When you’re just starting a business, there are so many imperatives to focus on that it’s hard to prioritize. Raising capital. Marketing. Operations. Staffing. Product development. How do you allocate your limited resources and bandwidth?
As you triage the mission-critical details demanding your attention, you might be tempted to move one of those details, your revenue stream, into the “worry about it later” category. But don’t. Better to keep your eyes on that prize, especially during the planning stage. Because when you do open for business, having at least one actual customer lined up, not just a prospect, sets up your enterprise for success.
Here are some tips for keeping focused on revenue as you build your business:
- A viable revenue stream gives you credibility. Your business concept may be unassailable on paper, but it’s easier to raise capital if you can demonstrate a revenue stream. Without an actual customer (or 10) to point to, all you have is a great concept, a hypothetical. At this early stage, having a revenue stream, even a small one, serves as proof-of-concept. If you can say you already have your first buyer(s) lined up, you’ll gain credibility. Not just with lenders but also with potential vendors, partners and other associates.
- Distinguish between needs and wants. It’s tempting, and distracting, to obsess over the accoutrements of success when you should be building out the basics. A spiffy brand identity, fancy letterhead, a catchy tagline, attention-grabbing swag are all wants: important, yes, but you can manage without them initially. What you need is a reliable revenue stream to build on. Use creative workarounds to craft a winning image or other signifiers of success. After you establish a track record for sales, then you can invest in the luxuries that are nice to have.
- Put innovation in its place. If you want your business venture to revolutionize your industry, that’s a great aspiration. But before you can innovate, you have to master the system as it exists. Work within the constraints already in place to craft products and services that sell. Establish a reputation for quality and reliability. Then, when you’ve built a solid customer/client base, launch your most aggressive redesign or new product.
- Don’t be too quick to bring in other people. You can realize your vision faster and more efficiently if it’s yours alone, at least initially. You may not have the vast technical, sales or other skills to be your own trusted subject matter expert, but you probably have the skills to manage the basics. Bringing on a key contributor too early distracts from your plans. It gets you bogged down in personalities, priorities and strategy. Though you’ll surely need a team in place later, it’s better to work solo until after you’ve fleshed out your vision. Rely on consultants, strategists and other key team members later in the process, when you need to take your vision to the next level.
- Build your base incrementally. Your new business can’t and shouldn’t try to be all things to all people instantly. Instead of chasing a mass audience all at once, cultivate one prospect at first. This reverses the traditional sales model (customers choose vendors). Choose a prototype customer you can learn from. Seek their input constantly, and thank them appropriately. Understand their motivations and needs as you develop your offerings. By going deep instead of wide, you’ll avoid the pitfalls of rolling out a faulty first-take product to large numbers of prospects.
By placing revenue in its proper place near the top of your priority list, you can avoid numerous expensive missteps and use your resources efficiently. For more on proven ways to launch a successful startup, including financing options like our acclaimed DreamSpark® plan, speak with our small business experts at 1-855-WHY-PANGO (1-855-949-7264) at Pango Financial or schedule a call.