David Cummings posted about the challenge faced by entrepreneurs when trading one-off revenue for scalable revenue. This is especially true for SaaS companies when the temptation is there to engage in one-off consulting engagements that bring in short-term revenue perhaps at the expense of investment in the long-term recurring business stream. As I commented on David’s blog, the key is to identify ways to leverage one-off revenue streams to drive additional value toward recurring revenue. You can do that not only in terms of tools, techniques or product ideas, but also marketing leverage such as case studies and testimonials.
One of the challenges entrepreneurs have is finding the balance between one-off revenue, like consulting services, compared to scalable revenue, like recurring Software-as-a-Service (SaaS) revenue. When times are tight financially, or it’s a bootstrapped startup, one-off revenue can become a necessity and highly desirable to get cash in the door.
Entrepreneurs need to continually ask the hard questions internally about what scalable revenue is being sacrificed for one-off revenue.
There’s no simple formula for determining when to give up one-off revenue in lieu of harder, scalable revenue. As the business grows and gains momentum, more opportunities arise for one-off revenue. Customers will ask for more consulting services, potential partners will reach out about one-time opportunities, and so on. When revenue sources arise, stay opinionated about what does, and does not, fit with the long-term vision.
What else? What are some more examples of trading one-off revenue for scalable revenue?