How Building Scalable Revenue Benefits Founders
In the early days of a company, founders typically close all of the deals. As the company grows, founders inevitably start looking for additional ways to generate revenue. But not all methods of generating revenue create sustainable, long-term value for the business. The founder’s goal should be building scalable revenue. Scalable revenue is revenue that is generated by successfully developing and implementing marketing, sales, and revenue generation processes that are repeatable and predictable. Scalable revenue benefits founders because it allows them to consistently forecast and deliver ongoing revenue streams that don’t rely solely on the efforts of the founder.
Building scalable revenue is a methodology and a mindset that requires deliberate planning and action by the founder. Moving from founder revenue to scalable revenue is not an easy task. Scalable revenue must be built, not bought. Scalable revenue is not built by raising prices, running promotions, or closing a few large deals. It can’t be bought by purchasing leads or hiring appointment setters.
Scalable revenue must be built over time by structuring what you sell, how you sell, and who does the selling to create a predictable, repeatable revenue engine fueled by tightly coordinated, highly effective marketing programs. Let’s talk about the benefits of building scalable revenue, what you can do now to start to achieve it, and how it can impact your business.
Scaling Past Founder Revenue
Once a founder-led firm achieves a certain level of momentum, it becomes painfully clear that the founder alone cannot deliver enough sales to sustain and grow the business. As founders move toward building scalable revenue, adding the right combination of sales and marketing resources will allow your firm to reach more of your target audience and close more deals. Over time, founders become less integral to the selling process because the majority of revenue is delivered by an integrated sales and marketing team. In addition to increasing revenue beyond what the founder alone can achieve, building scalable revenue benefits founders by giving them more time to focus on other areas of the business.
Scalable Revenue Is Predictable
Successful implementation of a scalable selling process enables founders to consistently predict revenue and achieve revenue goals. While it does take time to build scalable revenue using a sales and marketing team, one of the easiest ways to begin to achieve predictable revenue is by implementing some form of recurring revenue model in your business. Something as simple as structuring your service offerings so they are contracted for and delivered over time can give your firm a more predictable month-over-month revenue stream. This gives your business a foundational income stream that builds over time as more clients are added.
Building scalable revenue that includes a recurring revenue stream can make your business more appealing to investors and bankers because revenue and cash flows are predictable and consistent. Firms with recurring revenue models often receive higher valuations and may be able to access non-dilutive capital secured by their recurring revenue streams.
Scale Revenue With Existing Clients
Another way to begin building scalable revenue is to put a program in place that focuses on selling additional products and services to existing customers. Once you sign a new customer, cross-selling and deliberately up-selling them creates an ongoing source of incremental scalable revenue. Providing add-on products and services your customers find valuable can also strengthen and grow your relationship with them and maximize their customer lifetime value.
For many founder-led firms, adding sales resources focused on selling to existing customers is a low-cost, high-return investment. Customer service and account management team members are often well-suited to these types of “farmer” sales positions. They already know your clients and your business and they can be incentivized for minimal incremental cost with commissions or spiffs to increase revenue from existing accounts.
Building scalable revenue from existing clients also improves the return on your sales and marketing investment. It is always less expensive to get more revenue from existing clients than it is to win deals with brand-new ones. Make sure your clients have a positive experience with your firm so you are well-positioned to sell them additional services. This will preserve your existing client revenue base and minimize customer churn.
Set Aside Funds To Scale Revenue
Building scalable revenue in your organization requires thoughtful planning and a deliberate allocation of resources. Without any financial resources allocated to grow revenue, it’s almost impossible to achieve long-term success. The first step is to start where you are and commit to setting aside even a small percentage of current revenue dedicated to building scalable revenue.
Use these funds to develop an overall revenue budget for your firm. A revenue budget includes a marketing budget and a sales budget so you can plan, coordinate, and track all the spending dedicated to driving revenue. Over time, increase the percentage of allocated revenue until you achieve a level of spending that is right for your business and your industry.
If at all possible, the cash allocated to your revenue budget should be placed into a separate bank account. Building scalable revenue using a separate pool of cash earmarked for sales and marketing spending creates an important paradigm shift for founders. It’s much easier to invest funds to scale your revenue when you don’t feel you have to justify the spend out of operating cash each time you need to make a purchase.
Plan First - Then Spend
Too often, founders spend sporadically and opportunistically on things they run across that they think will drive sales. Putting together a plan and process ahead of time based on the specific needs of your business will make sure that the dollars spent are aligned with a larger strategy to take you from where you are to where you want to be.
It’s important to make sure that foundational systems to track and monitor selling and marketing activities are in place before you start to spend on them. This will help ensure that you have a clear line of sight into your total costs of acquiring revenue, as well as the individual performance and activity levels of your team members.
FounderScale Can Help
The journey from founder revenue to scalable revenue is one that founders don’t have to take alone. Mapping out a path to scalability can differ from business to business, and the team at FounderScale is uniquely qualified to guide you all along the way.
FounderScale’s core focus is helping founders increase their impact in the communities where they live and work by successfully growing their businesses. Contact us today to learn more about how we can support your growth and success.
