Tag Archives: Outsourcing

How Do You Generate Near-Term Revenue? Seven Suggestions

Situation: A young company that focuses on personalized solutions needs to generate near-term revenue to meet expenses. There are also options for debt or equity financing, but the terms for each will equally depend on near-term revenue potential. How do you generate near-term revenue?

Advice from the CEOs:

  • Think in terms of the referenceability of early customers.  As a new company, the first five customers define the company to future customers.
    • The core values of the company will help clarify how to make early choices.
    • Don’t just go for the easiest closes.
  • Create a chart of potential customer prospects:
    • Segment potential prospects into groups.
    • What is the deal model and key value proposition for each group?
    • Create a video and communications package to demonstrate the company’s benefit to each group.
  • There are trade-offs between the different deals that the company will pursue:
    • Small fast deals are most likely to meet immediate cash flow needs.
    • The biggest deals may involve the creation of LLCs. These will involve both more time and additional legal fees.
  • Make sure that early deals align with the company’s core brand.
  • Consider outsourcing to speed the provision of services to early clients. Build this cost into your billings. Assure that the funds from early deals flow to or through the company. This will improve the financial story to additional clients.
  • Consider serving special interest groups. Their potential value is that they work for their passion more than for money. If the company chooses to work with one or more of these groups, assure that customer selection aligns with company values.
  • The current focus for near-term monetization is on merchandizing. As an alternative, consider charging a separate fee for the use of company IP. This may give clients additional incentive to utilize company technology to monetize their investment.

OMG – our Product is taking off! Two Considerations and Two Options

Situation: Demand for our product has increased, and we need to scale up production. We’re small, so how can we do this without killing the product?

Advice from the CEOs:

  • This represents a major change of mentality and culture. Essentially, you’re moving from a “handmade” process to a commodity volume process. You may also be moving from low volume/high margin production to high volume/low margin production – this will change you.
  • If you are sure that you will get the contract for long-term production consider establishing high volume production at a new site.
    • Rent/lease another facility. Also hire a different set of experienced people, and consider giving this facility a new name to suit the new team. This will help you to establish a new culture suitable to the new opportunity.
    • Ask for an option for additional space on the lease.
    • If things don’t pan out, look at this new space as the eventual location for your existing team.
  • Other options to consider:
    • Outsourcing to a 3rd party manufacturer. This is an option, unless you are an OEM outsourced producer yourself. Essentially you could be telling your OEM customer that they could go direct to another source at a lower price.
    • Establishing an overseas production capability – one where you own the facility and manage the QC. This will be a challenge if the customer wants to specify “Made in US”, or where quality concerns are essential.

Key Words: Production, Scale-up, Ramp-up, Outsourcing