Revenue generation is, by far, one of the most important activities for any startup. It affects your business goals, who your ideal customers are, and more.
The definition of revenue generation is “the process by which a company plans how to market and sell its products or services, in order to generate income.”
It sounds simple, but it’s not as easy as it sounds. A recent study in The Hockey Stick Principles: The 4 Key Stages to Entrepreneurial Success claimed that “across 172 businesses, the median startup revenue is $0 year one and rises to nearly $3 million per year by year four.” Of course, 34% of startups close within their first two years.
How do these successful startups end up with such a high revenue growth? What are those initial steps they took to get on the right track? And how do you avoid being one of those startups that goes by the wayside?
That’s what we’re here to answer for early-stage startup founders. This knowledge hub is your ultimate guide to answer any questions you might have about revenue generation.
How Entrepreneurs Can Consistently Generate Revenue
We understand that there are many factors that go into generating revenue for startups, SaaS startup or otherwise. That’s why we’ve compiled a virtual handbook of information that will help accelerate your path to revenue:
It’s important to trust your source of information when you learn about business growth. At GrowthX, we’ve helped hundreds of entrepreneurs create polished revenue generation plans with our go-to-market expertise. We do hands-on work with you, and our revenue generation coaching and training playbooks reflect that due diligence.
Our coaching is not informational like a textbook, it’s transformational. Apply now for The Revenue Accelerator.
What’s a Good Revenue Generation Plan for My Startup?
There are no shortcuts in a sales strategy for revenue growth. To successfully start any revenue generation plan, you first have to lay the foundation. More importantly, you have to do worthwhile work.
And some activities are more valuable than others.
As they say in the navy seals, “slow is smooth and smooth is fast.” The same is true for founders.
For those who want a reliable sales strategy you can always come back to, here’s the not-so-secret secret – the best sales strategy for fast revenue is right in your inbox.
But who do I look for to increase my average revenue?
The number one reason most customer acquisition shortcuts and growth hacks fail is because they lack the most important ingredient: an ideal customer profile (ICP).
That’s why, to generate revenue, you need to know exactly who you’re looking for when seeking customers. Revenue is not about finding the Right Person, it’s about focusing on Mr. Right Now!
Google will offer thousands of answers, and all of them are distractions, or ‘shiny objects.’
These are keeping you away from the actions that will actually lengthen your revenue budget:
- The best email subject line
- The $4,000 monthly LinkedIn campaign
- Blindly copy this sales and revenue tactic
- The chatbot that will win sales in the first two minutes
- Double your revenue with growth hacks
The best way to start a revenue generation plan fast is to capitalize on what you already have. You have revenue in your inbox. If you need help clarifying your ICP, then this Free Go-to-Market Starter Toolkit will get you started.
It’s hard to get the ‘right’ contacts on my calendar.
That’s why you need to focus on your email inbox. It’s full of people you’ve already qualified and packed with past, valuable conversations.
The best part is you don’t need to do anything to connect with these contacts again. All you need to do is reignite that conversation.
You’ll be amazed at how responsive prospective customers are and how quickly your calendar fills if you email the right people (your ICP) for the right reasons.
- Have a goal of getting 3+ qualified meetings on your calendar this week.
- Plan on reaching out to these contacts 2-3 times over the next week.
- Remember, focus on the lowest-hanging fruit first when you email prospects.
Reach out to them. Send a brief, personalized email to reintroduce yourself. Better yet, pick up the phone and just listen.
The best way to make this communication effort worth both your time (and theirs) is to set a goal for your conversation.
Email Follow-Up Tips:
- If you send an email, keep it brief. You’re reintroducing yourself, not reminding them of product features.
- If you make a call, focus on listening. Learn about your contact and ensure they are still an ICP.
- Go into every communication with a plan. Do you want them to reply or do you want them on your calendar?
- Follow-up with all of them. You never know what their day was like when they saw your email come in.
Is there really value in assigning a percent of revenue per email?
This simple inbox review can be done in one day and drive revenue to your business long before you would have launched any campaign.
You can build a stronger, faster revenue generation plan that carries intent and more consistent outcomes by implementing this inbox sales strategy a few times a year rather than seeking shortcuts.
Is There One Thing I Can Do to Accelerate My Revenue Growth Rate?
What if there were specific tasks you could tackle that would accelerate your revenue growth rate by as much as 28%?
There is a clear correlation between action and revenue. We’ve worked with hundreds of entrepreneurs, helping them prioritize their time and tasks to maximize revenue growth.
