Solopreneurship – why you need these three different revenue streams
In this article, I’m going to be talking about the thorny issue of revenue streams and the different types that I believe need to be created, to become both successful and stress free as a consultant or freelancer.
If you’re asleep, you’re not earning money.
If you’re on holiday, you’re not creating for the future.
If you’re delivering services, then how on earth can you be selling?
It’s a constant conundrum. It’s a constant juggle, but there is a way around it. If you’re interested in creating a (relatively) stress free life and a more predictable, stable income, this article is for you.
Why you need to get this right
So maybe you’re already experiencing this issue. Maybe you’ve recently gone it alone and you’re trying to figure out how to manage your time. You’re questioning how to juggle the constant demands on your time about whether you need to be selling or whether you should be delivering a particular service.
It becomes quite a headache to know how best to spend your time.
If you don’t have any business coming in, then clearly, you need to be selling a hundred percent of the time. Yet, if you are completely booked for the next four weeks, how on can you also be selling for the future? There is a way around this issue and it’s something I’ve managed to achieve over the years, by creating three different types of revenue stream.
If you can do this … if you can create a consistent base level of revenue and then let it flex up and down. Beyond that, you’re able then always able to satisfy the bank manager, pay the credit card bills, put food on the table and pay the mortgage.
Once you have that baseline and you’re less worried about money coming in, anything else is, almost a bonus. When pressure is removed from your shoulders, you become more creative and you do better things for clients … you sell less hard (which is a good thing!) and you start to naturally attract business instead.
I’ve witnessed it for myself. When you have the luxury of different types of revenue coming in, everything gets easier. It’s something all consultants / freelancers should strive for.
A quick health warning – these revenue streams aren’t going to develop overnight. This is something to aim for – to have a plan for. Accept that things take time and, patience is a virtue and that all good things come to those who wait.
The holy trinity of consultant / freelancer revenue streams …
1) Services revenue
I’m sure you’re already starting to achieve in this area , or if you’re not, that has to be the starting point – swapping your time for money. Whether it be coding, whether it be design, whether it be public speaking, whatever it is, you deliver a service and people pay you for it.
2) Product revenue
The second type of revenue stream is having a product
3) Recurring revenue
The third revenue type, for me, is the Holy grail of the three – and that’s having a recurring revenue stream.
So services, revenue in theory, is straightforward, isn’t it? You are swapping money for the services that you offer. As I mentioned, it could be coding, it could be writing, it could be design, it could be public speaking. It doesn’t matter what it is, but you are essentially charging for blocks of time and swapping that for income, which is a great start, in the first instance.
It gives you freedom and flexibility – unless , the orders aren’t yet coming in, then of course, your bank balance sits worryingly at zero. So it’s really important to balance up selling those services and generating enquiries, with being able to deliver them in the first place.
@alisatsygankova via Twenty20
In 99% of cases, you will start by becoming a freelancer or consultant and swapping your time for money, but there is much more to achieve and you will never, I don’t think, get that absolute peace of mind if you sit back and rely on 100% services revenue,.
If you can implement the next two strategies, your life will become much easier and rewarding.
Generating product revenue, is not going to happen overnight.
To create any form of product, takes effort. Plan to start small with something and grow from there. You shouldn’t aim to create an all singing, all dancing product on day one. In fact, my recommendation is you don’t! If you put hours and hours and hours into creating something new, which never sells, you’re pouring time down the drain – never a good thing.
There’s all kinds of different products that you can create. You can write a book. You can create some kind of download. You could create physical products. You may sell something on Amazon or eBay, even.
@lelia_milaya via Twenty20
Figure out a plan to create that product. At first it will feel overwhelming, but there’s a solution to that –
block out half a day in your diary once a week … or an evening twice a week – whatever works for you and then start creating and investing in that product in whatever shape or form it comes in.
I have a handful of products out there in the world with more coming.
As an example, I’ve two books, which I sell on Amazon. They are focused on the IT marketplace, I should tell you, you do not get rich writing a book and being a self published author! That’s not the point. They get you noticed and they do absolutely bring in a decent, regular three figure income each month as I write this in Feb 2021.
You won’t be able to live off that income immediately, but if you add that to your services revenue, and hopefully some recurring revenue, which I’ll cover in a moment, it starts to look pretty good.
So think about long term product creation and avolution. Create something which can sit on a shelf in a virtual shop for, maybe 10 years and still be relevant.
So in 10 years time, something that I wrote 10 years ago could still be earning income, and that’s really appealing. That’s quite a different approach to charging your time for money. It’s also really cool to wake up each morning to see how many books that you’ve sold 😉
Each product you create in whatever form they come, will start to make incremental changes on your income.
Remember, it doesn’t have to be a book. Think about creating downloads, bits of code, whatever it may be. You may even consider (if you’re, if you’re talented enough), getting involved in the various marketplaces, which are out there, the digital marketplaces, such as Envato where you can create themes, graphics or video templates for sale to the world. You then take a commission from each sale, The support costs for that are relatively small.
Maybe spend. five working days, creating something of real value. That for me, is a good investment in time. The worst that can happen is that you lose five days of your time. The best that can happen is that there is no limit to the sales you can generate.
