Speed To Revenue – Think This
November 13, 2018
Speed to market is a term that is thrown around a lot, I use it a lot, it has staying power because it is a very relevant term. The quicker you get your part or product to the market, the better the chance your part or product has of succeeding. But what does Speed To Market really mean? From my experience and perspective what it really means is Speed To Revenue, because that is what success is really all about.
Revenue for any new product is the most important thing that your part or product needs if you want to be around longer than a couple of rounds of fundraising or a couple of trade show seasons. Revenue takes the pressure off, it funds manufacturing, it gives suppliers and project partners confidence, revenue solves all problems.
Speed To Revenue, not a common phrase but it should be in the back of every project managers mind. Every day you are not generating revenue is another day of pressure which is why I prefer a mind set geared towards Speed To Revenue over Speed To Market when developing a new product.
1. Launch quickly if you can. When you can launch version 1.0, or 1.0s, then launch it like Apple does. The phone giants don’t wait for perfection because they know how much competition there is out there and that missing a selling cycle can potentially kill their company within 6 months. One can argue about if version 1 is pretty enough or feature-rich enough, but at least by launching version 1 (in some fashion), it will be out there generating revenue to keep you moving forward. At some point you have to launch, earlier is better if you can.
2. Accept less profit. If you have an early manufacturing model that delivers you a positive profit margin, then launch and look for better profit margins down the road. Don’t let a spreadsheet model that demands a certain profit margin stop your forward progression. Accept positive revenue. Early manufacturing runs gives perceived strength while you work on your long-term optimized manufacturing solutions and pricing models. The other important benefit to early manufacturing runs is being able to work out unforeseen manufacturing issues and correct those issues on a small scale before big orders start to come in. Try low-volume manufacturing solutions at first if the pricing works.
3. Multiple revenue streams. If your product is a consumer-friendly product then we all want that Walmart order. But don’t hold out for only this model as they can take a long time to finalize. Utilize multiple online selling channels to create positive revenue as soon as possible to help support your entire project moving forward. Selling directly to the consumer can yield a much higher per unit profit margin, even if your manufacturing cost for smaller runs may be a bit higher. Make money as early as possible to help sustain the future of your project.
Positive revenue early builds on itself, it takes away pressure and stress that can lead to poor decision making. Speed To Revenue should be your ultimate goal, it should be your golden rule driving you to positive revenue as soon as possible. Think Speed To Revenue.