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.