Good revenue is capital you don't have to pay back

Founders and Investors alike have been watching the Silicon Valley Bank saga closely over the last few days.  It comes on top of already tight market for capital raising.  This blog looks at what you can do in this market – where investors are wary and capital raising is much tighter, with stricter conditions and at lower valuations.

You need capital to run the business, to maintain your growth, to increase your growth, to increase your valuation.

There is a form of capital that is still readily available, and you don’t have to pay it back.  Revenue! But it must be “good revenue”.

We’ve worked with some great Founders and Investors over the last 5 years and as the market/business environment has changed, the fundamentals remain.  Good businesses have a constant focus on their product/services, their people, their financials, capital raising AND revenue generation.  We worked with them all on revenue generation.  Good revenue generation. What is “good revenue”?

First, what does good revenue provide your business? 

• Good revenue gives you the cashflow that provides you and your team independence on decision making. Independence from banks and investors, especially around growth/investment based decisions including
  • new staff
  • product investments
  • new industries
  • new regions/countries.
• Good revenue provides a level of internal comfort about past decisions and future directions. It rewards effort to date and promotes a winning culture.
• Good revenue provides investors with a level of confidence to stay the course or increase their commitment to the cause.
• You don’t have to pay good revenue back!

“Good Revenue” is not “any revenue”.   Any revenue can be “bad revenue”.  This comes at a cost.

• Bad revenue has an opportunity cost on both sales and delivery. The answer to these questions should not be “we need the revenue – any revenue”.
  • Why are we doing this services project that is not core to our SAAS business?
  • Why is the product development team on this project and not on product development?
  • Why are our consultants working on a non-core project?
• Bad revenue can have a negative impact on the bottom line.
  • There is no margin in this.
  • We don’t know what we are doing – it’s not core.

Good revenue is revenue that is core to your business. 

• Good revenue is revenue from selling your core product or service.
• Good revenue derives from the delivery of value to the buyer.
• Buyers rave when they provide you with good revenue. They will rave about your product or service.
• Good revenue begets more good revenue for additional work for that client, or via referrals

Your business must have clarity on your “good revenue” and recognise “bad” revenue threats before it’s too late.  You must qualify all opportunities to determine if it is good revenue or bad. 

• Is there an opportunity?
• Can we win the opportunity?
• Is it worth winning the opportunity?

The fundamentals for driving “good revenue” and to avoid “bad revenue” are

1. A high performance sales team
2. A proven sales framework
3. A strong sales leader
4. A product or solution that solves real problems.

What is your plan to address these four areas? 

Talk to us about the first 3.  You are responsible for the fourth.

When you have “good revenue” you’ll sleep sounder at night. 

Talk to us about sales. We love sales.

Reach out for a discussion.