Revenue Modeling 101...continued...to the fourth power...

The final model addressed in www.plantostart.com ‘s “Four Revenue Models and Examples for Small Businesses” is the Services Revenue model.  According to the article, the upside of this model is that it is amazingly easy (ok, maybe they didn’t say amazingly, but after looking at the other models, that seemed like the best adjective to me) to maintain because essentially, all you are maintaining is your calendar...  Services Revenue = your time.  The downsides include not being easy to grow to scale (you are just one person after all and there’s only so much time in a week), and uneven revenue cycles if lead generation isn’t maintained adequately, which involves time that you aren’t directly getting paid for so it’s pretty important to create a streamlined system for maintaining your pipeline if you want to combat uneven revenue cycles.  Note to self (and you too if you’re playing along…) research sales pipelines.

Turning to CKF, the Services Revenue model fits into the plan in terms of course offerings.  I schedule time to teach, people sign up and pay, and I teach them…Service Revenue in its most simplistic terms.  I don’t even have to bear the entire responsibility of lead generation either.  By partnering with community education programs, the classes are promoted through my channels as well as theirs.

Well, we’ve come to the end of the article so where does this leave us?  The CKF revenue model should include Recurring Revenue, Transaction Revenue and Services Revenue.  Now, to start playing around with this data to prepare for forecasting.  I’m sure there will be charts and graphs involved…I hope there are charts and graphs involved, I do love charts and graphs…

Revenue Modeling, 101...continued...and continued some more...

When I read about the project based revenue model in Four Revenue Models and Examples for Small Businesses, from www.plantostart.com this first thing I thought about was the episode of How I Met Your Mother, where Ted Mosbey announces in a wedding toast that his new company, Mosbius Designs, has failed.  Mosbius Designs employed a project based revenue model.  His revenue was generated by lining up on single project after another.  As the article reinforces, he was selling his expertise, and that limited his opportunity to make Mosbius Designs scalable.  He could only work on so many projects at one time.  Further, he also had to pick up the dreaded phone and spend much time pitching his business, over and over again, leaving less time to actually do the work he was pitching.  Ultimately, his business failed and he became a sensation in the Netherland…or Sweden…maybe it was Switzerland, or Norway, I can’t remember, but I do know it was because of auto-tune (see this video…you are welcome… http://www.youtube.com/watch?v=VYyDDkfOndI )

Now I’m no Ted Mosbey and I don’t think the project based revenue model will be a good fit for CKF as a main component for my revenue model, but this did get me thinking about where project based revenue modeling could fit into my business.  Honestly, I couldn’t think of a single idea so maybe this is one that I get to keep off the list, which is good because as I said before, I’m no Ted Mosbey and I don’t want CKF to fail like Mosbius Designs did. 

So that’s it for this week.  Join me next Tuesday as my research into revenue modeling continues with my final topic for this part of my revenue modeling series, services revenue modeling.  Until, have a great weekend, and enjoy Ted’s toast…

Revenue Modeling 101...continued...continued...

Moving ahead in our little foray into the wonderful world of revenue modeling, we turn next to transaction revenue modeling.  Looking back at our text for this course (AKA: 4 Revenue Models & Examples for Small Businesses from www.plantostart.com) “…transaction based revenue models are based on predictable sales of goods.”  This seems pretty straight forward, I might not even need to go to Google or Wikipedia to apply this one to Cardio Kung Fu.

Goods, or as I’ll refer to them, products, are a ways off for CKF right now but they are in the plan.  We’re talking DVD’s, hand weights, apparel, and the list goes on.  So transaction revenue will eventually be a part of the CKF revenue model.  What remains to be seen is how big a part of the model it will be.  The phrase “predictable sales of goods” leads me to believe that I’ll need to gather some data in order to come up with a predictable forecast in terms of the transaction part of my revenue model.  While I might not have needed to go to Google or Wikipedia to apply the transaction revenue model to CKF, I predict a visit to Amazon to buy a book on forecasting in my near future…see how I did that?!

Before I make that trip to Amazon though, I’m going to dig a little deeper into the next model, project revenue. 

Revenue Modeling 101..continued...

Time to jump in and figure out this whole revenue modeling thing.  Looking a the article Four Revenue Models and Examples for Small Business http://plantostart.com/revenue-models/ from the website www.plantostart.com this is what they have to say about the Recurring Revenue model...

"The recurring revenue model.  It is every entrepreneur's dream, but few will achieve it.  It is often the most desired revenue model by businesses of all shapes and sizes.  What makes recurring revenue so special?  Two words:  profit margins and revenue stability.  Basically you create something one time, and it sells over and over again."

