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Business GrowthMarketingVideo

How to Identify Revenue Streams for Your Business

By January 20, 2021 March 8th, 2021 No Comments

Transcript

Aidan –

Where does your money come from? Do you track which services and products are most profitable?

In our last video of our Business Model Canvas Series, we were talking about revenue streams and why it is vital for businesses to have a clear understanding, of where their money is coming from.

Hi, my name is Aidan and I run a company called Proper Video. In our “Business Model Canvas Series,” we are joined by an amazing business coach called Paul Aisthorpe from a company called Scale-Ability.

I’ve personally been mentored by Paul and whilst with him, he helps me work through something called the Business Model Canvas. The Business Model Canvas is a one page business plan developed by an organization called Strategyzer. It helped me so much and I’ve now interviewed Paul about each building block of the Business Model Canvas, hoping that you will gain just as much value from it as I did.

So let’s jump in.

[Interview]

Aidan –

So Paul, the last video in this series, so we’re gonna be talking about revenue streams, which is probably, you know, it’s an important part of the business, knowing where your money is gonna come from. Because essentially we all start business to make a better lifestyle for ourselves, have more, you know, more money, not just to buy nice things but to give us more time with family, things like that. Everyone has their own personal goals on what a business will be able to achieve from them. So revenue streams is quite important. So can we just sort of like give me an explanation of what we mean by revenue streams?

Paul –

Yes, of course and I think just to pick up on your point understanding your personal relationship with money is really important as well. Because obviously the revenue that you’re gonna create in your business is obviously going to create value in your business and create an income for you. So it is important to understand where that revenues come from, what type of revenue streams we have. And you know, because we sometimes or sometimes or often sell more than one thing, we have more than one service that we deliver. And I think it also comes back to, if you’re on a growth journey and you want to improve your business, what do we wanna measure in terms of performance? So that’s really important to consider as well. So when we’ve got multiple things that we sell do we want to define each element of that as a revenue stream because we want to measure it? So there’s all sorts of reasons for looking at revenue streams. And in this particular part of business model canvas as well, it not only we talk about revenues, but how does that revenue create profit? We haven’t used that word a lot in these videos and profit is not a dirty word as you know. Businesses just have to create profit to survive to sustain, to employ people. So it’s important to talk about revenue and profit together here.

Aidan –

That’s it, that’s it. And just to touch on about profit it’s important businesses to create profits. And you know, most people reinvest it back into the business. To actually make their service better for their customers really. And also people might want that profit to take on that first, second, third member of staff. Create opportunities for them. But let’s, yeah. I think we were going off a little bit there. So we’ll go back to revenue streams. Can you me some sort of examples of the revenue streams that businesses can well, generate revenue from?

Paul –

Absolutely. So I’ll just give you the example of the food business, as well that I was part of. We categorized products, We have three and a half thousand products. So we might report on a our monthly basis, sales in different categories. And we might call them revenue streams. So for example, we sold frozen products. And that’s where I started right at the beginning of that, my journey with that business. We sold frozen products. So then we added on, in that growth journey, a range of ambient products to sell. Well we wanna measure how successful we are there. So that was categorized as a revenue stream. And it might also mean that, when we look at the business model canvas again, activities and resources need to be put into that. So we need to measure how much revenue we get. So we get an understanding of what our return on investment might be. Because it creates new costs. So again, it’s defined as a revenue stream. We then added on other categories, we talked about the cleaning product range, is as a revenue stream. And it might be a different type of customer again that’s gonna buy that product. So it all links around, It’s easy to see why it all links together now. And again, we start to look at what profits and what costs centers, and what costs sorry, you associate with those revenue streams. Certain categories might be more profitable than others and might dictate what we do next in terms of growing our business. So, you know, thinking about all the businesses, your business, you offer clearly three different ranges of service. Video marketing strategy, delivery and production, and then activation. So there’s, those could be three revenue streams for you that you measure and identify Because you could sell them all together or independently.

Aidan –

Yes, absolutely. It’s important to, it’s important to me it will be important to have a businesses doing a similar thing. Categorizing like you categorized the food. To see yeah exactly. To see what’s working, so to see where it’s put most of your effort. If you’ve got one product, if the strategy side was giving me a 10% profit margin and the activation side was giving me a 20% profit margin it would make sense to put more marketing spend on that and invest in that area of the business more, to grow. Which goes back into your point mainly. But yes, it’s, you know, to go a little bit larger than me, a multi-disciplined creative agency, they may have the same outlook. They might offer SEO, web design, they might even offer video themselves. So just to see what their customers are buying from, buying the most. Will give them a good indication on how to grow that business into a successful business really.

Paul –

Absolutely. And that again, the multi-disciplined agency is a good example because those different services might be different customer segments as well, back to the business model canvas, who might need to see or hear a different value proposition to attract them to your business. So by creating it as a revenue stream or defining as a revenue stream is really important isn’t it?

[End of Interview]

Aidan –

And that’s it. We’ve come to the end of our “Business Model Canvas Series.” I hope this video has shown you why understanding revenue streams is important to your business. And I hope that the whole series has answered some questions that you had. I know that we didn’t have time to cover absolutely everything within this series. So I’m sure that you’re probably going to have some more questions. If so, please feel free to get in touch with either myself or Paul and we’ll be happy to help.

 

 

Find out more about Paul

www.scale-ability.co.uk

www.linkedin.com/in/paulaisthorpebusinesscoach/

 

Download the Business Model Canvas

www.strategyzer.com/canvas/business-model-canvas

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