16 Smart And Effective Uses For Digital Twin Technology

A digital twin is precisely what its name suggests: A digital copy of a physical object or system—even a human being. It may be a simple concept, but the potential applications are anything but. Through the ongoing collection and exchange of data, a digital twin can simulate and even predict the behaviors and reactions of its physical twin in a variety of conditions, providing invaluable insights to industries ranging from manufacturing to healthcare.

Digital twin technology allows businesses and organizations to test products and processes, study and predict how real-world conditions can affect physical objects and beings, and make well-informed, big-impact decisions with minimized financial and human safety risks. Below, 16 members of Forbes Technology Council share some of the fascinating ways industries and organizations are leveraging digital twin technology.

1. Minimizing Manufacturing Waste

We at Cuby use digital twin technology to make sure we produce 1-to-1 kits of the parts needed in our prefab construction process. It’s been estimated that up to 40% of the solid waste in the U.S. is construction and demolition waste. Manufacturing all the parts in advance allows us to reduce waste by up to 90%. – Aleksandr Gampel, Cuby Technologies, Inc.

2. Building Resilient Supply Chains

Businesses are increasingly using digital twin technology to build resilient and responsive supply chains. The digitization of supply chain processes provides businesses the opportunity to increase organizational efficiency by predicting serious problems and deceleration. In fact, it is estimated that by 2025, 80% of participants in industry ecosystems will rely on digital twin technology. – Radhika Krishnan, Hitachi Vantara

3. Mitigating Disruptions Due To Weather And Climate

Businesses are using digital twin technology to mitigate climate-related disruption. By combining data from public sources, such as weather data, with data from suppliers and partners, leaders can see how an unplanned weather event might impact the flow of goods across their supply chain, then use this insight to quickly pivot orders, routes or suppliers to limit waste and meet demand. – Rohit Shrivastava, Anaplan

4. Studying And Refining Processes

Process mining combined with simulation gives reliable visibility into as-executed processes (versus relying on what somebody thinks is happening) and the ability to do “what-if” analyses. This is effective because it allows one to see what’s really happening and simulate changes before making them. Often, changes do nothing or create a bigger problem elsewhere. Simulation and mining prevent that. – Michael Nyman, iGrafx

5. Making Data-Driven Manufacturing Decisions

The utilization of digital twins in the manufacturing industry has seen large growth. Digital twins increase productivity and reduce costs by combining the physical and digital worlds to make data-driven decisions, prolong asset life cycles and minimize unexpected maintenance disruption across assets. This modernizes the sector by moving from the “break and fix” approach to proactive maintenance. – Cindy Jaudon, IFS

6. Testing Health Intervention And Engagement Strategies

Health outcomes improve when patients are confident, connected and engaged. Digital twin technologies provide healthcare organizations the option to test drive new interventions and engagement strategies. This lowers the risks of rolling out new programs by testing hypotheses through a simulated pilot while also enabling cost-conscious innovation. – Trisha Swift, PricewaterhouseCoopers

7. Improving Patient Outcomes

A digital twin enables accurate and continuous monitoring. That data flow can inform data-driven decisions. For example, doctors are using an individual’s genetic makeup to model new organs for transplant. Because these processes can leverage a populationwide data set of digital twins, they can replicate an individual human body’s internal system to improve treatment outcomes for all. – Nicholas Domnisch, EES Health

8. Expanding Professional Services Capabilities

Knowledge-rich professional services firms are building digital twins of accountants, advisors and auditors using graph-based intelligent automation. These are distinct from previous technologies, because the decisions these professionals make are complex, contextual and nonlinear. In a world where there are big skills shortages and raging inflation, this form of IA is closing the gap. – James Duez, Rainbird Technologies

9. Onboarding And Knowledge Sharing

A digital twin use case that is an easy entry point and can provide quick ROI is training or onboarding. In areas where experienced employees are preparing for retirement, where there is high turnover or where there are general labor shortages, having a prerecorded “virtual” expert that can walk you through the instructions in real time can be a game changer and is much more effective than a giant paper manual. – Samantha Williams, Sonoco

