Create A New Revenue Stream? Genius!

February 20, 2009

In the world of business, bottom lines are financed by revenue streams that feed into the system.  Businesses go to great lengths to maximize each revenue stream, that a particluar client may throw off, to its fullest and squeeze every ounce of revenue from it.  However, there is only so much revenue that can be squeezed from any given stream.  As a result, if a business hopes to continue to grow their revenues, they have to create new revenue streams that feed the business.  These new revenue streams could come from any number of different ways but the most common is by creating a new product or service and then selling it to the client as an add-on to all of the things the client may already be buying from the business.

This is, in fact, the only real way to create new revenue and grow a business because if a business were, instead, to decide that rather than offering and selling new products and services they could just simply take a lump sum of money from one area of their business and move it into another area of their business and then show that transaction as a profit, rather than as a transfer of funds, they would indeed be fooling themselves and providing a false sense of growth.  In fact, there have been many examples in the news over the past 10 years of major companies doing exactly that.  And rather than it resulting in new revenues, it ended up resulting in corruption scandals that brankrupt the company, left people unemployed and put the individuals who came up with the idea in jail.

So now we look at what’s going on in our economy and how the government is reacting to fix the economy and I don’t see a whole lot of difference between the illustration I mentioned above and what the government is currently doing.  It’s not rocket science folks!  If you need money, then create a new revenue stream.  One of the first that comes to mind is oil.  We have our own oil reserves yet we buy oil from terrorist nations and dicatorships. 

The price of oil is not based upon the supply and demand for it that currently exists, it is based upon what speculators think the future supply and demand for it will be.  As a result, the very minute you pass a law that allows American oil companies to drill for our own oil, the price of oil on the world market will go down because the future speculative supply would go up as America decides to become a major player.  Then, the minute a drill actually goes into the ground, the price goes down again and the minute oil is actually extracted, the price goes down yet again.

So if the price of oil is based upon future supply and demand, then doesn’t that mean that we could sell oil contracts to our allies in advance of actually having the oil available because we speculate that we will have a supply of oil available in the future?  Yes it does.  And as a result, you have immediately created a new revenue stream that is feeding into America, not to mention the thousands to millions of jobs that would be created, which will finance all of our endeavors as a nation and immediately fix our current economic mess.

I used oil merely as an example to support an overall idea.  I understand that oil is a hot button for a lot of people and so I invite you to substitute “oil” with any other commodity that we are not currently producing ourselves and you will see that the math still works out. Or would you rather just continue to borrow and spend money that we don’t actually have?

When you need money, create a new revenue stream.  What a concept.  In fact, it’s genius!

– Paul M. Harvey

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