Multiple Sources of Income: 4 Words That Can Make All the Difference
Author: Russell SmithAugust 1, 2017
Wondering how to bring in some extra income to keep your company afloat? Our small business accountants talk multiple income sources!
Recently, our small business accountants took it upon themselves to do a detailed analysis into the mind of one of the greatest (fictional) business minds of all time: Tywin Lannister.
They found that despite his gold business going belly up, he managed to survive and thrive on by relying on something else: multiple sources of income. While he may indeed be a fictional business owner, Tywin’s cunning strategy is one that we often witness in our own business world.
When Director Russell Smith went self-employed some 12 years ago, he came across the phrase ‘multiple sources of income’. Like Tywin Lannister, he saw the powerful benefits of supplementing his primary income with secondary sources of revenue.
As we are sure you can appreciate, sometimes, your main product or service doesn’t provide the income necessary to sustain or grow your small business. But that doesn’t mean you’re out of options.
Small Business Accountants Explain Multiple Sources of Income
The concept of multiple income sources is relatively simple. The execution is less so.
The idea is that you can earn extra profits by either offering services that differ from your primary role, but are similar and of interest to your base consumer market, or use your resources and skills to gain revenue through an entirely separate form of business.
Secondary Sources of Related Income
There are a number of ways you can take what you do and sell services or products that are related. Let’s look at our small business accountants firm in Leeds as an example.
As financial experts, we specialise in accountancy and bookkeeping. However, we can also offer other services, such as:
- Business consultancy and support
- Company setup
- Conferences and event speaking
This is not limited to accountancy.
A software company, for example, could also offer technical support, education in software management, coding tutorials, etc. A fashion retailer could offer design masterclasses.
You get the point.
Look at your customer base and think: what else could you offer them? The biggest benefit here is that you already have a customer base, which means less time spent on sales and greater ratios of investment to revenue.
You can also make money selling related products or services to consumers and earning commissions from third-party partnerships. For example, if you were a business consultancy and you partnered with a marketing company, you could refer those in need of marketing help to your partner and gain commission of sale.
Secondary Sources of Unrelated Income
As our small business accountants from Leeds know very well, there are plenty of ways to make money outside of you of industry and current customer base. These methods utilise your resources, skills and knowledge in a different way.
Often, these involve financial backing with long-term rewards. Examples of unrelated income to your business include:
- Rental of property
- Investment in businesses
Gaining sources of multiple income from avenues of profit unrelated to your business is trickier than those that are related, but it still can be done and has the potential to earn serious money.
Making Money From ‘Off Cuts’
In this day and age, you should never waste anything. It doesn’t matter if it’s food, time and energy, or business resources.
Plenty of businesses have what we call ‘off cuts’: essentially leftovers from resources you’ve already consumed. In the example of a textile business, you’ll likely have materials left after producing your primary product.
These ‘off cuts’ likely have value to somebody.
They don’t just have to be physical items, however. Even service businesses can produce off cuts. How?
Information you’ve gathered, resources you’ve pooled and systems you’ve created all have value to somebody. It’s just a matter of finding them. Here are some examples of off cuts service industries can sell to create a secondary form of income:
- Workplace Systems: Ways of working that increase efficiency. Essentially, you are selling knowledge and success. People buy this.
- Software: If you’ve had to create bespoke software for your company, it may be beneficial to others. Providing it doesn’t give competitors a major advantage, so why not sell it on?
- Valuable Information: Non-sensitive customer data is something that has value to other businesses, although you may hit a moral grey (and sometimes illegal) area if you start selling on email addresses. Other information that has value is market research, product usage data and results of service testing. Basically, anything another company can use to increase their own revenue, they will pay for.
Selling off cuts can offer a continuous revenue stream, providing you continue to produce them. They also have extra benefit, because you don’t need to invest time and energy into coming up with ways of producing them, as they are a by-product to start with.
Want to start making money through multiple forms of revenue? Don’t know where to begin? Our small business accountants from Leeds know all about how to source secondary income. Bring in that extra cash to keep the wheels of your business turning with Russell Smith Chartered Accountants today.