10. Providing Safe Training

Today, manufacturing organizations are leveraging digital twin technologies to replicate machinery that would typically put employees in harm’s way. Here, a virtualized version of the original piece of machinery can be used to give employees training experience with the virtual machinery without also putting the employee’s health and safety in peril. – Marc Fischer, Dogtown Media LLC

11. Understanding Multidimensional Problems

Digital twin technology shines the brightest when it helps companies better understand a multidimensional problem—one that is too complex to easily solve. Because it is a way to visualize and make better decisions, the technology has become extremely effective for everything from product design to diagnosing medical issues to better understanding variables that affect business expenses. – Josh Dunham, Reveel

12. Improving Manufacturing Efficiencies

A very interesting field of application is manufacturing. Thanks to a digital twin of a production plant, with all its different lines and machines, we can launch simulations to generate greater efficiency or to detect potential bottlenecks. Simulating the manufacture of new products or variants of existing products is also a very useful application. – Miguel Llorca, Torrent Group

13. Developing And Training Self-Driving Vehicles

Without digital twin technology, it would be impossible to develop self-driving vehicles at the scale and with the reliability we are witnessing nowadays. Billions of simulations on a “virtual road” by a “virtual car” allow for training machine learning models to forecast accidents and plan not just the fastest, but also the safest, routes so that drivers can entrust the actual driving to robots. – Aleks Farseev, SoMin.ai

14. Budgeting And Financial Planning

Financial and operational data is the lifeblood of a company, but it’s difficult to “see all of it” and understand it in real time. Digital twins offer real-time, big-data-enabled simulation modeling that can be particularly useful for budget and financial planning. The technology can streamline tasks such as procurement, case management and capital resiliency and deliver powerful insights for finance leaders. – Nicola Morini Bianzino, EY

15. Managing Traffic

Digital twins are already effectively used by urban planning councils in many U.S. cities for efficient traffic management. They help in simulating real-world congestion at junctions, predicting what may get worse when and where, and they can be used to test multiple mitigation techniques by leveraging the best mix of ML and city know-how. Dashcam-backed digital twins are explored alongside junction twins. – Pramod Konandur Prabhakar, Pelatro PLC

16. Simulating Real-World Conditions

One way businesses are leveraging digital twin technology is by using it to simulate the physical world. For example, a company can use a digital twin to simulate a real-life situation so that they can predict how their product or service will behave in that environment. Another way is by using it to understand how their customers use their services and products. – Leon Gordon, Pomerol Partners

Successful CIOs, CTOs & executives from Forbes Technology Council offer firsthand insights on tech & business.

Source: Council Post: 16 Smart And Effective Uses For Digital Twin Technology

Critics By Carlos Miskinis Digital twin research expert

To explain what Digital Twin means in simple words, it is a digital replica or a representation of a physical object (e.g. aircraft engine, person, vehicle) or an intangible system (e.g. marketing funnel, fulfillment process) that can be examined, altered and tested without interacting with it in the real world and avoiding negative consequences.

Think of it as an online platform for testing, creating and altering objects that are based in reality, without engaging with them in the real world itself. Technologies similar to this one have been used in various industries long before this concept was created, however, this new definition of the technology has much more potential, power, and scalability that can replicate, monitor and test virtually anything you can think of.

The rise of the Internet of Things (IoT) has complimented the adoption of this new technology, as IoT has resulted in its cost-effective implementation. Virtual twins have become imperative to business today, consistently named as a strategic technology trend in recent years. The complexity of technology has led to many questions within the industry. One of the most important ones is how is it changing the way design, planning, manufacturing, operation, simulation, and forecasting is traditionally functioning?

A physical twin that was replicated on a virtual platform is a near real-time digitized copy of a physical object. It is a bridge between the digital world and the physical world. Its core use is to optimize business performance, through the analysis of data and the monitoring of systems to prevent issues before they occur and prevent downtime. The simulations that are produced will help to develop and plan future opportunities and updates within the process or product.

