Whatever your startup business, it is critical that you determine a revenue model to support it. Your business model is the plan your startup will implement to generate revenue and make a profit from operations. While there is room for creativity and customization, there are core areas that must be clear. Every model requires these five elements:
SELL SOMETHING. This might seem simple. But, you need something — beyond your idea — to sell. A product. A service. Both. Make sure you have something for sale. Something substantial enough to build a business and make a living.
SOLVE SOMETHING. Your product or service must solve a problem for someone. Define that someone and make sure there is a group of people like them so you have a market. Focus on letting that person know you have a solution for them — and all others who face the same problem. In this is your value proposition.
CHARGE SOMETHING. Your solution has value. Set a price that ensures you at least break even. Is that realistic? Sustainable? If not, cut costs or boost your offer to find the price/value structure that works. If you have a service for which you charge $100 a month, and your monthly expenses are $500, you would need 5 clients a month to break even, more for a profit. Do the math. Make sure it is possible, and sustainable. Now, you have something to sell that solves a problem at a price that works — so go get traction.
BUILD SOMETHING. The extent to which your product or service gains popularity or acceptance is dependent on getting it out in front of those who need it. Create a sales channel — a place or method to consistently generate leads. Consider speaking events, social media, referral programs, etc. Here is where you can be creative. Test different approaches. Explore distribution channels –brick and mortar stores, collaborate with complimentary products, consider direct sales, etc. Make sure you are addressing every customer segment. Establish, fortify, and maintain customer relationships.
SAY SOMETHING. Back up all your efforts with your message. Deliver it consistently and constantly in every available venue. This is marketing. Do what works. Stop doing what doesn’t. Have regular sales conversations in the marketplace and ask for the sale.
Use creativity and customize the business model for your startup. Put the right structures in place to make money and ensure consistency in that monthly income. Then expand on it. If you aren’t selling something, you are running a hobby, not a startup — not a business.