Whether you’re an established company or a startup, the consequences of a bad business model are the same. For existing businesses, not realizing that a business model is no longer relevant and not being able to pivot will ultimately destroy the business. For startups, convincing yourself and investors that you have a business model that will ignite or disrupt the industry, but no initial revenue, can be difficult.
The startup graveyard is full of businesses that never get off the ground. Failure lists 67 startups that failed due to lack of business model and startup revenue. For starters, the difference between surviving and losing ground always comes down to looking beyond your cash flow. Why? Because when you’re running a startup, it’s easy to fall into the trap of wasting time on fun things that look like progress but don’t make money. Perhaps forming a partnership or focusing on good public relations. They may be focusing on “profits” like 40,000 website downloads but not generating real income.
If you believe that the survival of a startup depends on how quickly you can generate revenue, you must generate revenue quickly. There are some things to consider to get quick income.
Don’t withdraw investors’ money early. Income is not by saving money. To test not only the business model, but also the product or service, look for ways to earn real income with previous customers. No one is paying you for the business model. Test the benefits of your product or service with first paying customers and make adjustments based on customer feedback. Also, you save your precious capital when you need it most.
Build a product, not a business. Don’t waste time and effort building a business with expensive websites, offices, cool t-shirts and a lot of other junk. Work from your home, workplace, or a friend’s office (for free) and focus all your energy on growing your product or service. Paying customer authentication. Remember, no matter how far-fetched your brand, mission or business is, you’re not an entrepreneur until someone pays you to sell it.
to work. First, you’re a product developer, marketer, and project manager. Don’t rush to hire some workers without bringing in revenue. If necessary, use friends, freelancers, but if you can’t, don’t create a group. Use SaaS tools, simple financial software and sales pitches to land your first paying customer. Rely on mentors and advisors for guidance.
The first version should be ugly. Don’t try to create the perfect product or service because you started with this mindset. Be nice and test with the first customers. LinkedIn founder Red Hoffman once said that if you’re not shy about the first version of your product/service, you’ve released it too late. You need initial feedback from your first customer to make further improvements or adjustments. Check it out and go to the main function of your first client section. Then collect the money, prioritize the next one based on what worked and what didn’t, and move on to the next feature build.
Performance before innovation. If you think about successful startups, they start by doing or trying something. At first it was probably less about creativity and more about performance. The Airbnb founders rented out their rooms on a busy weekend in San Francisco to see if anyone would pay for them. Their sophisticated websites, advanced algorithms, other cross-selling services, etc. are challenging the idea that people will pay to rent out their homes for the weekend.
Focus on your first 10 customers . Focusing on TM (addressable market), SAM (servable addressable market) or SOM (serviceable market) may seem good at first, but you need to focus on getting initial income quickly. Among your top 10 customers. Who are they, where are they and how do you stop them? You may be in a multi-billion dollar market, but you need fast paying customers. Learn from the first ten customers, then go up to 20 customers. Learn from them and then earn 30 and so on. Have a specific, recurring and measurable income stream.