The connection between pipeline management and revenue management is one area nearly all founders need to improve.
Does revenue management take a long time?
Choosing where to invest your time and resources as a startup founder can sometimes feel like an uphill battle.
By spending at least 3 hours a month, less than an hour a week, actively managing your revenue pipeline, startups can achieve a 28% greater revenue growth rate than those that don’t.
Reviewing the pipeline means evaluating what revenue strategy works, what doesn’t, and what could be better. It means leveraging data and insights to intelligently tweak your revenue generation activities to remove friction.
I feel like this won’t help my revenue management.
To inform your next steps, you have to mine the sales data for insights rather than rely on your impression of what works. In doing so, you control and own the information-seeking and revelation process.
The data is clear, successful entrepreneurs regularly commit time to review their revenue pipeline. You have to look at the data and ask how it got there.
How do I get started?
For those who are doing their first pipeline review, begin by collecting data from all the little experiments you’ve been conducting.
- Schedule recurring pipeline reviews. Ensure that you have the time to review where your revenue is coming from.
- Collect data. Look at your inbox to review contacts for your successes, need for follow-up, and failures.
- Mine for revenue generating insights.
From there, your week can be boiled down to a checklist and then down to specific numbers. It will tell you everything you need to know about where, when, and how you are going to get your next revenue cycle.
By reviewing all the data points on a regular basis as opposed to on a one-off basis, you’ll avoid having to constantly pivot and pull out the revenue calculator.
Strategize your pipeline by viewing your activities as micro-experiments, collecting data, and synthesizing that info into meaningful, actionable insights.
- Hold yourself accountable by scheduling dedicated time for your pipeline review and protect that time.
- Be honest by evaluating accurate data, not impressions or feelings about how the pipeline is operating.
- Evaluate data sets, not single data points.
- Respond to the only 3 questions sales teams need to answer during a pipeline review.
- Maintain a focus on only the 1 meaningful revenue generating activities going forward.
In less than three hours per month, you’ll boost revenue profit by nearly a third.
How Long Will a Revenue Strategy Take to See Results?
The question startup founders should be asking is, “What exactly do I need to do to acquire revenue, and why am I not doing it already?”
We work with founders from around the world helping them create a revenue management system. In doing this work, we’re often asked by our founders, “How long is this going to take? When will I see revenue profit?”
With all the pressure to scale and move quickly, it’s no wonder that your natural expectation is that revenue will come immediately.
Revenue Activities, not Predictions
Before you can begin predicting time until you see revenue, you need to build data-informed hypotheses about:
- Your ideal customer profile
- Your market messaging
- Your customer acquisition strategy
- And more.
Most importantly, you need to calculate and commit how much time you can spend on market development.
Leading and Lagging Revenue Metrics
The reason why it’s so hard for most startup founders to predict when revenue will come through the door is because they focus solely on one metric: revenue.
But revenue generation is a lagging metric.
Instead of focusing all of your attention at the bottom of the funnel where you have the least control, focus your energy towards where you have control: activity.
Every day that you don’t engage with your market is a day in the future that you rob your business of new revenue streams.
Activity is your leading metric.
Spend Time, See Revenue Results
Even before the “when will I see revenue” question, you may find yourself asking, “How do I know what the right market is and when am I going to find out?” That answer still starts with activity.
A common conversation we have with founders goes something like this:
Startup Founder: We need to scale but we’re struggling to grow revenue.
GrowthX: What’s keeping you from scaling or revenue growth?
Startup Founder: We’re doing so much at once that there’s very little time to put towards sales and revenue.
GrowthX: What percentage of your week would you say goes into revenue generation?
Startup Founder: On a good week, 15-20%.
Before you strategize and create a revenue generation plan, you need to have an honest assessment of how much time your startup puts into your market.
Is 15% a realistic amount of time to be spending? In our experience, entrepreneurs should aim for 50% activity.
We’ve found that when we work with founders who make the pivot from 15% to 50%, the time to a full revenue report gets shorter, while the consistency of the revenue model increases.
I’m Not Ready to Reach Out
The main pushback we get when we tell entrepreneurs the key to revenue success is that they don’t know if it’s the right time. They want to keep building products and sales materials.
We know it can be uncomfortable if you aren’t used to interacting with potential customers regularly. If you never reach out to anyone, they can’t say no, and your ego isn’t hurt.
Block out 30 minutes a day to reach out to prospective customers.