 The benefits of virtual twin technology are astronomical, with industries such as agriculture, government, transportation and retail experiencing rewards from the technology and benefits going forward. Companies must find methods to prevent the risk of potential product defects among their assets and future products. This piece of tech allows production costs to be minimized, as companies will save expenses when products are right the first time.

There is no need for expensive physical tests or updates to the products or process. Research with manufacturers has found that this concept will enable the reduction of development costs of the next generation of machines by well over 50%. The features of the tech also provide added confidence to boost product performance and aid complex decisions, preventing costly downtime to robotics and machinery.

The core benefit of why most companies started twinning their processes, products, and services via simulations is due to their efficiency. Businesses are racing to market their product faster than their competition, and having the ability to virtually simulate scenarios where a product is tested for failure via multiple angles helps the situation immensely. Not mentioning the fact that the development and testing costs are usually reduced hundreds of times.

This technology will be able to anticipate how the product and process will perform through digital simulations and analysis. The accessibility of reliable and consistently updated information provides the assurance needed to make faster decisions and increase the speed of production to overtake competitors. Here is a use case infographic we have presented in our workshop about understanding virtual twins – find event information here.

We can see how a virtual twin simulation is used to replicate and optimize machinery that regulates water flow in a factory. By doing this, developers can see every moving detail on the screen and then make the calculated decision to upgrade, optimize or make positive changes accordingly. Offices that adopt this technology early will attract innovative and leading talent. Offices will be able to incorporate interactive features to improve employee satisfaction and productivity using data-driven simulations.

Employees who will use digital twin technology will be able to expand their engagement with online tools, such as interactive maps to locate colleagues on the floor, book meetings and complete tasks with more diligence and accuracyManagers will also be able to supervise remotely with the tool that will be similar to a 3D map that will be created using virtual online platforms that are based on simulations.

 It is evident that the digital twin concept will benefit many people within the supply chain. Combining this disruptive concept with IoT technology is an incredible opportunity for businesses to improve. Ultimately, it will also allow stakeholders to improve the overall efficiency and cost of their business, and improve many aspects of work for employees….

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12 Questions to Test Your Level of Self-Connection

We often try hard to stay connected to others (e.g., to friends and family). But how do we stay connected to ourselves? Self-connection is a new, important concept, one which I will discuss in the rest of this post. To do so, I describe a recent study by Klussman and colleagues on the development and validation of a new measure called the self-connection scale.

What is self-connection?

Self-connection has three components. These consist of self-awareness, self-acceptance, and self-alignment.

  • Self-awareness: Awareness of one’s internal experiences, thoughts, emotions, sensations, preferences, values, intuitions, resources, goals, etc.
  • Self-acceptance: Full acknowledgment and acceptance, without judgment, of self-relevant characteristics and experiences. And seeing them as part of us and belonging to us.
  • Self-alignment: Using self-knowledge to behave in ways that authentically reflect oneself and fulfill one’s psychological needs (e.g., autonomy).

All three components are required for self-connection. For instance, awareness without acceptance may result in self-loathing and self-harm.

Before we continue, let me note that self-connection is different from similar concepts such as authenticity and mindfulness. Authenticity is only one element of it (i.e., self-alignment).

And mindfulness is closer in meaning to a combination of self-awareness and self-acceptance, but not self-alignment. Let us take a brief look at the research by Klussman and colleagues on the measurement of self-connection.

Investigating the validity and reliability of the self-connection scale

Study 1

Sample: 308 participants; 49 percent female; average age of 38 years old; 80 percent white; 45 percent with a bachelor’s degree or higher.

Measures

  • Self-connection: A pool of 29 items
  • Authenticity: Authenticity Scale
  • Mindfulness: Cognitive and Affective Mindfulness Scale-Revised
  • Self-concept clarity: Self-Concept Clarity Scale
  • Flourishing: Flourishing Scale
  • Meaning: Presence of Meaning subscale of the Meaning in Life Questionnaire

Study 2

Sample: 164 participants; 39 percent female; average age of 36 years old; 77 percent white; 47 percent with a bachelor’s degree or higher.

