I hear and read a lot about business plans and ideas on a regular basis. I am still surprised to hear about businesses that are supposed to start generating revenue only when they have enough users. This wait and see strategy drains the most precious resource your start-up has…cash. When that dries up, and you have failed to attract the 10 million users you need to generate a decent revenue stream from your advertising based revenue model, it becomes time to pack up your bags and blame it all on how the market was not ready for your mind blowing-industry disrupting business model. The fact of the matter is, that there are very few start-ups that manage to generate the sort of numbers it takes to make it big using this strategy. Wanting to be the next Facebook, Twitter or WordPress is all very well, just not an advisable route to follow unless you have a ‘Great’ idea along with a substantially large war chest.
The simple fact of the matter is, the longer it takes you to generate a substantial revenue stream, the faster your morale decreases, along with the faith your angel or seed funder has in your model, and ultimately it will be, game over. The question you should be asking yourself every single waking moment of your day is “How can I generate substantial recurring revenue for my business?” The focus has to be on the “recurring” aspect. Do not chase large accounts until you have established and developed a stream of revenue that pays the fixed bills. This requires you to test many permutations of your initial product or service. In which cases are customers willing to pay more? What are some major hurdles you face? Can you provide a cheaper service initially, to get your foot in the door so as to sell a more complex offering later?
Constantly asking yourself these questions will help focus your thinking on the most critical aspect of your business model. When you have fixed your revenue model , raising funding becomes easier, hiring better resources becomes possible and the morale of the entire set-up is boosted. If you have not figured out how to generate regular revenue for your business as yet, I suggest you get onto it as soon as possible.
Rather than waiting for things to happen….make them happen!