The most common reason for UK start-ups to fail is running out of money or failing to generate any new capital (38%), according to research by CBInsights opens in new window.
Many businesses may begin their start-up journeys with loans opens in new window and savings to support them until they are profitable.
As a start-up grows its primary source of revenue it can be worth thinking of ways to generate additional income.
Additional income is money your business makes from supplemental activities unrelated to its core activities, such as renting out unused space opens in new window, offering training opens in new window, or selling your skills as a consultant.
Generating additional income for your start-up could be an excellent way to provide a financial safety net for your business in more challenging times opens in new window, but it could also allow you to reinvest the money into your business to help it grow faster.
Additional income ideas
Rent out unused workspace or storage space
If you own workspaces such as offices, workshops, or storage space, consider how to maximise its commercial potential.
You could consider letting unused space to other start-ups, sole traders opens in new window, or freelancers. Examples include:
- renting out storage space to tradespeople to store tools and materials
- renting desk space in empty offices to freelancers or other smaller businesses
- renting unused car parking spaces to nearby offices or factories for use by their employees
Leasing unused space doesn’t have to be full-time, either.
For example, if your start-up has a hybrid work schedule, you could consider renting out the space on the days you and your team work remotely.
Be careful when considering subletting space that your business has leased.
Many commercial leases prohibit subletting to other businesses – check the terms of your lease before subletting.
Selling unwanted assets
Rather than dumping or recycling broken or replaced equipment or furniture, consider selling it second-hand.
With sustainability growing as a priority for businesses of all sizes due to the UK government’s goal to become net zero by 2050 opens in new window, you could combine green initiatives opens in new window with your mission to secure additional income for your start-up.
Advertising unwanted or broken equipment or furniture online is often free, or you can consider commercial services such as online auction sites.
Read our guide on how to make your start-up business sustainable opens in new window.
Create a subscription service
Rather than selling goods and services as individual items, it may be worth considering different business models, such as subscriptions opens in new window.
This allows you to repackage your offering as a regular service or send products to customers regularly.
For example, you could offer a subscription discount on hygiene products if you’re a well-being business opens in new window.
Or, if you’re running a marketing start-up opens in new window, you could offer a subscription for coaching calls with clients.
Launch related business activities such as a merchandise line
Another way to create additional income with your start-up could be to launch a line of merchandise or related products that align with your brand.
Ideally, these new offerings appeal to your existing customer base but also appeal to other audiences, helping you to grow your customer base opens in new window.
An example is Girls Who Grind opens in new window, a small, female-run British coffee company that sells coffee grown by female coffee farmers leading the “coffee revolution”.
As well as coffee, they also sell slogan t-shirts and lifestyle items related to coffee and feminism.
Offer consultancy services
Alongside your start-up’s core products and services, you could also consider providing consulting services directly to other businesses.
This is where you sell your expertise and knowledge to customers, which may cover your salary costs while your start-up grows.
Consulting can be on a day rate or a per-project basis.
You can work as a consultant part-time and devote the remainder of your time to growing your start-up.
Generate passive income
Passive income is where your business generates revenue from services or products customers can buy that don’t involve much work from you beyond the initial set-up.
Examples of passive income include setting up online training courses with lessons, activities, and pre-recorded videos.
You can use online training platforms opens in new window to sell your course, which users buy and take the course without your ongoing involvement.
Customers could also provide contact details such as an email address or phone number when purchasing your online training course, which could help with data capturing opens in new window and marketing.
Looking to market your new business but lack funds? Read our guide on marketing on a shoestring opens in new window.
Write a book or contribute to a magazine
Many magazines and online publications accept guest articles opens in new window from individuals outside their content team.
If you have the knowledge, experiences, or insight you think could be worth sharing, reaching out to relevant online and print publications could earn additional income for your start-up while also increasing brand awareness and trust.
You could even compile your knowledge into a book and self-publish.
Amazon Kindle opens in new window has a comprehensive self-publishing option that is easy to monetise and free to do.
Upsell additional services to existing clients
Upselling can be one way to secure additional income from your pre-existing client base.
This is where you sell an additional product to clients that complements a product or service.
A typical example would be selling protective mobile phone cases to customers who have just bought a mobile phone.
White label your products or services
When you white label a product or service, you allow another business to sell your products or services under their brand.
A well-known example is Costco selling Kirkland products, which are made by other manufacturers and rebranded as Kirkland.
This approach could open up additional income streams by making your products and services available in more than one place, increasing brand awareness and your chances of sales.
Read our guide on white labelling. opens in new window
Want to learn how to manage your start-up’s finances? Check out our free online courses in partnership with the Open University on being an entrepreneur.
Our free Learn with Start Up Loans courses opens in new window include:
- Introduction to bookkeeping and accounting opens in new window
- Financial accounting and reporting opens in new window
- Financial methods in environmental decisions opens in new window
Plus free courses on finance and accounting, project management, and leadership.
Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.