By Steven Knight, Creator of Solutions and Opportunities at Mosaic Home Services Ltd. — building Canada’s largest home improvement franchise network.
In a previously published article, I wrote about one of the most challenging topics entrepreneurs in the home service industry will face: how and when you should diversify your revenue stream. I shared my experience and framework, dubbed the 4C model. In this post, I will dive deeper into the last of the C’s and give some examples and practical advice that can be applied by entrepreneurs who mean the best, but oftentimes damage their business by overlooking the basics.
So far, we’ve looked at customer, cash flow and convenience. Looking at our last C — cross sale — I want you to take a harder look at any new service or product you’re considering adding to your revenue mix. Ask yourself, “How could this new revenue stream benefit my existing one(s)?”
In my opinion, the last C is the most important, but it’s the one that no one thinks about. As entrepreneurs and business owners, we’re wired to think about the next great opportunity, the next big thing. We’re dreamers. But rarely do we think about how those new dreams affect our old ones. Odds are, if you’re looking to build a new revenue stream, the one you have is pretty profitable.
I want to tell you about Pam, the commercial cleaner from Calgary. Pam had a business that cleaned offices — a highly competitive market with a low barrier to entry. She had to fight for every last penny. Pam goes out with her daughter one day to a car dealership. They’re looking for a new car for her daughter, one that can work for her growing family. They shop and shop, and finally find the one. They’re in the salesperson’s cubicle waiting for the finance manager to come down with the paperwork when the sales rep asks Pam what she does for a living.
“I own a cleaning company,” she says. He asks, “Well, can you clean windows? The manager just fired the last guy this morning and they really need to get done.” Pam has done this before, but only when she’s asked for it; she’s never marketed it. Truthfully, it isn’t her favorite activity; she’d rather clean the inside of the building, but she’ll take what she can get.
She goes back the next day to meet the manager and give them a quote. The manager tells her they already have someone on contract to clean the inside, but this person doesn’t do windows. Every year it’s a pain to find someone; all the dealerships complain about it. Here’s her in.
Pam charges a healthy sum to clean the windows, and she checks in every month with the dealership about their interior cleaner. Because she knows her industry, she knows that all it takes is one mistake for her to have an opportunity, and she gets it. They missed a cleaning right before a huge blowout sale. The manager needs someone there today. She jumps on it and wins the contract in time.
More importantly, though, Pam uses this new revenue stream as an opportunity to feed her existing business, knowing that it’s just a matter of time before she doesn’t have to settle for just the cherry on top — she’ll get the whole sundae. She goes to every car dealership in town, who all have contracts with other cleaners, but none of them have a window washer.
Pam could have fallen into the trap that catches most entrepreneurs who are chasing the next bright, shiny opportunity — she could have gone so far down the rabbit hole of window washing that she lost focus on her interior cleaning business. She could have disregarded the other C’s in our model — customer, cash flow and convenience — and jumped headfirst into a new venture that required lifts, specialized training, new cleaning products and a different client base.
Instead, she exerted a high level of personal restraint, kept her eye on the prize and focused on making sure that her new revenue stream benefited her old one, which was already profitable in the first place. She realized that the grass isn’t always greener on the other side when chasing new business. She took a controlled risk in offering a new service, and she didn’t pour a ton of resources into it. She simply asked herself, “How could this new revenue stream benefit my existing one?”