Over the last few weeks I've worked with a number of clients who are frustrated with the progress in their businesses. From what they can see, they're doing just about everything right - marketing their services, a decent business model, a range of products to choose from and endless networking and meetings to interest clients in their services.
But they're not getting the sales they believe they should be getting. And that's frustrating. Even scary.
The advantage of an outside view (in this case mine) is that I see things that the founders don't see. When you're in the depths of your business it's sometimes difficult to see what works and what not - very often you think you have all the bits and pieces in place, but some of those bits and pieces live in your mind only. We're so close to the problem we don't always see what's really happening.
But this is not about how good I am at spotting the missing bits. It's about the common theme that - by coincidence - was the root problem with the businesses I worked with over the last few weeks.
They didn't have a Minimum Viable Revenue Engine - an MVRE.
So what the heck is a Revenue Engine?
Your Revenue Engine is how your business makes money. I developed the concept of the Revenue Engine as part of the Tornado Method - a comprehensive framework for designing, building and running a small business.
Here's what the Revenue Engine looks like:
In brief, your Revenue Engine consists of 5 phases:
- Marketing generates leads for your business.
- Lead Nurturing builds trust and authority.
- Sales gets people to buy.
- Delivery is where you actually deliver your products or services; and
- Follow Up is where you make sure your clients are happy (and come back for more).
Your Revenue Engine is supported by your Admin and Money Management layer. Get all 6 elements in your Revenue Engine right and you should have a working business. (It's not quite that simple - you also need a good foundation we call Building Blocks. More about that later.)
A Minimum Viable Revenue Engine
The businesses I worked with were all early stage, having started up in the last year or so. The owners are all savvy specialists in their respective areas, but none of them had a solid business background. They'd applied what they knew about business to designing and building their own.
But none of them had a Minimum Viable Revenue Engine.
A Minimum Viable Revenue Engine (MVRE) is the smallest, simplest Revenue Engine that delivers sales for your business. It contains at least the following:
- Marketing to generate leads for your business;
- some kind of lead nurturing to build trust with your leads and determine if they're a good fit for your services; and
- just enough of a sales component so you can make an offer to your potential client.
When you're starting out, your priority is to get revenue in the door. Make sales. The fastest way to do that is with a Minimum Viable Revenue Engine (MVRE) - just enough marketing, lead nurturing and sales to get your first clients to buy.
There are two keys to getting an MVRE running:
- The first key is just enough. If you're small, and you're in a hurry to get revenue flowing, and you don't know a lot about stuff like marketing, you need to do just enough to get up and running.
- The second key is that you have to have all three elements of your MVRE in place. You have to have marketing to generate leads, an ability to nurture them and something to offer. If any of these three are not up to par, you're not going to make the sales you need.
None of the frustrated business owners had a fully working MVRE.
The missing pieces
All of these businesses had some form of marketing. Some of the marketing was very expensive - the business owners were spending a lot of their own time networking, speaking to potential clients and cold calling. This marketing is expensive because the amount of time you spend finding and qualifying potential clients is high compared to the eventual revenue you expect to get from those who turn into paying clients.
None of the businesses had decent lead nurturing. In most cases, the lead nurturing consisted of ongoing conversations with the potential client; expensive (again) for both the business owner and the potential client.
And on the sales end, most of these businesses had inadequate offerings. They were either trying to sell their expertise (in effect selling their time), or they had a single offering to which the client could only say yes or no. Only one understood the value of outcome-based selling.
So how do you go about fixing these problems?
Design a Minimum Viable Revenue Engine
Marketing and sales folks will know that a Minimum Viable Revenue Engine (MVRE) is in effect a simplified sales funnel. They will also know that you want to focus your personal time on potential clients that have already been qualified - they meet a certain minimum number of criteria that determine whether they're a good fit and they are ready to buy.
In a small business you want to keep your MVRE as simple as possible. There's only you (or perhaps a partner or two) and ideally you will be spending most of your time on stuff that generates revenue. So you want your MVRE to take up as little time as possible, but also deliver results.
Let's start with marketing.
