A black swan event like COVID-19 gives new perspective on the importance of embracing innovation and change for enterprise organizations. The pandemic forced many companies to reinvent themselves and develop new service lines and revenue streams. Some alternative cash generators will stay strong in the coming years, and others will likely be discarded. But 56% of enterprise organizations say they aren’t confident they will find the new revenue streams necessary to keep up in their competitive markets. How can your organization build new revenue streams post-COVID?
Why new revenue streams matter
At the risk of stating the obvious, data shows a decline in enterprise sales volume, operating margins, and consequently, ability to fund new business initiatives — all thanks to COVID-19. This general decline could lend itself to conservative approaches to limit risk associated with potential new revenue streams. CFOs tend to be conservative, and any reluctance they feel when considering the costs and risks of innovation is understandable.
But new research shows most CIOs are on alert for new business opportunities — no matter how large or small their business — because there’s no going back to the way things were always done. There was opportunity in 2020 even as many markets tightened. A majority of CIOs saw demand for new digital products and services increasing, and 2021 looks to continue the trend.
For the C-suite, prioritizing digital innovation positions their company for long-term growth. Anything less means being left behind.
How to build your business organically
Ask any senior executive and they’ll likely agree: Developing new revenue streams is critical to the success of every enterprise. Most will attempt this by either exclusively pursuing merger and acquisition activity or scaling up sales in the various channels they have already established. How can you fuel organic growth in your organization?
Innovation and new business models give you an opportunity to reinvent your company. Big players — including Target and Walmart — do this with private label products. Netflix has evolved from a pure distribution model to content creation. Even your local Mom and Pop restaurant expanded its delivery model in 2020 — or they did if they wanted to survive.
Whether you are leveraging existing clients and offering new products and services or building new channels, organic growth will shore up existing revenue streams and any merger and acquisition activity you have planned for 2021 and beyond.
Four ways to create a new revenue stream
It’s easier to turn a sailboat than a battleship, and in big business, efforts to innovate and evolve organic revenue streams can be thwarted by several factors. Politics and workflows aside, consider these four ways to create new revenue streams regardless of business size:
- Determine the need and deliver it. How do you determine the need? Ask your customers about their needs, wants, and priorities. If you’re seeking a new customer base, view new product and service lines from their perspective. It’s not about you. It’s about them.
- Engage your workforce in delivery. Transparency is a keyword for 2021. Use transparency to develop stakeholder buy-in around key innovation initiatives. The goal is to engage your workforce in the success of new channels by seeking their input, advice, and support.
- Build collaboration by using tech to deliver. Once collaboration is achieved around your business growth strategy, put the right tech tools in place for delivery. Product and service launches move at a faster pace now. At this phase of your roll-out, ask yourself what technologies can best help you achieve your goal.
- Stay agile. If the pandemic taught us anything, it’s that agility is critical to business survival. Every new product or service line you launch should come with contingency plans in case of market changes. The needs, wants, and priorities of the market and your customers will change. It’s the one thing we should all prepare for moving forward.
The Windsor Group Sourcing Advisory works with mid-market and enterprise organizations to create and deploy innovation to improve your bottom line. Visit windzr.com to learn more, or contact us for a trusted advisor to help weather the storms ahead.