Are you a successful business?

Three of the most important things startups need to focus on / demonstrate if they are raising money, want to grow or just plain want to be successful:

1. Gaining customers (or if no proof of concept then a list of qualified customers)
2. Showing they know how to grow their business
3. Demonstrating profitability and ROI

These points may sound easy to achieve and you may be saying to yourself, ho hum, I don’t need to read further.

Point number 3 – Demonstrating profitability and ROI. A lot of startups get lost here. They don’t realize that you have to invest/spend money in order to make money – Lie #4 – I have to show a profit before I can market. Investors (and actually the company owners should feel this way too) are looking to see if you’re profitable or when you are predicting profitability (break even and beyond). And tossing some money out willy-nilly at marketing efforts will never bring ROI into your company…marketing is a strategic exercise that requires thought and planning and, well, strategy.

Here’s some definitions and formulas for calculating ROI and profitability:

2 responses to “Are you a successful business?

  1. Hazel Adams-Shango

    I found this brief commentary interesting as I am in the process of starting up an educational consultancy and am attempting to work on the beginning of pricing my consultation services. In a perfect world, I would like the business to demonstrate profitability in 2 years or less. I am attempting to monetize a service I preformed while working for a municipal agency and for which there is great demand – more than the agency itself can answer during many time of the year. However, I am attempting to reproduce a similar product with less on-hand resources but would like to yield the same salary I left plus 20%. I’m funding my own start-up so my marketing budget will have to be extremely efficient and effective. I’ll continue my research on consultancies and how my services can be priced effectively to meet the price point in the market and to build a strong customer base.

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