Let me tell you the story of Entrepreneur Goldilocks, nicknamed EG. Unlike Goldilocks and the Three Bears, this adventurer didn’t have to choose among too hot, too cold; or too big, too small. Instead, as she tested and tried her products in the marketplace, EG found that all three was the perfect combination of just right!
Interior designers say balance and interest occur in sets of three. Religions espouse to the mystical strength of three. Literature, superstition and even comedy work with the number three – three wishes, three musketeers, three bears.
So, too, three can represent power in choosing an entrepreneurial business model. More specifically, entrepreneurs who build a business around three revenue streams often find more success than relying on one or two product/service lines for income.
EG, like most other entrepreneurs, wanted to set up a business that was efficient. She wanted to garner as much profit margin as possible, meet the needs of a diverse customer base and minimize her overhead. So she implemented the 3 Revenue Stream Goldilocks Approach.
Revenue Stream #1
First Entrepreneur Goldilocks looked for an easy way to introduce her business to interested buyers. She decided that a low-priced “try me” service should be part of her product mix. A service professional, EG looked at this entry product like a point-of-purchase candy rack at the grocery store check out. This service had the following qualities:
- Most customers interested in her company would be interested in this service.
- The service was easy to replicate and therefore didn’t take much time (overhead) to execute.
- At least half of the customers who purchased this service would become repeat customers.
- When customers purchased this service, EG can develop a relationship with them for future business or for referrals.
Revenue Stream #2
This service represents the bulk of EG’s business. This is the work that gets her excited each day; it is the work that makes EG feel as if she is making a difference. Developing this service is similar to the produce and meat departments in the grocery store. If EG does not sell any of revenue #1 or revenue #3, she can still pay her expenses and have a bit of discretionary “lifestyle” money. This service:
- Has a higher profit margin than revenue stream #1, but also takes more of her time.
- Because it takes more of her time, EG has priced this value priced (hint: these words are linked to an amazing download on how to value price your services!!!) service to accommodate fewer customers and make a reasonable profit.
- At least one-third of the customers who buy this service will purchase revenue stream #3.
- EG has the necessary infrastructure to “upsell” customers.
Revenue Stream #3
This is EG’s premium service package. She learned from studying from Bill Baren that “10-20% of the people in your tribe want the highest level of service you’ve got – and are willing to invest into it.” She also found out from customers who had experienced success by working with her that:
- Customers don’t want a Band-Aid.
- Customers who experience success, want to continue on that path by finding the best, most effective solution with a high level of service and support that ensures they achieve their result.
With this in mind, EG developed a high-dollar, high service package available to only a small percentage of her market. While her prospects were fewer, she didn’t need more than one customer per month in this category.
By combining three revenue streams, EG’s business was just right for her. She could meet her goals, live the life she wanted and do the work that made her look forward to working each day and serving her customers.
What do you think? Does the Goldilocks approach make sense to you? What three revenue streams do you have in your business? Let us know is the comments below or start a conversation in our Facebook community.