The Million Dollar Mistake That'll Put You Out of Business

Question: Why are 50% of businesses not around to celebrate their 5th anniversary?

As a business owner, this is the million dollar question you have to ask yourself if you want to be around years from now.

The most common answer to the question of a business’s failure is usually very simple: it wasn’t making enough money.

Right now, 82% of businesses FAIL due to lack of cash flow management and not understanding cash flow at all. 

Any time one issue is single handedly forcing businesses to shut down, it means that we have to start taking it seriously. 

And the problem is, it’s so deceptively simple that it’s easy to overlook.

It doesn’t take a rocket scientist to figure out that cash is vital to the success and growth of any business; but somehow, many business owners have been seduced into focusing on other things. 

From customer avatars and marketing to blogs and websites, business owners aren’t spending enough time focused intently on revenue. 

In fact, most business owners don’t even know the difference between working on the business and working on the revenue. 

And it’s a subtle distinction that is costing a lot of people a lot of money.

For those of us small business owners commanding our own enterprises, tunnel-visioning our way past a concrete business strategy with a specific revenue plan won’t do. 

And, it just doesn’t work.

It’s time to get hands-on with the ins and outs of what ignites our success instead of relying on the teachings of business “gurus” who neglect the very life blood of the business you run.

Let’s dive into cash flow and revenue models so that our businesses can ultimately become the new staples of a new generation.

What is a Revenue Model?

Your revenue model is the thing that outlines exactly how your business makes money and it consists of four major components:

  1. Your offer (product or service)
  2. Your audience
  3. Revenue supporting activities
  4. Revenue generating activities

In your business, the revenue model is the foundational context that drives your profit and the money manual that you come back to, again and again.

With the rise of social media, so many new revenue models have popped up and become popular. Here are some that come to mind: 

  • Influencer 
  • Affiliate 
  • Flipping/Markup
  • Freemiums and freebies
  • Advertising

No matter what business you’re in, these are some ways that regular degular entrepreneurs are making consistent income every single month. 

But for most business owners, that’s not the case. Too many businesses are focused on the first 3 components of the model while largely neglecting the last. So I want to talk about why your revenue isn’t just a part of your business model. It’s the main idea. 

Why Does Your Revenue Model Matter

First of all… #revenuemodelsmatter

A revenue model holds you accountable. It keeps you focused on what moves your business forward.

And while it seems like common sense, the problem might be that it’s deceptively obvious. 

Every entrepreneur understands that the purpose of a business is to make money, but over 80% miss the mark all together. 

How the heck does that happen? 

Well, there’s a deep and dire flaw in the system that’s as old as the business development model itself. 

People mistake what they do with how they make money. 

It’s easy to think that these are the same things but they’re not. 

If Cassie is a candle maker, that tells me what she does. But here’s the thing that often gets missed: It actually tells me NOTHING about how she makes money. 

This messes people up and it is the number 1 thing keeping them broke.

Cassie could make money from partnering with influencers or affiliates, advertising on social media or buying low cost candles and selling them for a profit.

Companies that understand the difference between what they do and how they make money thrive, grow and expand. 

Companies that don’t are stuck, stagnant and eventually they die.

The Biggest Mistake You Can Make

Many business owners think they’re running a business when what they really have is a very expensive hobby. 

I don’t mean to be rude when I say that because it’s not your fault. 

When you look at the business development process you go from idea to implementation to improvement while giving minimal attention to the revenue model itself. 

You have entire coaches dedicated to teaching you how to build businesses but have very little information about how to build the revenue… and by now you know those are NOT the same things. 

The biggest mistake a business owner can make is to divorce revenue and cash flow from the overall structure of the business…

or to collapse them, as if focusing on the business will automatically take care of the revenue and cash flow. 

Let that sink in for a minute. 

I probably sound like a broken record at this point but I want it to sink in that focusing on the business will not automatically take care of the revenue. 

What's Your Money Maker

By now, you get it. 

What you do is not the same as how you make money. 

Mcdonald’s is in the burger business but Ray Croc understood that they were uniquely positioned to make money from systems and real estate. 

McDonald’s is the company they are today because they have an impeccable system that produces a predictable product no matter where you are, and because no matter where you are, you’re never too far from a McDonald’s 

So now, I want to flip the script and put it on you: 

If you’re a business, what is your current revenue model? And if you want to push t further, what is the revenue model best suited for your business. 

If you’re thinking about starting a business, what is the best revenue model to support the mission and vision of your future endeavor? 

When you start asking yourself these questions, you’ll set yourself up to be in business for years to come.

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