The period of global recession between 2008 and 2010 was a troubling one for U.S. businesses. It was an especially difficult period for small and independent ventures that lacked significant resources. According to recently released census data, 170,000 small businesses failed in the U.S. during this time. Although there were some financial blessings in 2010, many businesses have struggled to maintain a thriving and profitable enterprise since the financial crisis. While 6.82 million small businesses operated within the U.S. throughout 2009, this total had dropped to just 6.79 million by the end of the following year. This week, the Federal Reserve announced that it was still concerned about the sluggish recovery and slow growth rate being experienced by the U.S. economy.
SEE: Recession Stats You Need To Know
Developing Revenue Streams: Key to Business Success in 2012
With these points in mind, small and independent businesses must be creative in their thinking and develop innovative ways of expanding in 2012. Creating new revenue streams is a good starting point for struggling commercial ventures, as it allows them to boost their turnover and maximize profitability.
Embrace a New Business Model
One issue that many small businesses face is the fact that they have rigid and outdated business models. The continual stream of innovation in technology and media has provided a constantly changing business landscape. The traditional publishing industry provides a relevant case in point. Established newspaper franchises have been forced to adapt their business models and embrace digital media subscriptions and online advertising as a way of diversifying their revenue streams. There are fears that this may not be enough, especially for small and independent publishers across the globe.
While the development of this strategy has seen the New York Times record increasing growth in revenue during the first half of the fiscal year, the majority of newspaper franchises in the U.S. and U.K. have recorded only modest returns through digital output. This has encouraged a far greater level of creative thinking within the industry, with a range of new concepts being discussed to expand the boundaries of print media. These include the development of a digital retail mall, in which newspapers connect their readers with merchants in exchange for a transaction fee.
SEE: Which Is Better: Dominance Or Innovation?
Maximize Online Revenue Streams
Not only do the concepts being discussed as potential saviors of the traditional newspaper publishing industry highlight the need for creative thinking in business, but they also prove that the issues facing small businesses are global concerns. Just as newspaper franchises in the U.S. and U.K. have struggled in recent years, so too are small businesses in Australia experiencing diminished growth. This is primarily because of a reluctance to develop an online presence and create new revenue streams. Part of the issue is the false perception that creating a website and optimizing it is an extremely costly process, which has discouraged independent ventures from making a financial commitment.
More worryingly, this trend is even noticeable among retail based businesses operating within Australia. Despite the fact that the value of online orders grew from US$143 billion to $189 billion between 2010 and 2011, it is estimated by the Australian Bureau of Statistics that just 35% of retail firms were set up to sell their products remotely. This is opposed to the 52% of wholesale businesses that trade online. This proves that the lack of education concerning the cost and potential returns of establishing an online presence is threatening to significantly limit revenue streams on a global scale.
SEE: How To Start An Online Business
Consider Passive Income and Developing Personal Revenue Streams
The issue with owning and operating a small business is that it is an all-consuming entity, and one that often requires the vast majority of your time and financial investment. While this is fine in the case of sustained success, it becomes extremely detrimental when your business is hit by the effects of depression and economic hardship. This is where creating a stream of passive income can boost both you and your business, especially if it can be conducted as an independent exercise and kept completely separate from your business interests.
Passive income relates to a revenue stream that you do not have to earn directly, and it is something that can be accrued while you focus on the day-to-day tasks of business operation. Traditional examples of this practice include investing in real estate and accruing royalties, but developments in technology have also ensured that trading on the financial markets provides business owners with a viable opportunity to boost personal wealth and support a commercial venture. Dividend investment is a particularly suitable option, as it delivers regular payments on the back of an established investment portfolio.
SEE: The Two-Hour-A-Day Trading Plan
The Bottom Line
On a more general level, it is creative thinking that will ultimately enable small and independent businesses to thrive in the current economic climate. This must be applied to the development of new and innovative revenue streams, whether they relate to the business model that you currently employ or the expansion of your own personal wealth. By reacting to evolving market trends with bright and innovative thinking, it is possible to grow your business organically and develop multiple streams of income even in a depressed economy.
Photo Courtesy Elvert Barnes