You have a great idea for a new revenue stream to add to your business. Perhaps it has been suggested by a client, or you were at a conference and are inspired. Some of you will want to immediately get started and some are more apt to drag your feet. You wish there was a way to know if your idea will work in the end. What it really comes down to is having a set of criteria to determine when to say yes and when to say no to new ideas. A way to understand if you should add that new revenue stream to your small business.
Most of us who are tiny business owners, understand that we’ve gotten probably where we are by listening to our gut, which can be the perfect solution in the beginning. As our time gets tighter as we increase business, we may need to give our gut some parameters and not throw spaghetti at the wall. In this article, I’m going to take you through a quick list of five steps that you can use as a way to decide if that new idea is worth your time and resources.
The first question to ask is: Does it excite you? If you have an idea that in theory, you think would be a great addition to your offering, but you are not thrilled about it and you dread the work it will take to do it, it’s probably not a good idea to start it. Why? Because there have been studies done that show that when people start projects (or businesses), the initial stage is extreme excitement and optimism. And then you come down into the valley of despair where you start to lose that energy and enthusiasm. If you can push through the valley of despair, you will climb back up that slope to the top. This time armed with wisdom.
If you’re not excited at the beginning, you’re going to plummet as you get deeper into the work. You’re basically setting yourself up for failure. So the first thing is really just to think about if you are truly excited about what you’re considering doing. If it is something that you’re doing because you should, or because people keep telling you that it makes sense, that’s not a reason to do it. You want to have that enthusiasm to do the work and to get it done.
The second question is to ask: Will it benefit your current people? Now, if you’re a larger business, you can have different people that you are selling to and serving as you have more people to do the selling and serving. You may have teams that are working with each group of people and separate products and services for each group.
We however are not talking about that, we are talking about tiny businesses. If it’s just you, it starts to get complicated if all of a sudden, all of the work that you have done in your tiny business has been to serve a specific person. And then you create a new product because you’re excited about it, but you don’t have the people to sell to. I will say that that if you are in this situation, this should really make you pause. Because you will have to then create a following for that new revenue stream, which is even more work than just offering the current revenue stream, and may not have the payoff.
Make sure you ask yourself if you have that bandwidth? If you do, then consider if you are great at building followings around things? If so, then it may be worth pursuing. But for most of us, it’s much easier to instead create something that our current clients and customers will benefit from, an add-on to our in-place streams rather than trying to find a new audience for a new product or service.
The third question to ask: Do you have the skills or the time needed to do this new thing? Why should you ask yourself that? Well, if it’s something that you easily can be doing, then fine, you can start it as soon as you have done your research and figured out how you want to do it and things like that. In fact, you can start telling your current customers and clients about it to figure out how this something they need will look and be. Their input will be valuable in creating it.
If you don’t have the skills to do it, let’s say you currently are a website designer and you want to add logo design onto your offerings? Well, if you’ve never designed logos and you have no background in graphic design, there may be a longer amount of time until you’re making money with this new stream. The amount of time to learn it could end up taking away from your current revenue or if you are hiring someone to do the work or contracting out, then what they are paid will of course take a piece of the revenue.
The fourth question is to ask: Does it align with your why? Does it align with the values of your company? If not, it will really throw off your brand and confuse people. Does it align with why you’re doing it, why your company does what it does? It’s a huge question, and I didn’t put it first because sometimes you can talk yourself into this if you’re excited. There’s a reason I put this fourth. Your idea has passed the first three parameters, now we ask the hardest question.
The heart of it is, does it make sense to become part of your business? Will you still be still adhering to your mission if you do this or does it start to confuse things? This is an important question to not only keep your business strong and attract your clients easily, but it will help to prevent you from burning out with the work.
The fifth question is: How long will it take before you make money on this? And can you wait that long? Some things, like when you start a business, can take a couple of years to start to gain traction. Do you have that long? Do you have the funds to fund the idea until it produces a profit? The cash flow to still pay your bills if you are stepping back from revenue generation while you get this project going?
If you want to write a book, it can take a few years from when you decide to write the book to when the book comes out. Even if you’re self-publishing because there are just a lot of steps involved that take time. But if it is something like creating a worksheet for your current clients based on something you already do, then you could make money a few days from now. If it’s a big retreat at a destination you may have to pay for the reservations and many costs upfront, you’ll need the capital before you sell all the spots. Are you able to do that? Can you afford to wait to make money for how long it will take to create the new revenue stream?
These are five great questions to run your new ideas for revenue streams through before you waste your time, money, and energy working on something that is not a fit. I hope you find these useful in making your next decision! If you need help with your tiny business, please visit the services at mssierrabailey.com.