There is never going to be a perfect time to start, and this causes startup founders to stall. The problem is, the longer you wait to get started, the longer it’ll be until you see a sales revenue formula.
All you need is to commit 1 market activity every day. That’s as low as the bar needs to be for most startup founders to start seeing results.
When you’re done reading this very sentence, send a message on LinkedIn or pick up the phone.
What Are The Real Revenue Generation Activities I Need to Do?
We’ve worked with hundreds of startups around the world, and we’ve found that revenue generation doesn’t revolve around a new campaign or a new sales hire, but instead around intentional activities.
Pivot Your Startup to Be Sales and Revenue Focused
Have you taken the time to sit down and list all of the tasks you could do to start calculating annual revenue? If you haven’t, yesterday was the time to start.
Establish a routine of proactive revenue generation activities, rather than reactively hoping that it comes from some unknown source.
Here’s a short list of revenue management behaviors you can start implementing:
- Drive your own sales and revenue activity
- Measure the effects of your revenue activities
- Hold yourself accountable
- Follow up with customers, prospects, and investors multiple times
Just to check, did you really send a message on LinkedIn or pick up the phone when prompted in the above section?
Align All Revenue Activities to Your ICPs
You might think your sales and revenue method is the most important part of your startup revenue strategy.
But what you need to do is align every activity and every part of your startup towards a specific Ideal Customer Profile (ICP).
Your Ideal Customer Profile is the most important asset for revenue generation.
Once you define your ICP, then you can determine your pricing strategy. Once you discover that information, it informs how much you can spend to acquire that customer.
Drive alignment through these revenue activities to make sure they are not creating issues.
The most common outcome our team at GrowthX sees while working with entrepreneurs is that startups can change their revenue model while shortening sales cycles.
Our MXP Online program has helped hundreds of founders accelerate revenue cycles after working with us.
“MXP Online, a product-market fit virtual accelerator from GrowthX, is the best curriculum and training I’ve seen for early-stage founders. Can’t recommend it enough.” (Jeff Kaplan, Venture Asheville)
Be Intentional About Revenue Generating Activities
Once your revenue generation activities are aligned to your ICP, you are in a sweet spot to set goals. Companies that spend time managing their revenue generation activities grow 28% faster.
Be cognizant of and regularly evaluate your startup’s progress with intentionality. That’s how you learn when you need to pivot or reevaluate your revenue calculation versus when you step fully on the gas.
You have to start identifying friction in your process on a regular basis, and to do that you can build structure around your revenue generating activities.
But how do you actually do this? For revenue growth, you must have a regular cadence of aligning these to your ICP:
- Align your sales and revenue process
- Align your messaging
- Align your calendar
- Align your contacts
- Align your pricing and revenue model
To acquire revenue for your startup, you don’t necessarily need to do anything new or different, you just need to be focused.
What’s the Best Revenue Model For My Startup?
If only there was a revenue app for startup founders that offered a 3-D view of their revenue model.
However, there is a process that every founder can follow to uncover each of the three dimensions of revenue generation. It’s called market development, and it’s distinct from sales and revenue.
Market development is the pursuit of revenue for the purpose of learning, while sales is the pursuit of profitable, predictable and a revenue scale.
Here’s how it plays out every week for our team at GrowthX. Invariably during the pitch we learn that startup X has Y dollars of revenue.
We rarely fail to stump the founders during their pitch when we figuratively pull one of the revenue dollars out of the stack and ask how profitable it is.
If you don’t know which of your revenue streams are profitable, predictable and scalable, then what sources of revenue are you planning to scale?
The foundation of a 3-D revenue model is data-informed focus. This is why we believe it’s the best revenue generation plan for startup founders.
How can I be data informed?
In the early days of a startup, learning is more important than business revenue.
Customer interactions yield value only if you are collecting, sorting, and analyzing data. The goal is to identify patterns, the foundation of revenue recognition.
- Be methodical about how you collect and store data.
- Take the time to define and map out your sales and revenue funnel and the exit criteria.
- Carefully identify and implement a marketing and sales technology stack that fits your current workflow.
- Most importantly, verify that the revenue management tools that you have implemented are tracking and reporting the unit economics of every step of the customer journey.
I’m having trouble focusing my revenue generation plan efforts.
We know how valuable your time is, but it’s vital to stay on point with revenue generation.
The most important element to focus on is your ideal customer profile.
Not all revenue streams are created equally, so focus on the profiles that offer the most value for your startup.
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