Measures

  • Self-connection: The Self-Connection Scale developed in the previous investigation
  • Life satisfaction: “In general, how satisfied are you with your life?”
  • Positive and negative affect: Positive and Negative Affect Schedule
  • Anxiety and depression: Patient Health Questionnaire for Depression and Anxiety (PHQ-4)
  • CDC health measures: CDC Healthy Days Questionnaire
  • Health behaviors: Preventive Health Behaviors Scale

Study 3

Sample: 992 participants; 56 percent female; average age of 34 years old; 72 percent white; 52 percent with a bachelor’s degree or higher.

Measures

  • Anxiety and depression: PHQ-4
  • Eudaimonic well-being: Flourishing Scale and Presence of Meaning subscale of the Meaning in Life Questionnaire
  • Hedonic well-being: Positive and Negative Affect Schedule
  • Self-connection: The Self-Connection Scale
  • Self-acceptance: The self-acceptance subscale of Ryff’s Psychological Well-Being Scale
  • Self-compassion: The Self-Compassion Scale-Short Form

Results

The Self-Connection Scale demonstrated good reliability and validity. For instance, analysis of data showed it was related to similar constructs—authenticity, mindfulness, self-compassion, self-acceptance, self-concept clarity, hedonic and eudaimonic well-being—yet distinct from them.

In addition, the factor structure of the scale was confirmed.

Testing your self-connection

To determine your level of self-connection using the scale developed in the study, follow the instructions below.

Indicate your agreement with the items from the Self-Connection Scale—whether you strongly disagree (1), disagree (2), somewhat disagree (3), neither agree nor disagree (4), somewhat agree (5), agree (6), or strongly agree (7). The numbers in parentheses are the scores associated with each response. Note, Item 4 should be reverse-scored.

  1. I have a deep understanding of myself.
  2. It is easy for me to identify and understand how I am feeling in any given moment.
  3. I know myself well.
  4. I am often surprised by how little I understand myself.
  5. I try not to judge myself.
  6. When I find out things about myself that I don’t necessarily like, I try to accept those things.
  7. Even when I don’t like a feeling or belief that I have, I try to accept it as a part of myself.
  8. I can easily forgive myself for mistakes I have made.
  9. I find small ways to ensure that my life truly reflects the things that are important to me.
  10. I spend time making sure that I am acting in a way that is a reflection of my true self.
  11. I try to make sure that my actions are consistent with my values.
  12. I try to make sure that my relationships with other people reflect my values.

So, how did you do? Note: The first four scale items are related to self-awareness, the next four to self-acceptance, and the last four to self-alignment.

A high score suggests a high level of self-connection. A low score suggests you are either not self-aware, not accepting of yourself, or do not act in concert with your feelings, beliefs, values, goals, etc.

Needless to say, a high score is desirable. Indeed, research by the authors shows that self-connection is associated with a number of positive outcomes. These include positive emotions, life satisfaction, flourishing, clarity in life, and meaning in life.

People who are disconnected from themselves are more likely to experience negative emotions (e.g., sadness, anger, confusion, stress) and feel their life is unsatisfactory and has no purpose.

Takeaway

Many of us commit to staying in touch with friends and coworkers, current events, the newest trends, and the latest cutting-edge technology, but rarely commit to staying in touch with ourselves—our changing feelings, sensations, thoughts, inner resources, goals, etc.

If you belong to this group and are disconnected from yourself, there are ways to remedy the situation. Simply pause a few times during the day and check how self-connected you feel. Ask: In the last little while…

  • Have I been self-aware?
  • Have I been self-accepting?
  • Has my behavior reflected my true self?

Commit to getting to know yourself better and becoming your best friend. It may change your life.

By: Arash Emamzadeh

Arash Emamzadeh attended the University of British Columbia in Canada, where he studied genetics and psychology. He has also done graduate work in clinical psychology and neuropsychology in U.S.

Source: 12 Questions to Test Your Level of Self-Connection | Psychology Today

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Nobel Prize Winner Has a Simple Trick to Learn Anything Quickly

The physicist Richard Feynman believed that simplicity was the key to learning. Feynman worked on the Manhattan Project when he was only 20 years old. He went on to win the Nobel Prize in 1965 for his work in quantum electrodynamics, along with Julian Schwinger and Sin-Itiro Tomonaga.

