At the very start, a business may have zero revenue streams but it should have a plan detailing how it plans to make money and keep the business afloat. I have said a bit about what a revenue model is in one of my previous posts. It is the strategy a company will use to create and manage its revenue streams, and the resources it will require to sustain it.
It could be based on sales, adverts, subscriptions, referrals, and the likes, but it will generally be a strong determinant of your long-term profitability. It should come up at the time you are drawing your business plan because revenue generation will determine the financial projections in your business plan.
It is quite important that you decide on the Revenue model first before having each department or sub-teams present you their own model. For instance, imagine that your tech team builds an application with features in line with a Freemium model. On the other hand, you have the sales or business development team presenting you a plan or strategy that drives on the Affiliate Revenue Model or Subscription Revenue Model. The situation can get even worse when your CFO now presents you with financial projections based on Direct sales or Transactional Revenue models.
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Trying to merge all their plans together would be your perfect recipe for disaster. Instead, first, create a revenue operating model for the business and then have each of the teams work based on that model. You can sit with your team heads or your partners, or even speak to a consultant while trying to decide what revenue model will work best for your business.
Do proper research and speak to experts while reaching the decision, because once you hit the ground running, it is not easy to change your revenue model until you have stabilized as a business.
With the revenue model in place, staff can be properly briefed as they onboard and will know what is expected of them early enough. You will also now have a template upon which the subteams will develop their plans, strategies, and products. If you choose the subscription-based model, the product development team knows on time what features to merge into the product. The marketing and business development team also develops their plan based on this model and this way you have the entire team working in sync.
