If you’re one of the many people striving to reach financial freedom, you’ve likely heard more than one “money guru” mention the importance of revenue streams.
Though there’s a lot of bad financial advice out there, diversifying your revenue streams is a time-tested, effective method of growing your personal income.
And something many people don’t realize is that you can start building multiple revenue streams early on, soon after (or even before!) you’ve started living on your own.
Having revenue streams is a legitimate business model, whether you’re the head of a giant corporation or a recent high school grad.
Let’s explore more about what revenue streams are, and how you can unlock them to grow your personal income and earn more money long-term.
What is a revenue stream?
Before we dive in too deep, let’s establish a revenue stream definition:
A revenue stream is a channel or method through which a person or business earns money.
That’s it—pretty simple!
Revenue on its own is the amount of money a business or person generates by selling products or services. (It’s a bit different than the idea of profit, which refers to the amount of money earned after subtracting what had to be spent to make that money.)
But for the purposes of this article, you can essentially think of revenue as income or money in the bank and revenue streams as the different ways you get money in the bank.
Take Apple, for example. It’s a huge brand best known for its iPhones and Mac computers, but selling physical products isn’t the only way Apple makes money. Digital services such as iCloud storage, music or app subscriptions, and warranties are all separate revenue streams that make up an enormous portion of the company’s total revenue.
On an individual level, many people only have one source of income: the pay they get from their full-time job.
But every single one of the world’s wealthiest people has multiple income streams. And increasingly, people of all backgrounds and experience levels, in many industries, are realizing that multiple revenue streams aren’t just for the super-wealthy.
Earning more income overall is obviously one of the main benefits of having multiple income streams. But beyond that, having multiple types of income streaming into your bank account provides more security and helps you avoid the vicious cycle known as feast or famine.
Consider this: if your primary source of revenue starts to dry up, you’ll have other streams to minimize the impact. It’s easier to build up those other streams with the right foundation in place rather than starting from scratch if your primary stream starts hemorrhaging money.
4 types of revenue stream models to earn money
Revenue streams can be organized into four basic categories, depending on the type of payment and the products or services provided.
We’ll take a deeper look at those four categories, providing revenue stream examples that you may be able to leverage as well.
1. Transaction revenue streams
This is the most common stream of revenue for a business—typically the primary revenue stream for businesses or individuals selling products.
Any time you purchase groceries, clothes, technology, movie tickets—literally anything that is paid for once and only once, that counts as a transaction.
Examples of revenue streams for individuals: transactions
- Creating and selling your own artwork (jewelry, paintings, etc.)
- Dropshipping Amazon products
- Screen printing custom t-shirts
- Selling merchandise on sites like Etsy
- Working at Vector Marketing (wink wink)
2. Project-based revenue streams
A project revenue stream is similar to transaction-based revenue in that it’s a non-recurring payment at one point in time. However, this form of revenue is usually broken up into several large payments throughout the duration of a project, which may take a substantial amount of time, money, and resources to complete.
Examples of revenue streams for individuals: project-based
- Launching an online course
- Developing a mobile app
- Managing a marketing campaign on a freelance basis
- Creating copy or design for a website
- Publishing a novel
3. Service-based revenue streams
A service revenue stream is usually based on time instead of a physical product. For example, when you hire a lawyer, they charge an hourly rate for their services—there’s no transaction or project, just a charge based on the time they dedicate to the case.
Examples of revenue streams for individuals: service-based
- Rideshare or delivery driving
- Working as a virtual assistant
- Providing massage therapy
- Consulting or coaching
4. Recurring revenue streams
A recurring revenue stream, as the name suggests, means that payments will be ongoing. You probably have at least a few subscriptions to streaming services or online platforms you use—those are just one type of recurring revenue stream.
Examples of revenue streams for individuals: recurring
- Running an online membership/club
- Releasing a regular publication
- Selling a subscription to a Patreon (or something similar)
- Renting or leasing property
How to create revenue streams for yourself or your business
Now that we’ve detailed the different types of revenue streams, the next step is to examine your own opportunities and find which potential revenue streams work best for you.
You don’t want to go overboard and jump on every revenue stream you stumble across. If you want to be successful, you’ll need to plan and strategize.
Here’s how to get started:
Do your research and choose a stream to test
The first step to building a new revenue stream is obvious: You have to decide what kind of revenue stream you want to start.
This means doing some research. You can start by looking at our list of potential side hustles to get some ideas of potential revenue streams.
As you look through this list, consider which ones suit your skills, schedule, and passions, and generally align with what you want to do in life.
Understand the time, resources, and labor needed to start a new revenue stream. Does it make sense based on your current workload and budget? Do you have a plan to make this revenue stream profitable, or are you just starting one for the heck of it?
Remember, you don’t want to spread yourself too thin by trying all of the interesting potential revenue streams at once. Choose the one or two that seem most logical and test them out for a few months, then reassess and adjust your strategy if need be.
Identify your primary audience and source of revenue
Understanding your target audience and their needs is vital to the success of your money-making endeavor.
Knowing your audience allows you to tailor your product, services, messaging, and marketing efforts to effectively reach your audience. Taking the time to get this right at the start will ultimately save you time and money.
Some easy ways to get started include researching businesses targeting similar audiences, reading surveys and data, and exploring social media.
Brainstorm opportunities that complement your existing revenue stream
Let’s go back to the Apple example. All of Apple’s revenue streams fall under the umbrella of digital products and technology. The brand didn’t jump off script and start selling automobiles—their streams are cohesive and consistent with their brand.
Apply this same principle to your own brand or business. How can you create a network of different streams that still correlate and support each other?
Here’s an example—let’s say you own a small business, and your primary source of revenue is selling clothing. You could create an extra revenue stream by starting and monetizing a fashion blog. You’ll earn additional income while showcasing your products and picking up website traffic.
Maybe you even make the clothing yourself—creating YouTube tutorials could be another successful source of revenue.
Think about the customer’s journey
The best opportunities for revenue streams often occur along different stages of the customer’s natural lifecycle.
Apple sells an iPhone. What next? How about a warranty on the phone for parts and repairs? Now add apps and streaming subscriptions into the equation. You can see how easily this builds.
Now the question is: how can YOUR customer’s unique journey present opportunities for additional revenue streams? The best way to answer this question might be to ask your audience yourself.
Find out what your customers are thinking about before and after they interact with your business, and create your potential new revenue streams around their answers.
Now is a good time to get started
Whether you’re looking to jumpstart a career or make a little extra money, multiple revenue streams are great for big businesses and entrepreneurs alike. Consider adding a new stream of income by working part-time with Vector Marketing.
We love ambitious entrepreneurs—get to know us and how we can help you.