Tweet

Which of these revenue models is right for you?

Guest post by: Jenny Stilwell

Article Overview: Everyone wants to make money while they sleep! The reality is that nearly all service professionals need to have a stable business nefore seeking passive revenue. There are essentially three simple models for service based businesses and professionals: direct, leveraged and passive revenue and each has its own set of challenges.

Which of these revenue models is right for you?



Everyone wants to make money while they sleep! But the reality is that nearly all service professionals can’t go straight to that ‘money while you sleep’ model until they’ve outgrown the startup phase and have a more stable business.

There are essentially three simple models for service based businesses and professionals:

Direct Revenue

This is where you need to be providing the service directly to your clients. It’s all about you delivering one on one, and while you’re doing this, you can’t be doing anything else in your business (but others can!)

When you’re in start-up mode, or you haven’t achieved a sustainable level of clients, or if you’re unable to forecast your next 6-12 months’ cashflow with any certainty, then this revenue model applies to you.

This is a fundamental and critical revenue model that some service professional try to bypass, by going straight to either of the next two models. You will never achieve leverage or passive income if you have no clients.

Leveraged Revenue

When you have a sizeable, stable client base, or you can confidently forecast your cashflow for the next 6-12 months, you can start to create more products and services to provide those clients. Some of the outcomes you will achieve include:

- You add more value to your clients

- You increase your revenue

- You create new IP and products faster because you’re leveraging off what you’ve already done before

- You create new revenue streams

Leveraged revenue simply means you create additional revenue by using existing knowledge or programs or methodologies and repackaging and repurposing it.

For example, I created an entire HR system for clients many years ago, based on delivering this information via the Direct Revenue model. I provided consultancy services to create and implement a customised HR system for some of my clients. Later, I repackaged that into a product and sold it online to create Passive Revenue. Now, that has been updated and is available as a hybrid product/service via a mentoring/information download package.

It does take time to repackage your IP and methodologies, but usually not as much time as if you were to create something new from scratch.

The new products and services you create as Leveraged Revenue may also be Passive Revenue – for example, if you create a new program that you deliver one to many, that would still involve you. However, you’re doing it once and delivering it to many at a time. If you turned that program into a product, that could generate passive revenue that wouldn’t involve you at all in the delivery.

Passive Revenue

If you have distributors or resellers who sell your products they would be creating passive revenue for you. Royalties and commissions create passive revenue, as do information products.

But you need to know that passive revenue requires very robust back-end systems and processes to make this model function properly.

Taking yourself completely out of the delivery process is a big shift in how you do business, so make sure that when you start to move into a passive revenue model, that you have a team, reliable processes and systems, and the right technology. Once you have that, you need a powerful marketing machine. Passive revenue may cause your many sleepless nights before you make money in your sleep, so make sure you have the right support, and a solid client base, before you advance to this model!

Related Articles
  SME's - a link between funding and a compliance model
  Men and Body Image
  SME's - a solution for Africa
  Increase Revenue Ideas,Increasing Revenue
  Using Customer Service To Generate Incremental Revenue
  Developers Make Moves to Round Out Their Business Models
  Your Revenue Forecast Is Wrong
  Sales Training London How Do You Make Money When You Lose the Sale
  Is $100,000 a Lot of Money to You?
  Do You Know and Plan For The 3Rs for Your Business
  5 Most Effective Online Continuity Program Models
  Buy An Existent Business or Start Up Your Own Business
  Franchise Consultants - Best Practices
  Video Switch: Route video from multiple sources to a single display
  Choose Your Reality and Create Your Future
  Video Splitter: Replication of video signals on multiple displays in real time
  Profitable Affiliate Business Models
  Beware the Hockey Stick in Your Budget
  The relationship of revenue growth to your job?
  Revenue

Article Tags: business growth, revenue models, service professionals, simple models, stable business



Related Forum Posts
Re: Teens make $$ on Squidoo - [quote="hooligan18":19qi8dl7]I dont understand how to make money of squidoo? I made 1 lens reciently, its bacislly pictures of hot girl models. so what if i have enought traffic through my lens, companies will want to adversite through it ? or how do i make some money from it?[/quote:19qi8dl7] Squidoo has Adsense ads on your lens and other advertising. It shares some of this ad revenue with you. You can also add your own affiliate links or links to your own pages and earn money that way. But see my comments earlier on why trying to earn from Squidoo is not the best strategy in my opinion.
Sharing Google Adsense revenue - Martin, Barbara is correct - you need to set up an Adsense channel to track the data. Otherwise you will be earning the revenue but will not know how much of it came from my site. Barbara, Yes, the way the code works is that the revenue is shared with the person who initiated the post. As long as it remains hot and people keep coming back to read it and reply, you will get credited with earnings from the post.
How much is a website worth? - Hi guys - has anybody out there bought / sold a website? Have you found any models to determine the value of a domain name?
Revenue Streams for Websites - First of all forgive me because I am really a newbie when it comes to online businesses. I have been playing with the idea of creating my own website. Basically, I am looking to create a content based website with revenue generated through advertising. (The content is still somewhat undecided as I am debating between a couple of ideas). My question is; what specifically, are the different and best ways that a content based website can generate revenue? Thanks Darren
Good role models - In that case, which shows on tv (if any) do you enjoy watching? And if you had the money are there any good role models on tv you'd ask to endorse your products and services?


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Winning Market Share in a Tough Economy

Rumor Has It

Making the Most of Your Trade Show Experience

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.