Somebody (it may have been me) said that if your business isn’t making money you don’t have a business, you have a hobby that is draining your pockets. You could have a huge following on Facebook, be a Twitter superstar and have everybody and their sister using your new app, but if you don’t have a plan for how you’re going to make money you’re doing business backwards.
You may as well be spending your days playing tiddlywinks….
If you don’t know how your business is going to make money, stop NOW so you can figure it out.
I’m not saying that your business needs to turn a profit from day one, that almost never happens. Even if you create and sell something that doesn’t require raw materials, you’ll have to make some type of upfront investment. I’m a big fan of digital products and every one I’ve created has required software, time and even additional support to get it to market.
What I am saying is that you should know, even BEFORE you get your business license, how you plan to generate revenue. This is known as your business model, and it doesn’t have to look like your neighbor’s. You could plan to buy a product for $2 and sell it for $45, you may have a plan to build your audience first, then offer those people something that you’re selling. What I don’t want you to do is focus on the vanity metrics, like fans and followers, with no clue as to how you’ll make money from that audience.
If your only plan is to secure investor funding, what will you do if the funding doesn’t come?
You’ll be forced to make a difficult decision, much like the ones we’ve seen brands have to make and shut down operations.
Keep in mind that this is a plan, and things often happen that cause plans to change. What’s important is that you recognize when it’s time to change course, and have the courage to do it. One of my favorite Mike Tyson quotes is “Everybody has a plan until they get punched in the mouth.”
What does the fighter do once they’ve been punched in the mouth? Make the necessary adjustments and keep fighting!
Because friends don’t let friends have a business without a money-making plan..