Posts tagged "fundamentals"

Investment and Revenue Streams

“Sometimes the best investments are the ones you don’t make.” Donald Trump

Multiple revenue streams are extremely valuable assets for any business. Each revenue stream has to be positioned to address certain components of the overall strategy. Every revenue stream is not created equally, some are based on low margin and fast moving products/services while others facilitate growth of higher end products/services. The key factor to be addressed here is not only the creation of renewable revenue sources positioned for the right markets, but also correct investment into these streams. 

For example, if your business currently provides you three streams of revenue, you need to have certain measures in place to gauge the level of growth of each stream. These metrics will provide you critical data to measure which streams have the potential of exploding, as compared to others whose growth is relatively stunted. Without these metrics, we could make a fatal error of investing in wrong revenue streams which could have negative impact on the overall bottom line. Concentrating your investments on the right revenue streams is a strategy used by all successful companies. 

In my personal experience, one of the most telling signs of focusing on wrong revenue streams, is near the end of the quarter when the entire team has to push itself ridiculously hard to reach set targets. If this happens in a consistent fashion, quarter after quarter, you could be backing the wrong stream and costing the organization dearly. Develop flags for each of your streams and when things seem to be going off course consistently, look into revenue streams rather than blaming the economy or your team.

Are you investing in the correct revenue streams?

Revenue and Market Segmentation

“The perfect business model must have a way to build in its own high-margin products that can be sold while processing reliable renewable revenue streams at any margin.” Mitch Thrower

 Once identification of a business model has been made, correct mapping of its target market is essential. Having a strategy to aim a product/service at ambiguous market segments results in spreading yourself too thin, especially when resources are tight. Market positioning of products is of paramount importance for successfully generating revenue at a quicker pace. For example, I was consulting with a startup organization who is launching a business in the mobile social networking area . They have specifically developed a service for the 15-21 age range, exclusively for the Chinese market. Even though the market is exploding for mobile usage in China, by selecting a niche segment they can become a much stronger adversary to competition.

It is only after a market segment has been selected , a niche market to operate in identified, that you have to develop revenue strategies. These strategies can be aimed at capturing multiple subsets within your market segment. For example many online service providers give you multiple options to sign up for their service. At one my companies we use Highrise(CRM tool) which allows you to sign up either as a single user, small medium enterprise (SME) or a full fledged enterprise implementation. This strategy gives them the capability to develop revenue streams faster, at multiple levels. Ultimately this provides the company with growth, stability and flexibility to adapt itself to changes in economic situations.

The example mentioned above shows a company which has not selected any clear market segment to promote its products in. Many SMEs find them a more cost effective alternative to other such CRM tools. Positioning a product for mass market appeal is a strategy which I have not used extensively in any of my ventures. It is a harder process and one, I think, you could grow into rather than jumping into the deep end for it. For every facebook, google or amazon there are thousands of similar services which never got similar traction. Correct market segmentation provides you with structured direction and enables you to develop specific competencies. These can result in major competitive advantages in the long run. 

When developing your Go To Market strategy, paying attention to niche markets and building multiple level revenue streams around it, could become your winning strategy. 

 

Revenue and Business Models

“The first layer of the perfect business model is to build a business with reliable revenue.” Mitch Thrower

When developing business plans, identification of potential revenue streams is a mandatory section. There are several different kinds of revenue models that can be used depending on the nature of business. Having developed several business plans which drew revenue models from product based sales, service fees, memberships and advertising I have been exposed to different types of revenue models. What I have learnt is that when developing these models great care has to be taken in understanding the assumptions these streams are based upon.

Many a time we find ourselves in the middle of an execution strategy and the assumptions we had used breaks down during the actual run. Over time as I have begun starting ventures with personal funding, I have started to use the ready, fire, aim approach. This has given me the ability to take multiple approaches to the market and build revenue streams based on feedback we get from the market place. This approach may however, not be totally feasible for cash strapped startups, in this case I would build stronger assumptions based on market data collated through research. 

A business must develop multiple streams of revenue and each stream much play a strategic part in the overall strategy. Points which must be taken care of during this development phase, will be the synergy between your long term goals and your revenue streams. Do they grow exponentially?, Do they help you achieve the targets you want ? Is the revenue model an optimal fit with the business model, etc. Many web entrepreneurs put a lot of faith in the advertising revenue stream. I have heard countless pitches where entire revenue strategies are based on this one factor. Sometimes they have not even thought a couple of steps ahead about new revenue streams, optimizing current streams, competition, margins. Some have not even accounted for market change. 

