One of the best lessons I’ve learned when I first started managing businesses, is that in order to maximize income for the company I had to look into multiple incomes streams to increase revenue. It always just made sense to me and I’ve taken that thought process into all future businesses including mine.
Let me just delve deeper into the concept of scaling your business and what that means, as the term ‘scaling’ has multiple definitions. And no, I’m not talking in reference to sea creatures.
Scaling your income streams in business is the process by which you set up your business model in accordance with a particular level or proportion. What does this entire mumble jumble mean in layman’s terms? It means you take your business model and evaluate how you can expand it in order for you to reach a greater mass of people; without necessarily having to put in more of your time into the process.
The best way I know how to explain this further is to give an example…
Let’s say you are in the Real Estate business and up until this point your only source of income has been the commissions you’ve received on the sale of homes. You’ve made a nice living, but you’ve reached a cap. That is, you pretty much know already what your income is going to be.
From past experiences, you know if you show 40 houses a month with an average conversion of 10% with the average home selling at 200K and a commission of 6%, your earnings for the month (minus what is given to the broker) will be an average of $24,000.
40 houses x 10% = 4 houses sold per month
200K x 6% = 12,000 – $6000 (goes to broker house) = $6000
$6000 x 4 houses = $24,000 per month income earned
This is just an example so this may or may not be the case in reality; however I think you get the idea.
By the way, if you are having trouble with numbers, check out my post ‘What Would A Million Dollar Business Owner Do?’ This article may help you with getting clear with your numbers.
So up until now $24,000 has been the maximum amount you’ve been able to make with this business model. Sure you can think about showing more houses, but at 40 houses per month, you are already working overtime! There’s only so much you can physically do.
So how would you scale this?… Consider changing your business model!
How can you take your knowledge, skills and contacts and expand your reach to generate more income?
Here are some possible ideas:
- Offer paid workshops to other Real Estate agents on how to close the sale
- Sell information products on how to become a Real Estate Agent
- Get paid for speaking engagements on the topic
- Collaborate with interior designers and earn a finder’s fee
These are just a few examples although I’m sure if you are in that industry you can come up with a lot more.
Now look into your business and see for yourself where you can begin to scale your income streams and how you can reach a larger mass of people with the same or less effort.
Note: For you do-it-yourself’ers like myself, you may need to start considering hiring others to help you in order to move your business to the next level.
Here’s a quick example: I used to work in the company that had a food & beverage component to it and in it we sold various products including coffee – made in house. As you may imagine, since this area wasn’t the primary focus of the attraction, our coffee sales were close to non-existent.
I took on the task of bringing in a well know coffee company (Starbucks) to come in, set up their coffee machines and branding materials. Guess what happened? Our coffee sales went up substantially!
I leveraged our business with using another company with an already existing brand, their equiptment and their coffee to increase our sales; and the same effort was put on our part.
Get the idea?
Today’s Action Plan:
- Jot down currently what is your business model and what is your source of income stream. Do this on a white board or just some plain paper. The point is to get it out in front of you.
- Start creating a plan on how you can change the paradigm of your business model to include multiple sources of income streams.
- Print out this new business model (take a picture & print it out if you did it on a white board) and place it right in front of you to see at all times; and begin developing each area.
- Come up with plans on how you intend to reach the masses.
I would recommend tackling only one (or two, ONLY if you are proficient in the Art of Completion… and I think most of us entrepreneurs know exactly what I speak of ) at a time. Once you’ve reached a level you are happy with then move on to the next area.
P.S. These income streams may change over time as your business evolves. You may only have 2 or 3 ways to scale your business initially, but eventually find ways to increase it. Or you may start off with 10 ways and realize that only 3 or 4 really work for you and are worth your time and efforts.
The important thing here is to continue to explore ways to scale your businesses income streams and adjust your plan accordingly to fit your needs as time goes on.
Your turn: Are you currently scaling your businesses income stream and if so how is that working for you?