By Ed McLaughlin with Wyn Lydecker

Before you start your business, ask yourself: How will you generate revenue? Answering this question is an essential part in determining your business model. You need to know if you will sell a product, a service, advertising, or access to data. Cash flowing into your business from sales is the first step toward realizing a profit.

You need to understand how you will structure your model:

      • Will you collect sales revenue directly from customers in exchange for the service or product?

      • Or will your business act as an intermediary, helping to bring buyers and sellers together, and collecting a fee for the service or a percentage of the resulting sale?

      • Or will your business be a publisher of content or the creator of an online community that charges for access to the content?

      • Or will you provide content or community for free and collect revenues from advertisers who want to target your readers or users?

      • Or will you be a collector of data and charge fees to marketers for access to that information?

      • Or will your business use a combination of these revenue models?

Use theses questions to help you formulate and describe your own model. My startup, USI, had a pretty simple revenue model. We sold a service of managing real estate portfolios and executing real estate transactions. Our customers paid us fees for dedicated resources and commissions on transactions.

I explore revenue generation in more depth in my upcoming book, “The Purpose Is Profit: Secrets of a Successful Entrepreneur from Startup to Exit.”


Copyright © 2014 by Ed McLaughlin   All rights reserved.