Marketing The purpose of marketing is to generate leads for your business. A lead is generated when they contact you in some form or fashion - calling or emailing you or downloading a lead magnet (a white paper, checklist or something similar) from your website. You may even exchange business cards at an event.
To generate these leads, potential clients have to become aware that you exist, and you can solve a particular kind of problem. But at this stage, you don't know which of your target market has that problem, so you want to spread your net as wide as you can with as little effort as possible.
So you need to answer the question:
What is the most effective way to let the most potential clients know I can solve a particular problem for them?
The majority of my marketing is content marketing. I publish articles like this on different channels (that's marketing-speak for things like LinkedIn, Medium or industry publications). Over time, more and more people become aware of me and that I can solve a problem for them (how to escape the rat race and build their own 6-figure lifestyle business) and they download a lead magnet from my website.
This kind of marketing is effective for me because over time I've built up a sizeable following on my own mailing list and platforms like LinkedIn or Medium. The more people read (and respond to) my articles, the more become aware of it.
Your mileage may differ, but the question you have to answer remains the same: what is the most effective way to let the most potential clients know you can solve a particular problem for them?
Lead Nurturing Lead nurturing is about building trust and authority. In my case, I nurture leads by following up after they've downloaded a lead magnet, pointing them to articles on similar topics or offering other freebies they may find valuable. For my larger clients (I also help construction companies deal with hyper growth) I have a series of white papers on specific techniques we use to deal with the pains of growing too fast.
Another favourite lead nurturing tactic is the 5-part email course. Over a period of time, you send leads (who opted in to the course) a series of five lessons designed to teach them a specific skill or solve a particular problem. A variation on the course is the recorded webinar - potential clients are invited to watch a pre-recorded webinar and contact you if they're interested in learning more.
While the primary purpose of lead nurturing is to build trust and establish your authority, you should also be qualifying your potential clients. Clients who interact with your offerings (open an email, follow a course or contact you after watching a webinar or attend an event you're speaking at) are all self-qualifying - the fact that they're interested in what you have to say is an indication that they have a problem you may be able to solve.
Sales Clients who have indicated a high level of interest in what you do are ready to move into the sales stage. Depending on the kind of business you run, your sales will range from simple (buying and downloading a PDF) to complex (structuring a program to solve a manufacturing problem). In either case, you need to understand two things:
- Always provide two or three options. If you offer one option only, your client can only say yes or no. Offer two choices, and they can say yes, yes or no. And offer three so that can say yes, yes, yes or no. You get the drift. Most clients will go for the middle of three options if you give them the choice.
- Understand the value of outcome-based selling. Clients don't buy widgets or consulting services for the heck of it. They buy those things to solve a problem, and that problem has a value to them. You need to determine how valuable the problem is so you can show them your cost is small compared to what they stand to gain, even if your price is high.
Sales is of course the one thing we're most scared of. We don't like asking for money and we don't like being rejected. The good news is that you don't have to be sleazy and you don't have to sell hard - you can sell in a way that is comfortable to you. But you have to get at least proficient at it - your business success depends on it.
The businesses I worked with are now in the process of filling in the gaps in their Revenue Engines. Because they are all early stage, I encouraged them to design and build the simplest possible Revenue Engine they could imagine - this stuff is hard enough when you start out that you don't want to deal with complexity as well. We'll see how they do.
If you're in a similar situation, I hope this helped you get some perspective on where you may need to improve. In summary:
- A Minimum Viable Revenue Engine (MVRE) is the simplest marketing, lead nurturing and sales process you can implement to generate revenue for your business.
- You need to have all three elements of your MVRE in place before you can expect to see consistent results.
- Spend as little time as possible with individual clients in the early stages of your MVRE. Spend more time with qualified leads further in the sales process.
- Lead nurturing is also about qualifying potential clients. Those who engage with you or the information you provide are self-qualifying and worth spending time on.
What you can do now
Understanding the Tornado Method will be a big step forward in building and running your own business. Watch the 3-minute video on the Tornado Method here and download the Beginner's Guide to the Tornado Method for free from the same page.
Good luck with your business.