Package your services
The other thing I’ve seen people do successfully, is to package your services into a product.
Use a marketplace like Fiverr or PeoplePerHour, where you offer something specific – a ring fenced service. It’s essentially a very, small packaged element of your service, which is perhaps templated in some way behind the scenes, allowing you to speed up the delivery of that service.
I provide a packaged service in conjunction wth my Helpdesk Habits (recurring revenue) programme. I deliver an hour’s introductory session via Zoom to a group for a fixed fee. It’s a templated presentation which I customise for each customer.
I also have another packaged product – a customer video testimonial service – Tech Testimonials.
So, be creative, there’s plenty of products you can create which link to your niche or to your marketplace, which will in turn help you to boost your services revenue too.
Definitely make sure there is a link – it doesn’t make sense to create a product which is completely tangential to your core services.
Daniel Priestly talks about this area in his Key Person of Influence book. An essential read.
The Holy grail of revenue creation for me, is recurring revenue – where customers pay for assets / a service every month or year.
Creating a service, which has recurring revenue is the business model for the future.
I’ve managed to create two recurring revenue businesses – my soft skills for engineers Helpdesk Habits programme and my online fitness programme. We offer free pilates workouts to drive interest.
We’ve of course seen the likes of Microsoft and Adobe do this over the last few years. If it works for the big guys, why shouldn’t it work for the small guys too?
@jijieforsythe via Twenty20
Microsoft pivoted a few years back. They saw the power of recurring revenue. You used to buy a copy of Office and it would sit on your desktop for three or four or five or ten years, and eventually you’d have to spend another hundred pounds, a hundred dollars, whatever it may be, for a new CD.
Microsoft recognized they needed to change their business model. With Microsoft 365 – they have a recurring revenue theme and very little out of date software to support – double whammy!
My personal experience
It’s harder than it looks and it takes real effort to run and grow a recurring revenue business, but if you can crack it, then it’s one of the most consistent forms of revenue you can ever have. You can actually drag the row of your cashflow along by a good few months, because you pretty much know the flow of income.
Once again, there is no upside limiting it.
If you can create recurring revenue elements to your solopreneur business, on top of your product and services revenue, you can start to see how you can get that consistency of revenue over the months.
I’ve talked about membership sites, where you’re, adding content to a site on a regular basis, within your niche.
I would also call YouTube ad revenue a recurring revenue model too, but you do have to keep contributing content to the platform. Remember you are not in control of that content. YouTube can change the rules, any time they wish. An old colleague of mine has always talked about Owning the Racecourse. He is right. Anything you build on other platforms is at your own risk.
If a membership site is too tall an order for you – then you can still get creative – why not consider reselling other people’s services?
Consider face-to-face physical sales, where you’re taking a commission. If you are constantly referring somebody else’s service or a piece of software, consider asking for regular commission. Most people will have no problem in paying you for referring their services. Have a think about the sort of people in your network and whether you could resell some of the services they sell.
There’s plenty of products and affiliate schemes out there – including the likes of Amazon. There’s a great list of affiliate marketplaces here.
It’s not easy to make big bucks, however, if you’ve got traffic coming to your site, a few links here and there, coupled with a few promotions and suddenly there’s a couple of hundred pounds or dollars coming in every month. Do you see the trend in this article? Aiming small initially, begins to add up over time.
My personal experience – SaaS
The ultimate recurring revenue model is to create a Software as a Service business. This isn’t for the faint hearted!
I co-founded a service back in 2010 called Customer Thermometer, which was the world’s first 1-click feedback survey tool.
I sat in the room I’m writing this in now, with some very big pieces of paper, over 10 years ago now and we created a service which customers have bought and bought and bought, from very small businesses right the way up to, big corporate accounts. With that comes the responsibility of developing software, keeping data safe and creating a team. It’s not easy.
This concept also moves away from the solopreneur model, but there are plenty of very, very small SaaS businesses out there, run by a single person and they’re enjoying plenty of success. If you want more on that, I would recommend the Indie Hackers website. There’s people creating and building software businesses in public, right around the world. There’s plenty of ideas, which perhaps aren’t ever going to fly, but there’s plenty of good ones too.
Get inspired, if this is something that you’re interested in.
The key to getting started
So to conclude, three revenue streams is all about balance.
Start with services – that’s what you know, but think quickly about ways of building a product and plan for the future.
It might take you a year or two to figure out a subscription or recurring revenue business. Which is OK – but keep it on your radar.
Do these three things and you will reap the dividends that it wil bring.
Don’t be put off by the effort. Instead, focus initially on bringing in the low hanging fruit, and focus on keeping your family afloat.
Once you’ve got that in place, start to carve out time to create that product and recurring revenue business and experiment. Talk to people, involve other people, partner with people, do what you need to do.
If you stick at services revenue, life and finances will always be up and down – you will never get that consistency of revenue. As a result, you’ll always have that little bit of extra pressure on your shoulders.
If you can create those other revenue streams, life will become much easier.
Now – stop reading and go and make it happen!