Search This Blog

Sunday, January 24, 2010

Lack of Revenue will Kill your Company

My dad once told me that the biggest hurdle that many companies face is the failure to be profitable. I would completely agree.

After my last post on Minimum Functional Units, I would suggest that the failure to be profitable causes much of the scope creep that many startups and small businesses experience. The appeal is understandable..."I'm not making enough with service A, so let's add another service."

Unfortunately, scope creep dilutes the marketing message and spreads sales resources even thinner. Often the result is that owners end up overwhelmed with work and without much result, so they go out of business.

A much better outcome can be achieved if the company can stick with the original offering,focus on getting the MFU cashflow positive then scaling.

Of course, some MFUs just don't cashflow and in that case owners are much better off with a small failure than if they have tried to build a diversified structure on a faulty foundation.

Birmingham Angel Network, LLC's Fan Box