Now, I have to admit, when applying this idea to CKF, it got a little confusing to me so  had to take to the interwebs to get some further clarity on recurring revenue and what that could actually mean for my business. (I found that clarity here... http://www.davemanuel.com/investor-dictionary/recurring-revenues/ ).

DaveManuel.com used these examples that helped clear things up for me...

"Example #1: A software company sells annual licenses for its business software. At last glance, 30,000 different companies were paying for annual license.  This would qualify as "recurring revenues" as these revenues will show up year after year.

Example #2: A website owner runs an investment newsletter that charges $19.95 per month.  Subscribers are billed automatically every month.  This would qualify as "recurring revenue" as the revenues occur again and again, month after month.
Using these concrete examples, I'm going to attempt to apply the Recurring Revenue model to CKF, here goes...

Inspired from Example #1....in 2014, I will be offering licensing to fitness professionals that want to teach CKF.  The license structure has four tiers to it: Instructor, Lead Instructor, Advanced Instructor, and Elite Instructor.  At the Instructor level, fitness professionals are licensed to teach Cardio Kung Fu.  At the Lead Instructor level, fitness professionals are licensed to teach Cardio Kung Fu and either CKF Sculpt or CKF Core.  At the Advanced Instructor level, fitness professionals are licensed to teach Cardio Kung Fu, CKF Bootcamp and either CKF Sculpt or CKF Core.  At the Elite Instructor level, fitness professionals are licensed to teach every CKF workout.  The tiered structure makes it convenient for the fitness professional to advance his/her license as their fitness practice expands. Licenses are renewed on a yearly basis, making licenses a yearly recurring revenue item.

Inspired from Example #2...with a target launch date of November 1, 2013, website memberships will be available that will offer members access to tools to stay on track with their workouts and food plans, an exercise library, progress charts, message boards, and daily messages.  Website memberships will be offered for a low monthly fee, making these a recurring revenue item.

I think that's about it for the Recurring Revenue portion of my revenue model.  Next up, Transaction Revenue modeling....

Revenue Models, 101...

I’ve got this notebook in which I’ve been writing down everything I’m working on for CKF.  In there I have outlines for workouts, contact information for media folks, brainstorming notes, brain-dumping notes, webinar notes, you name it, if it has to do with CKF, it’s in there.  As things are starting to ramp up, one of the things I have notes on, but haven’t done any real work on is revenue modeling.  I’ve got ideas about how much I want to make, I’ve got ideas for programs, I’ve got ideas for products, but I don’t have these ideas captured in any organized fashion because I don’t really know how to create a revenue model from scratch, so I’m going back to school.  Well, not really, I’m going sit here in my sweats and search the internet to learn how create a model for CKF. 

The place I’m choosing to start is with this article:

http://plantostart.com/revenue-models/

This article outlines four basic models, recurring revenue, transaction revenue, project revenue and service revenue.  After a quick skim, it seems like this whole revenue modeling thing won’t be as difficult, or as easy as I imagined.  It seems less difficult because now at least I have a place to start.  It seems less easy because CKF has several moving parts so I’m guessing I won’t discover it fits nicely into one of these models.  In order to come up with my model, I’ll apply CKF and all its moving parts to these four revenue models and see where I end up.

First up, recurring revenue….

time management, ninja style...

I start my new full-time job tomorrow so one of my to-dos this weekend was to come up with a master schedule for all the things I have going on my life.  Working part-time offered me a little flexibility in terms of when I chose to work on building CKF, or when I vacuumed or did laundry or cleaned the bathroom or ran errands, you get the picture.  Now I’m trading in that flexibility and you know what, that’s a good thing for me.  When it comes to time management, I need structure to feel like I’m accomplishing things.  If I just start with a long to-do list and have all day to do it, at the end of the day, I don’t feel like I’ve accomplished much.  That’s probably more a function of my tendency to put way to many things on a to-do list when it seems I’ve got all the time in the world to get them done.  So this will be good. 

Because I don’t have a ton of time, I’m going to write my schedule while I’m writing this blog post, a time management two-fer if you will.  My first step…what are the things I want included in the schedule?  Because I can waste all kinds of time writing list after list and can devote hours keeping multiple calendars, and because I have a lot going on in all areas of my life, it would probably be the most efficient for me to have one master schedule that includes Cardio Kung Fu, work and my home life. 

