What’s your revenue profile?

Are you clear about your revenue profile? Below is an excerpt of a blog post written by Neville Chamberlain discussing the power of your revenue Profile.

What’s your revenue profile

In this week’s article I am going to stray from my usual style to have some fun. OK, this is totally geeky / nerdy fun but I’ve found the concept so powerful and insightful it seems to be a lot of fun for everyone that’s done the exercise with me. Here’s the story:

About three or four months ago I started out with a very simple diagram to help myself understand how marketing and sales play a role in building a successful business. I’m no stranger to marketing and sales, but venturing into the online part of my business forced me to understand how this stuff works in the online world.

The first diagrams proved to be useful and they evolved into something called the Business Accelerator Framework, a totally accurate but incredibly boring name. A suggestion from my weekly mastermind group turned that into what you now know as the Tornado Method. As I started formally teaching the method feedback from workshop and online participants have added a lot of additional concepts and refined the overall method.

One of the most powerful concepts is that of your Revenue Profile.

Your revenue profile

Your revenue profile is simply a graph of your business’ revenue over time. In the first few workshops that I did on teaching business owners how to deal with overwhelm, the thing that really jumped out at me was that there are a number of archetype profiles - and each archetype has a number of common causes for looking the way it does.

In this article I’m going to describe the 8 archetype revenue profiles (plus the ideal revenue profile we aspire to), together with the common causes for each.

Understanding your revenue profile is tremendously useful - not only does it make it very clear where you are in building and growing your business - it also gives you a very good idea of where you need to improve.

Your profile may be a hybrid

Not all businesses fit one revenue profile perfectly. Your profile may be a hybrid of two or more, most often one profile for a period followed by another profile over another period of time. Still, understanding where you are now is going to help you zero in on what’s not working.

Useful for startups too

I’ve found that understanding these revenue profiles are useful for startups too. Even if you’re pre-revenue or just started booking your first sales, understanding the revenue profiles gives you advance warning of where you may be headed.

So without further ado, let’s take a look at the profiles.

Profile 1: The Startup

This is the classic revenue profile promised by startups to investors. Although less common today than it was in the dot-com era, the basic principle is the same: we’re going to be under water for a while but then revenue is going to take off exponentially and we’re going to take out Google and Facebook and rule the world.

When you see a profile like this there’s not a lot you can do but shrug and wait to see what happens - but if you’re the startup presenting this to potential investors you’re probably in trouble. Very few businesses actually follow this profile so you may want to think about the underlying assumptions that led you to think this is feasible.

Common causes:

  • unbridled enthusiasm and a disconnect from reality

Profile 2: The Roller Coaster

The Roller Coaster also goes by the poetic names of Feast and Famine or Starving Artist. It is most commonly seen with solopreneurs or small businesses where the principal is expert in his or her field but very little else.

In this profile, revenue is great when there is a client, but quickly drops off when the client engagement comes to an end. A mad flurry of marketing and sales activity ensues, you land another client and revenue swings up again - only to repeat.

If the business owner is not able to create a marketing engine that creates a steady steam of leads this profile will continue indefinitely - or until the business owner gives up.

Common causes:

  • insufficient marketing and lead nurturing to build a steady stream of leads;

  • insufficient knowledge of marketing, lead nurturing and sales; and

  • no time allocated to marketing and lead nurturing when there is revenue.

Profile 3: The Cliffhanger

This profile is common amongst professionals new to running their own business. They set out on their own, land a big client and enjoy the riches while it lasts. The contract seems to go on for ever, but one day it ends - and with no marketing or lead nurturing revenue drops to zero.

This profile has two outcomes:

  • The business owner gives up in disgust and goes to find a job; or

  • a mad scramble to land the next client ensues leading to a Roller Coaster profile.

Common causes:

  • no appreciation that all client engagements come to an end some day;

  • no time or effort spent on creating the marketing, lead nurturing and sales engines that will inevitably be required to build a sustainable business.

Profile 4: Maxed Out

This is the profile of a successful business that has hit a ceiling and can’t seem to break through it. The business is profitable and sustainable, but longer-term growth seems difficult to achieve.

I’ve seen this profile with quite a few of my clients, and the underlying causes are not always easy to solve. One common cause is that the owner is stuck working in the business and believes that he or she is so critical to the success of the business they can’t delegate work to their team. Another common cause is geographical constraints - growth opportunity in their local market has reached its peak and expanding requires going to new markets - which is expensive and risky.

This is one of my most favourite problems to solve for clients - provided of course that the client is aware that breaking through the ceiling will require a substantial shift in their mindset and are willing to undertake the journey.

Common causes:

  • owner stuck working in the business;

  • growth is prohibitively expensive or risky; and

  • fear of the unknown - growing further is going to change everything.

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