Once upon a time the only way for a business to make money was to drive revenue with sales. Today however you have angel investors, bank loans, venture capital, friend and family rounds, initial coin offerings, crowd funding, and ultimately initial public offerings as sources of funding. With so many funding options available to entrepreneurs, do they even need to worry about sales? The answer is still a resounding yes.
Here are a few of the reasons why businesses still need sales as soon as early as possible:
1. Venture funding and angel investment is still hard, and rare. According to the Kauffman Foundation, only .6% of Entrepreneurs receive venture funding, and among even the fastest growing companies, this source only accounts for approximately 13%.
2. Investors are going to want to see revenue to give you funding. Yes, there are some ideas that are so world changing that they don’t require any sales as a proof of concept to show the VCs and Angels, but most likely this isn’t your idea. More than likely, one of the first questions you’re going to be asked is if you have any revenue and if so how much. They want their money to be rocket fuel, not kindling.
3. Adding revenue is the only way to raise money that has no strings attached. Debt will have to be paid back at some time. Investors will want a say in any future decisions you make tying your hands on some business moves that could be the best way forward for your company.
4. At the end of the day, you’ll either need to develop sales or you will wind up out of business no matter how much VC money you bring in.
So do startups need sales? The answer is a resounding yes. These are just a few of the reasons startups need sales. At the end of the day, it’s best for your company to focus on sales from day one, so you never have to worry about any of the other kinds of funding.
This need for sales even very early in a company’s life cycle is why Rothstein Consulting created our new class, How to Turn Your Idea Into a Sales Machine. This all day class that we’re offering on Tuesday 7/24 or Saturday 7/28, will cover the basics of who your customer really is, what type of revenue model will work best for your idea, and how to frame your product or service to solve a problem they already know they have. It will give you all the building blocks to be ready to start selling your idea.
If you’re interested in finding out more about How to Turn Your Idea Into a Sales Machine follow the link to register for either Tuesday or Saturday. We’d love to help you!
-Richard Rothstein, Rothstein Consulting.