Sales January 17, 2017 37 Reads share

How to Stabilize a Revenue Stream for Your New Business

One of the biggest challenges of running a startup is maintaining a steady stream of revenue. When you first get started, you won’t have any customers, and you’ll rely on your initial capital or lines of credit to make most of your purchases. These financial establishments will only take you so far, however; you don’t have infinite capital to work with and your lines of credit have a hard limit. Plus, you’ll be paying interest on whatever debts you accrue.

The Importance of Stability

Even in a volatile business, or one in its infancy, you’ll see revenue coming through in fits and spurts. For example, you may be able to land major client deals on occasion, or see rogue increases in traffic to your site that drive spikes in sales temporarily. These bursts of cash will help you get through the most difficult “startup” phase, but if you want to grow, you’ll need a steadier stream of revenue to keep you funded.

Steady revenue allows you to:

  • Make predictions. Inconsistent bits of revenue don’t allow you to chart a vision for the future, which makes it difficult to make decisions in the present.
  • Budget your purchases Knowing exactly how much money you have to work with can help you budget more effectively, controlling your costs and staying within your means on a consistent basis.
  • Set more accurate long-term goals. With stable revenue coming in, you can chart your future growth and make better plans for the future accordingly.
  • Create better experiments. With a steady stream of revenue, you’ll have a consistent benchmark. Then, as you create new marketing initiatives or make business changes, you’ll be able to more accurately measure how they affect your results.

But how can you make your revenue stream more stable?

How to Stabilize a Revenue Stream

These are some of the best strategies you can use to keep your revenue streams steadier:

Set up monthly agreements and retainers

For starters, you can improve client retention and establish reliable monthly payments by getting your clients set up on monthly plans and retainer programs. For example, if you’re in the repair industry, you could establish monthly maintenance schedules for your customers, or if you’re selling software as a service (SaaS), charge your customers an ongoing monthly rate. As long as you keep customer churn to a minimum, this will help you make accurate predictions about your forthcoming monthly revenue. Look to bigger, national-scale companies here to see how they do it—steady revenue streams are important no matter what size your business is.

Use partnerships or consignments to win new sales

Securing new sales regularly is a big part of keeping your revenue stream full, but sales can be a tricky and unpredictable area. Instead of trying to do all the work yourself, or having your staff share the sole burden of reaching your targets, hedge your bets with partnerships or consignments. For example, you could work with an outside business in a similar niche to swap referrals in exchange for other favors or ongoing referral fees. If you choose your partners wisely, you could earn a steady stream of new customers without getting your hands dirty.

Establish multiple lines of revenue

One of the easiest ways to stabilize your incoming revenue is to establish more than one stream. For example, if your main line of business is selling professional consulting services, consider also selling “premium” content you’ve written, such as eBooks or whitepapers, for a few dollars per download. Even if it only makes you a few hundred extra dollars per month, it can help you stabilize your income stream—plus, you’ll hedge your bets and guard yourself against sudden volatility in other areas. If your main draw is a blog or other content-based page, you could consider selling advertising to other companies. You could even partner up with another business to send referrals their way in exchange for a finder’s fee—the opposite of what you did in strategy two.

Make passive income

You can also opt to make more passive income; this is revenue you don’t have to specifically work for. Some of the examples we’ve listed already qualify as passive income—for example, selling a monthly subscription for use of your software or reaping the profits from downloadable content don’t require any new effort every month, but still make you money. Certain types of investments can also help you earn passive income, such as buying real estate that you rent out to other businesses or individual tenants (depending on the nature of your business). Passive income is reliable because it isn’t dependent on as many variables, which means it’s easier to predict and keep consistent over the long term.

Focus on output, with minimum viable products

If you want to hit your revenue goals, you need to focus on output—that is, focus on getting your products and services in the hands of more people. While you may be tempted to toil away, gradually shaping your ideas into perfect iterations, it’s oftentimes better to stick with a minimum viable product and get to market as soon as possible. This will help you establish a small, but stable revenue stream early on, which will give you a fantastic foundation to work from later. Your business doesn’t have to be perfect right away, but it does have to be stable; just like a ship doesn’t have to be luxurious as long as it stays afloat.

With these strategies in place, you’ll quickly realize that building a steady stream of revenue isn’t just a pipe dream. It may not make your business profitable right away, and it might not make you rich, but it will give you an ideal starting point to begin expanding your business organically. With revenue coming in and spending under control, you’ll quickly grow out of “startup” territory and keep your business operating indefinitely. As you progress, you can take better control of your business operations and optimize them for better profitability and success.

Image: Shutterstock

Larry Alton

Larry Alton

Larry is an independent business consultant specializing in tech, social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn

Read Full Bio