The answer to this question makes a whale of a difference on what your actions are as an entrepreneur! Have you heard a story like the below:
The entrepreneur was building a website to generate traffic and then sell to the visitors some related products. The entrepreneur was certain that if he builds the traffic and the following, selling his wares to the following will be certain. This will result in recurring revenues and also tremendous value for the company. More importantly his concept is unique which is already becoming the talk of the town!
If you are immersed in the start-up ecosystem you know that this is not a unique business model. A lot of web start-ups do the same. The entrepreneur was building something that he felt was unique. Why was he building something that fundamentally had a value proposition and not a direct revenue model? It could have been his intention to do something unique! How often have you come across an entrepreneur who is focused on creating value without a sharp eye on revenues / profits? In recent times it is not strange to meet entrepreneurs of this type. But when they are studied as the ideal role models to entrepreneurship, it confuses many others who get into entrepreneurship / start-ups for other reasons.
When one of the invited entrepreneurs to my class shared an example like the above, one of the participants (an entrepreneur himself) in class asked me over lunch how the speaker could focus on the idea / concept over revenue generation? I asked him back this question: ‘Why did you become an entrepreneur?’
He looked perplexed at me and asked why it mattered? I told him to consider a situation where he did not generate revenue for 12-15 months and asked to rate his comfort factor? He said he could not last even 3 months without revenue (at least mentally). I told him that the person who spoke could last probably 10 years without revenue. Does that make a difference? He said ‘Yes’. I told him to think along these lines:
- Why did you start?
- Is that the focus of your plan and measurements?
And all of these will be based on the question I asked the entrepreneur – “Why did you start-up?” Let’s be honest with ourselves. It helps us be happy entrepreneurs and stay the course for a longer time.
What do you think?