If you are writing a business plan or, are in a new startup venture, identify your revenue streams as clearly as possible, and understand what resources need to be put into place to realize their true potential. The future of your organizations rests upon these strategic initiatives. Make sure you think them through in thorough detail before moving forward. 

The life blood of any business

“In the end it’s a revenue stream, and all revenue streams eventually reach the sea.” Paul Schrader

All businesses, regardless of size, need to establish recurring revenue streams to progress. Without them it is like a car with a limited tank of gas and no petrol stations on the route. When the car runs out of gas, you get stranded and need to find alternative modes to reach the desired destination. When devising a strategy for your startup business it is essential that you take into account all the petrol stations on the way to help keep you moving. Earlier in my journey, I was part of many businesses where we did not give enough thought to revenue model, this caused many problems .

Since then I have learnt to identify and adjust this aspect sooner rather than later. However, even when you have identified viable revenue streams, much thought has to go into the actual execution of developing it. The focus needs to be on recurring streams which will boost your ability to push and develop your organization further. Establishing these recurring streams,  gives you the ability to take on larger projects, lay more emphasis on promotion and marketing ,and most importantly, give you the  stability to weather storms that a startup has to face.

Over the next week I will take you through five major steps about generation of recurring revenue for your startup venture. These will include identification of possible revenue streams in the your business model, correct identification of market segments, pricing and positioning of products/service, accounting for continuous change and setting correct metrics to monitor revenue cycles effectively. These basic fundamentals will help you understand how to establish revenue streams into your business model.  

5 Basic Fundamentals of Success

“A journey of a 1000 miles must begin with one step.” Ancient Chinese Proverb

1. Take 100% responsibility for your life: You are responsible for how you want your life to be. If you are constantly blaming external factors from limiting you to achieve what you want then you have to change. You have to examine how you are reacting to key events in your life. Are you ignoring feedback?, Blaming others for your mistakes?. You have to break away from these negative patterns and correct the way you respond to ensure you get the results you want. If you want to read more please click here.

2. Believing: Do you believe you can achieve all the goals you set for yourself? Do you believe that you have what it takes to make your business or relationship succeed? If you don’t then either you are not doing what you ought to be or you are not taking responsibility for your own life. All of us need something to believe in. This becomes your guiding light to take you to places where you never thought you could. I personally believe that I have all the key qualities for being an entrepreneur which are “Passion” & “Ambition”. Every project I undertake I ensure that these core values are infused into the team and that we all believe that we have what it takes to succeed. If you want to read more please click here.

3. Taking Action: Do you plan endlessly about the business you want to start? Waiting for the right time? Unfortunately there is no such thing as the right time. Successful people are highly action oriented. Talking about plans and idea’s is very easy but committing yourself to doing it is another ball game altogether. You have to step out of your comfort zone, learn how to rely on your “gut” and once you have decided on a path take that first step. Believe me thats the hardest one, after that it becomes much easier with all the feedback, suggestions and help you get along the way. If you want to read more please click here.

4. Confronting your fears: Is the fear of failure holding you back? This is a completely natural emotion that each and everyone experiences in our life. The key here is how we choose to respond to it. We can always go back into our shell and say its too difficult or that the time is not right. However if you want to achieve something out of the ordinary in life you have to confront the fears which are holding you back. Personally one of the fears I have always had is that of public speaking. Over the years however I have confronted it by taking classes and practicing in front of smaller audiences. I still have a long way to go but you have to begin somewhere. So confront the fears which are holding you back today and start to live the life you want. If you want to read more please click here.

5. Asking for Feedback and Using it Constructively: When we start any new project, business, relationship or job we usually make ourselves believe that we are doing the best we can be. This attitude sadly limits the rate at which we grow. An exponential catalyst to help us to learn and grow much faster is to ask for Feedback. You have to start asking your business partners, team mates, clients, friends and family as to how you are doing. You need to then constructively use this feedback to make life better for those around you and most importantly yourself. This will unlock your true potential and give you a whole new perspective on life. If you want to read more please click here.

Once you have mastered these basic fundamentals you are on your way to achieving anything you want in life.

p.s To all my loyal readers: The last day of every week will be a recap. This will help in reinforcing the concepts as well as being a review page for those who want a quick review. I want to thank each and everyone of you who read everyday and for all the emails and comments you sent. It was greatly appreciated. Thank you.
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