Feynman believed that truth lies in simplicity and that things are easier to learn and retain when they’re simpler. When your knowledge of something is full of complex explanations and terms taken from textbooks, you’re less likely to grasp it.

He’s famously been quoted as saying, “You must not fool yourself, and you are the easiest person to fool.” The goal of learning is to understand the world better. But more often than not, the way we learn doesn’t help us to achieve this.

You end up memorizing something exactly as it’s written in a book or as the teacher explained it to you, so it doesn’t take long for this knowledge to disappear. This is where the Feynman technique comes in.

The idea is to make things simple enough for anyone to understand. In doing this, you can acquire a deep understanding of the topic you’re studying. The Feynman technique has four steps.

1. Choose a topic and start studying it

Feynman’s technique isn’t limited to mathematics or physics. You can apply it to anything.

2. Explain the topic to a child

This step allows you to establish whether you’ve learned what you studied or you just thought you had.Explain the concept in your own words as if you were trying to teach it to a child.

When you try to break things down into simple ideas with plainer vocabulary, you’ll realize whether or not your knowledge of the subject is sufficient. This makes it easy to identify any gaps in your knowledge.

3. Go back to the study material when you get stuck

Only when you can explain the subject in simple terms will you understand it.This means the knowledge will stick with you and not disappear, as it can when you try to memorize something.

Review your notes and study material for anything you still don’t understand.Try to explain it to yourself in an easy way. If it’s too difficult or if you have to use terms from a textbook, then you still haven’t got it.

4. Organize and review

Don’t stop until you can deliver a simple, natural explanation.Go back to steps two and three as many times as you need. It probably won’t take as long as you think.

By: and ,

Source: Nobel Prize Winner Has a Simple Trick to Learn Anything Quickly

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How To Adopt The Japanese Approach To Accepting Life’s Challenges, “Ukeireru”

Life since the coronavirus pandemic has been a lot to swallow. But in terms of how to cope and carry on, the best first step may indeed be accepting the realities we’ve faced, however difficult or grim.

In Japan, the concept of acceptance is fundamental to the traditional culture. There are many Japanese words that translate to “acceptance” – “ukeireru” is just one of the more current choices, but people may refer to the concept using others. Regardless of word choice, psychologists say acceptance is a value that can go far in helping us manage stressors big and small, from coping with a Wi-Fi outage to living through a global pandemic.

“Sometimes it’s necessary to accept who you are, what you do, and what society does to you,” explains Masato Ishida, Ph.D., Associate Professor and Director of the Center for Okinawan Studies at University of Hawai`i at Manoa. It’s not the same thing as resignation, he adds. Rather, it’s more so accepting the current situation in order to make peace with it and either make the best of it or move on.

Shigenori Nagatomo, Ph.D., a professor of religion at Temple University specializing in East Asian Buddhism research, uses the English word “harmony” to describe how acceptance or ukeireru is part of Japanese culture. “Human beings are understood to be ‘beings in nature.’ Hence the importance of establishing harmony with it and with everything else in the world,” he says.

A lot of people in Japan have an aim-high, work-hard attitude, which makes it tough to accept anything less than perfect, Ishida explains. So this underlying way of acceptance helps in those times when everything doesn’t go according to plan.

How to embrace “ukeireru” in your own life:

Ukeireru goes beyond self-acceptance. It’s about accepting the realities that surround you, too – your relationships, your roles in the communities you’re a part of, and the situations you face – rather than fighting them, according to Ishida.

What’s more, psychology research tells us being more accepting of our own thoughts and emotions without judging them promotes improved mental health and helps us better cope with the stressors we do face. Scott Haas, Ph.D., a Cambridge, Massachusetts-based psychologist, wrote a book on the topic of ukeireru after studying Japanese culture (Why Be Happy? The Japanese Way of Acceptance). He explains that by practicing acceptance, you make space in your life to move on from negative or unpleasant situations. For example: To find motivation to get a new job, you first have to accept you’re ready to move on from your current role — or, to start grieving the loss of a loved one, you have to accept they’ve passed away, Haas explains.

