"Treat every end of month like it's the end of the quarter, every end of quarter like it's the end of the year and every end of year like it's the end of your life"
Wow! That's a blast from the past. I can't tell you how many times I've heard those words and also shouted them out while trying to grow a start-up to go public and even more so after we went public. I still here it but only 1/2 as much - with one of my two set of clients,
1. These guys have a gun to their head. They are still in the non-recurring revenue IT Solutions Provider business - a VAR. They must meet their monthly nut to keep the business running but have dreams of crossing that chasm to a recurring revenue world. It's freakin' hard to get to the promised land but certainly not impossible. Before I work with them I try very hard to get them to fully understand that crossing the chasm will take time and effort and there are simply not very many short cuts. I tell them we must get to a recurring revenue world much like a dimmer switch - you turn it too quickly and the lights off - or in this case you fall in the chasm. I also tell them - why do you think the big boys (think Cisco, IBM, HP etc) are slashing costs so much? To fund their way over the chasm of course. I tell them those hard decisions may have to happen. So we go through some financial modeling and sales productivity modeling to see what it will take to get to the promised-land. Although these exercises are not brain surgery they certainly are eye opening it almost always comes down to some expense adjustment, mixing OTR (One Time Revenue) with MRR (Monthly Recurring Revenue) and a low cost marketing and sales model adjustment.
2. These guys have NO gun to their head. They have already crossed that chasm - an MSP, CSP or SaaS ISV. Ahhhhh!!!!! So what problems are they facing? Typically not racking their brain every month to figure out how to pay the bills. These guys are stressed in a different way, they are trying to figure out how to cost-effectively grow their customer base of MRR thus dramatically increase the value of their business. The challenge here is 9 times out of 10 they want to do it the same way they have always done it - traditional outbound marketing and sales. Think cold calling lists, email blasts, events etc. I say that's fine but it's not scalable, not in line with how customers buy today and certainly not cost-effective. So we implement a digital aka inbound marketing model with a digital sales function. Another dimmer switch approach is needed here.
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So what am I saying? Crossing the chasm to recurring revenue is hard and some very hard decisions may be required but it certainly is not impossible - the other side is a wonderful place to be and well worth the journey but still poses it's challenges.