OK, so I’ve got three categories for my schedule: CKF, work and home life.  My second step is map out the basic tasks that need to be completed weekly, at least for CKF and for my home life.  I’m not sure that this needs to be my second step but my rationale is that there are some things that need to be done in my mind and I’d rather have the management part (the tasks) of my time management schedule drive the time part rather than the other way around. 

What are my tasks for CKF? Twitter, Facebook, Blog posts, classes, bookkeeping.  Obviously there is more work to be done, but for a start, while I’m working full-time, the purpose of this list is just to make sure there is time scheduled to get those daily and weekly tasks done.  Clearly I’ll need to schedule more time than is needed to complete these tasks so I can also do the building part of the business that doesn’t fit into a neat weekly to-do list like researching sample class locations, writing instructor manuals, attending conferences, etc.

What are my tasks for my home life?  Grocery list making, menu planning (yeah, I’m starting with food, don’t judge, I really like food) working out (on non-class days) vacuuming, dusting, cleaning the bathroom, cleaning the kitchen, straightening the house, windows, laundry, floors, bill paying, homework check-in with the jr ninja, Kung Fu lessons, cooking, brushing the dog, walking the dog…I’m sure I’m forgetting something here but this is a pretty good start.

I’ve got my lists of tasks, I guess next step is to create the schedule.  For this I’m going to take to the interwebs for some help…

The first one I came to was this one…

http://office.microsoft.com/en-us/templates/daily-work-schedule-TC102780252.aspx

This is good, but I want a place to put daily to-do’s as well.  I don’t want to list actual tasks in time part of the schedule.

The next one I came to was this one…

http://www.youtube.com/watch?v=Hsijk3l5vjQ

This is not helpful  for what I’m working on right now, but I’m including here because I’m in love with organizing CKF projects this way.

Back to the task at hand, so I kept looking for ideas but I kept coming up with sites that only allowed me access if I joined their mailing list.  I found this ironic as joining their mailing would add yet another task, in the form of “delete uses sales pitch emails” to my to-do list.  I decided to look at the original template I found and tweek that one a bit. 

The result of my first stab at this is below…

Day/Time	Priority	Daily Tasks	Multi Day Tasks	Weekly Tasks
Week Days		Twitter	Blog (tue, thur, sat)	bookkeeping
5:00 to 6:15	CKF	Facebook	laundry (mon, fri)	clean bathroom
6:15 to 7:00	get ready for work	brush Dru	vacuum (tue, thur, sat)	clean kitchen
7:00 to 7:15	walk Dru	straighten house		dust
7:15 to 5:45	work			floors
5:45 to 10:00	home-life			windows
				bill paying
Saturdays
6:00 to 9:00	CKF
9:00 to 12:00	home-life
Sundays
6:00 to 11:00	CKF
				home-life
				CKF

I’m sure this will change, but this is a good first stab I think. 

Check back on Thursday to see how I’m doing so far.

Launching while working, a pro's and con's list, and this one blogger that convinced me I got it right...

Cardio Kung Fu is growing, however, so are our household bills.  In December I took a little hiatus from full-time employment to focus on what our family needed (me home more with more flexibility while my husband traveled for work) and started working part-time.  This was ok for a while but recently it became clear to me that I needed to go back to work full-time.  I’m not independently wealthy so I don’t have the luxury of losing money while I get CKF up and running and working part-time, while the flexible schedule was awesome to begin with, has felt more like being held hostage as time has gone on.  I couldn’t get into a rhythm of working on growing CKF with my schedule changing every week (not to mention not being posted until a few days before the week actually started) and my stress was mounting with each barely-over-minimum payment I was making on my one credit card that has a balance on it.  After much consideration, a couple of weeks ago I decided to start looking for a full-time gig again.  Part of this contemplation included looking at pros and cons.  The pros, money, a feeling of purpose again doing work that was appreciated, structure, stability, vacation days, sick days.  The cons, no more full days off to build CKF, and, well I couldn’t come up with anything else.  Since I wasn’t actually using the full days to build my business (there were also pesky things like laundry, vacuuming, cooking, etc to  catch up on since my work schedule was so all over the map) I decided there really wasn’t a down side.  CKF is a new fitness program and the way I’m building exposure is by adding community education sites and that I can do while working.  It’s going to take time before I’m a household name so I figure why not have a stable income in the meantime.  I also know myself well enough to know I’m at my most effective when my schedule is full.  A full schedule means I don’t have time to waste on actions that won’t garner results.  And that’s just what this guy said so if it’s in a blog on the internet, it’s got to be true, right?

http://chrisguillebeau.com/3x5/starting-a-business/

Oh, and BTW, I start my new full-time job on Tuesday…