Hot or Not? How to Know if your Business Idea will Fly or Fail by Sean Evan Wise

Author:Sean Evan Wise
Language: eng
Format: mobi, epub
Publisher: Ryerson Entrepreneurship Institute
Published: 2013-01-01T05:00:00+00:00

Element 20: Revenue

What is it?

In real estate the mantra is “location, location, location.” In entrepreneurship the mantra is “sell, sell, sell.” Prior to the dot.com bubble bursting a decade ago, proof of concept was seen as: turn the light switch on light goes on.

Today, more and more investors have expanded the proof of concept definition to be: turn the light switch on light goes on customer pays $5/hourto read under it.

In today’s world of Agile Development, the mantra is fail fast, fail often. Innovations are tested against the market as soon as possible. If the market doesn’t want to pay for what a venture is selling, then is there a need for that innovation?

Why does it matter?

Nothing helps an opportunity succeed like success! Revenue means the solution is valued by end users. Revenue can also generate secondary benefits, including:

Early and direct access to customer feedback;

Validation of assumptions in the revenue model;

A deeper understanding what it will take to sell and scale the solution.

Questions to ask:

Have you sold your product/solution/service? What was the total revenue over the last 18 months? Were they early sales or more standardized replicable sales? What is needed to really scale up sales? What would it take to double sales to date in 90 days?

How to score this element:

-10 if …the Startup is 18 months or more from being able to scale revenue.

-5 if …the Startup is less than 18 months away from first revenue.

0 if …the solution has been sold, but not enough to be standardized.

5 if …the Startup has enough monthly revenue to break even.

10 if …the Startup has their costs covered and are making a small profit. 25 if …the Startup not only has positive cash flow but has been quantifiably profitable for more than six months.

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