Scalable revenue model?
Sunday 1 September 2019 Tags: Services, Earning model, Scalable, Profit
Scalable revenue model
A successful third generation entrepreneur has a production company for metalworking machinery. The company is strongly dependent on physical labour and its availability.
“The entire world wants something from me but my production company has a linear growth model. That has always been the case and will remain so”, the entrepreneur comments with slight frustration.
“Why do you think that is?”, I ask.
“I could build ten factories to meet the demand but that will not work, will it? I don’t have the people, I don’t have the time, I don’t have the money," and continues listing limitations and obstacles.
“But aren’t you the one with the knowledge, aren’t you the best authority where metalworking machinery is concerned?” I persist.
“Well yes, but what am I supposed to do with it other than building machines?”
Knowledge as revenue model
“Imagine setting up a service division in addition to your factory. Fill it with a team of dedicated consultants and software producers with the assignment to convert the knowledge of your business into digital products - products to help all those customers that you currently cannot serve with machines. You can, however, be of service with your knowledge.”
“Have you gone out of your mind?" he says, “My family worked on this for 97 years; you don’t expect me to pass it on for next to nothing?”
Knowledge against user information
“You are not passing on anything," I said, “You offer that knowledge in the form of a subscription via your own portal. Your condition being that your customers provide you with all the user information. What would this mean in terms of your existing business? And how valuable would it be if your customers continued to pay their subscription for many years to come! It will help you accelerate your knowledge development and they will be very happy to continue to make use of it.”
A magnet for your target group
“Suppose that in five years' time, your platform would contain so much usage and development information that as a user of steel working machines, you would be crazy not to have a subscription.
What effect does it have on the scalability of your business, the profitability, the growth? Your platform will become a magnet for your target group and your Sales Department can retire. So who is crazy now?”
What does this mean for you?
Whether it concerns metalworking machines or your specific product; if you have the knowledge, you can expand it using this format. Learn more? Register and we will contact you as soon as possible.
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