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| Subject:
Strategic startup decision: single or multiple revenue sources?
Category: Business and Money Asked by: shangul-ga List Price: $20.00 |
Posted:
08 Feb 2006 14:31 PST
Expires: 10 Mar 2006 14:31 PST Question ID: 443285 |
Assuming everything else being the same, which Startup has a higher chance of success; the one that targets one source of revenue or the one that projects the same total profit but through multiple sources of revenues? |
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| There is no answer at this time. |
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| Subject:
Re: Strategic startup decision: single or multiple revenue sources?
From: ubiquity-ga on 08 Feb 2006 19:45 PST |
The results are the same (i.e. Expected return). What is different would be the standard deviation. If the multiple revenue sources are independant of one another, it would likely be safer (i.e. more likely to get that expected return). Think of it as being similar to investing in one stock verse investing in many. Investing in many (diversifying) is safer (because a loss peculiar to a single stock would not effect the portions attributed to other stocks), but it does not increase your expected return. Also, diversification may limit loss, it liekwise limits upside. So keep that in mind to. |
| Subject:
Re: Strategic startup decision: single or multiple revenue sources?
From: ubiquity-ga on 08 Feb 2006 19:46 PST |
In sum, the cnaces are the same. |
| Subject:
Re: Strategic startup decision: single or multiple revenue sources?
From: shangul-ga on 09 Feb 2006 13:49 PST |
Well, I am not sure if we can compare that with stock diversification. In case of startups you have human factors involved. You can have all your sales/marketing staff going after one revenue source, or spread them around multiple sources. From pure mathematical point of view it may increase the chance of making ?any revenue? at all, but I am wondering if it would increase the chance of successful growth for a company! |
| Subject:
Re: Strategic startup decision: single or multiple revenue sources?
From: salescoach-ga on 21 Feb 2006 10:22 PST |
Excellent comments from both. My 2 cents are these. 1. By sources, do you mean 3 different products lines, 3 different manufacturing processes, 3 diff. business lines. This is way more difficult to do if you are a FIRST time startup entrepreneur. If they are SIMILAR to each other, that is anther story. 2. If you mean 1 product to 3 markets, I would suggest concentrating on 1 market (the one most familliar/studied/researched) and it NOT need be the biggest in terms of money. Bottom line, do you want to be a BIG fish in a SMALL pond or a SMALL fish in a BIG pond. You should answer that honestly first. My advice would be being a BIG fish in a small pond, concentrate resources, become an expert in this market, build a reputation, clients, testimonials before you tackle a new (not new product) market. Hope that helps. |
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