Acceptance is much different from resignation, which is when you submit to something you’re facing and give up in terms of making a change for the better, or getting out of that situation. Its also isn’t necessarily something you block out a half hour in your calendar to practice. Rather, it’s a mindset to guide your thinking day after day. Ishida describes it as a “slow-cook philosophy,” meaning the more you bake it into how you interact with people and the world, the more naturally you’ll find yourself using it in response to stressful and negative situations.

So how do you get started? Here are some tips:

Make time to connect with nature.

When it comes to accepting reality, the very ground we stand on is a good place to start, Haas says. Get a houseplant. Go for a walk. Spend more time outdoors! It will help you establish that harmony with nature that Nagatomo is talking about, which is fundamental to acceptance.

Recognize what’s actually stressing you out when you’re feeling wound up.

It’s going to be tough to accept situations if you’re misinterpreting what’s upsetting you, or what stressors you’re actually facing, Haas says. Are you arguing more with someone in your household because they’re behaving differently – or because you’re both stressed about the hardships brought on by the pandemic, for example? Are you really stressed about your dry cleaning not being ready – or because you have a big work deadline that week that’s putting you on edge outside of working hours, too?

“It doesn’t always feel obvious when you’re experiencing it,” Haas says. But oftentimes the problem isn’t you or the other person (in whatever situation you’re stressed about), it’s some underlying problem that’s ramping up tension. Try to practice connecting more with the root issue and not burying it with timely stressors.

Remind yourself that every situation is temporary.

We tend to feel stressed when we feel trapped, Haas says. And one way to make any situation immediately less stressful is to remind yourself that it’s temporary – and whatever unpleasantness or burden you’re feeling won’t last forever, he explains.

Practice mindfulness or meditation.

Take time to do things that help ground you in the present moment. Take time to do things that help you tune into your thoughts and feelings over the noise of whatever outside stressors you’re facing. Mindfulness and meditation practices can help you do this, Haas says – so can journaling, going for a walk by yourself, or listening to music. “Anything that helps you remove yourself from a situation to create space away from the stress can help enormously,” Haas says.

Make incremental changes.

Change doesn’t happen overnight, so don’t expect it to. Whatever new situation you find yourself in that you’re trying to accept and adapt to, do so by making small, incremental changes to your routine, Haas says.

For example, don’t compare a new significant other to your past relationships; but instead work to appreciate each trait that makes this person who they are. This kind of mindset can be applied elsewhere, too: Focus on making one new friendship at a time after moving to a new place, familiarize yourself with each process at a new job gradually, or learn to move with your body after a major injury (you won’t wake up on day one feeling back to normal!). It takes time for something new to become familiar, feel routine and truly meaningful to you.

Don’t be afraid to abandon routines that aren’t working for you.

And when it comes to adopting those new routines, be flexible. If something isn’t working, figure out something else to do, Haas says. For example, a lot of people picked up new hobbies (like baking bread, doing needle point, or birding) or habits to help them get through 2020 and the pandemic. If those routines are no longer making you happy, helping you find joy in the present moment, or no longer feel worthwhile in 2021 and beyond, move on and try something else, Haas says.

Be kind — to others and to yourself.

Remember, it’s okay to feel fear, sadness, or anxiety about all the uncertainty we’re experiencing right now. Rather than beat yourself up for those feelings or try to fight them, be kind and compassionate toward yourself. It’s part of acceptance, Haas says. You have to be okay with feeling the way you do. And then you can go ahead and figure out how you can make yourself feel better.

If your feelings of anxiety or sadness have become unmanageable, it’s important to seek out help immediately. Professionals at the National Alliance on Mental Illness, a national nonprofit with local chapters in each state, can assist you in finding the appropriate resources to manage your anxiety at 1-800-950-NAMI (6264) or info@nami.org.

By: Sarah DiGiulio

Sarah DiGiulio is a New York City-based writer and editor who covers psychology, mental health, fitness, sleep, and other health and wellness topics.

