Would you like to earn money while you sleep? Most of your clients do. While most product and service companies have diverse ways of generating revenues, professional services firms generally don’t make money unless they’re recording hours on a timesheet. But an emerging crop of innovative firms across the globe are successfully cultivating new revenue streams, diversifying their sources of income, and yes, even making money while they sleep. How do they do it? Here are seven ways you can accomplish this in your own business.
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To help secure a successful future for your firm, consider where you fall on the innovation spectrum, inspired by the work ofClayton Christensen in The Innovator’s Dilemma.
Overdeveloped Services < ———————————————– > Underdeveloped Services
When creating an investment portfolio, no reasonable person would put all their money in just gold, just Certificates of Deposit, or just stocks (especially in today’s economic climate). In a marketing communications firm, your client compensation agreements are your most important financial asset. If they are all based on the exact same compensation system – just fees based on hours, for example – it means you’re not diversifying your portfolio.
Consider the deceptively simply question, “Where do profits come from?” When you pose this question to a group of agency professionals, the answers will typically include such things as clients, hours worked, and even efficiency. But the real answer to this question is that profits come from risk.
Advertising agency income “per unit of work” has fallen 40% during a steady 20-year decline. So reports agency consultant and advisor Michael Farmer, whose research demonstrates that agency staffs are being squeezed to deliver increasing workloads at a time when fees are declining faster than costs.
No activity within an advertising agency gets as much time, attention, and energy as the new business pitch. Countless times I’ve heard agency professionals confess that “We’re at our best when we’re developing new business presentations” and “Our best creative work is usually for new business prospects.”