Michael Birch said that it should be a land grab when you start a business. Do not worry about monetising as you cannot monetise no traffic. Personally this is not something that I agree with, I think that the business model should come first otherwise you are doomed to fail. There are exceptions to this rule (Google, Twitter), but for me the old strategy of build a site, get lots of traffic and then sell the business for millions is not the best return for your effort.
The first things I look at when analysing a business are:
- what is their business model?
- does it make sense?
- is it sustainable?
- how can it be optimised and maximised?
If you are looking to invest in businesses it is much more attractive if the business makes money along the way; rather than simply making a return from a successful exit. Getting lot of users and then selling the business is not a business model.
I can see why people don’t bother with a business model, it has proven quite hard to monetise the web outside of advertising. But is the most essential piece of the puzzle as most of us are not lucky enough to sell our business so it needs to be operationally profitable and cash flow positive.
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on Wednesday, August 12th, 2009 at 11:20 pm and is filed under General.
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Definition of a successful business = profitable!
Traffic is irrelevant as one visitor paying £1 is better than 1,000,000 paying zero.
Ignore revenues (vanity) and if the exit strategy is a sale then good luck – that will account for only around 0.001% of businesses.
Looks like making a little profit might be helpful then
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