Source: How to Adopt the Japanese Approach to Accepting Life’s Challenges, “Ukeireru”

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3 Issues To Consider Before You Introduce Recurring Revenue Streams Into Your Business

All business owners understand and appreciate the importance of revenue to the success of their businesses. At the outset, revenue is critical to the ability of a business to pay its expenses and satisfy any payroll obligations. Investors will examine the history of revenue of a business as a benchmark to evaluate the future profitability and potential growth of the company. Revenue is also an important criteria that lenders use when assessing whether to extend credit to a business  the lifeblood of every business.

With revenue being so important to the success of a business, it is often a surprise how little time most business owners spend on exploring how their businesses can meet  if not exceed  their revenue-generating potential.

The reality is most business owners are so focused on the day-to-day realities of running their businesses that they simply do not have the time to consider if their businesses are generating as much income as they should or if there are other opportunities to increase revenue-generating potential.

Related: 17 Passive Income Ideas for Increasing Your Cash Flow

What is a recurring revenue stream?

A recurring revenue stream is simply a way of conducting business that results in customers paying the business on a regular basis in exchange for some value. This value can either be the right to receive goods or services from a business or the right to access or use the property of the business for a given time.

This is very different from non-recurring revenue-generation business models, such as the sale of a product or the provision of a service, where a business has no expectation that a current customer will be a customer in the future. Recurring revenue streams enable business owners to better predict how much revenue their businesses will generate in the future. Savvy business owners use these recurring revenue streams to attract investors, obtain credit and grow their companies.

It is no wonder that the foundation of many successful modern businesses today often relies on recurring revenue streams.

Related: Why You Should Use a Subscription Business Model

What are some examples of recurring revenue streams?

You may be intimidated by the idea of a recurring revenue stream. You have no reason to be: Recurring-revenue business models are all around us. Here are three common examples of recurring revenue streams that you may be familiar with and ought to consider implementing in your business.

  1. Renting or leasing. If you have ever leased a car or rented a home, you are familiar with this business model. Leasing is a form of generating revenue where a business collects money from a customer in exchange for giving a customer the right to use a physical asset for a specified time.
  2. Licensing. Do you pay for any online services? Do you use any form of social media? Your relationship with those online services is often governed by a license agreement, which sets out terms for how intellectual property of one party can be used by the other. If one party is required to pay for the rights to use the intellectual property of the other party, those payments are often calculated based on how often that customer uses that intellectual property or on the amount of money the customer generates using the intellectual property of the business.
  3. Subscription. This is the model you are most likely familiar with. Whether it be your account to the latest video-streaming platform, your fresh coffee subscription or even your subscription to a pizza service, subscription-based business models are everywhere. The success of most subscription-based business models relies on providing ongoing value to customers in exchange for recurring payments for as long as possible.

What to ask before integrating a recurring revenue stream

While introducing a new revenue stream for your business is certainly attractive, recognize that not every recurring-revenue business model is the same. The reality is that each type of recurring revenue stream needs to be tailored to the capabilities of each business and the needs of each customer. Here are some questions to ask when considering the opportunities to integrate a recurring revenue stream into your business:

What value from your business are your customers willing to pay for on a regular basis? What price will customers pay for that value on a regular basis? What changes in your business operations need to happen to make these revenue streams a reality?

Related: 3 Simple But Effective Strategies to Create Consistent Income Online

Don’t go it alone

While I hope this article illustrates some of the benefits of integrating recurring revenue streams into your business, I must emphasize that this is simply an introduction to the concept. Don’t underestimate the amount of time, money and energy that may be required to create a new revenue stream for your business.

I would encourage you to find lawyers, accountants and other advisors to guide both your assessment of the suitability of a recurring-revenue business model for your business and the implementation of your strategic decisions. After all, a little time and energy invested in preparation often pays dividends in the long term.

Romesh Hettiarachchi

By: Romesh Hettiarachchi  – Entrepreneur Leadership Network Contributor

Source: 3 Issues to Consider Before You Introduce Recurring Revenue Streams Into Your Business

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