from it ongoing.
No matter which of the 3 basic business models you follow, you can create all three revenue streams.
I’m sure you’re already earning revenue from your active income stream, so no need to elaborate.
What about passive revenue?
One efficient way to develop passive revenue streams is to look for vendors you use, know and trust, who your niche market can also use, know and trust. Then work out a mutual revenue share for each client referred who buys.
I have heard from people in business that think this is a bad idea. They feel it somehow taints their image.
I say that’s nonsense. You’re restricting revenue by not leveraging all of your knowledge, experience and business contacts. Why would you do that?
Plus, cross-referral programs keep small business strong and thriving. It also reduces marketing and sales costs significantly.
The only way referral revenue sharing doesn’t work is if you’re referring a business you know to be inferior. Just don’t do that!
An example of this is on the “Services” page of my Web site.
Another example in product form that I personally use is Simple.ology. I use it, I gain great benefit from it and I recommend it.
Passive income sounds easy enough, but what about residual income?
You can develop residual income streams simply by being aware of products and services you use.
If you use a tool that makes your business or personal life easier you can develop a revenue stream from it.
As long as you can say, “I honestly use this and gain great benefit from it,” you’ll find it to be a lot of fun to get a check in the mail for your recommendation efforts.
Examples from my treasure chest of residual income streams include:
My auto responder company. I have used them for years, love them and would recommend them to anyone without hesitation.
My blog host. They are one of the best ways for anyone to have a blog at an extremely reasonable cost. I’ve been with them since 2005 and have no plans on changing anytime soon.
My print marketing automation secret weapon. It’s the only marketing tool I know of that allows you to help people feel great while marketing to them. I Love it, have used it since 2005 and will use it for years to come.
I even wrote a book about it called Marketing Made Easy: Creating an I Care Campaign.
Now what about your business?
Can you see opportunities for creating passive income?
What about recommending the tools you use that makes your life easier, would you enjoy recommending them?
If you find that you’re uncomfortable with this idea, will you please email me at firstname.lastname@example.org?
I’d love to talk to people who are comfortable with active income but uncomfortable with the idea of passive and residual income.
Our conversation will be totally confidential and will help me with my mission of empowering small business owners.
I’ll post anonymous findings in future blog posts so we can all share and learn from one another.