Step 1 – Cash Flow or Scalable Business Model?

Business Planning Start-Up Guide

Will your business’s primary purpose be for cash flow or to scale into a growth business?  It’s not uncommon for a cash-flow start-up to transition into a scalable business at a later date; but that transition should be deliberate and strategic.

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Cash-Flow Business? Scaleable?

 

Cash Flow or Scalable Business?

A cash-flow business is designed with one primary product or narrow product line in mind.  It may have one or a two employees, but its strategy is to grow market share within a particular product or product line, within one or two sales (distribution) channels such as Amazon or Google Shopping.  For example, a yoga mat company, whose primary sales channel is Amazon, is a cash-flow business.

A scalable business will have multiple products, multiple distribution/sales channels, and a long-term growth strategy.  In our yoga mat example, a scalable company would have multiple product lines, many distribution channels, and an expansion (growth) strategy.  Some call it a “real” business because it’s what we all think of when we think “business.”  It may have an exit strategy designed to maximize sales volume and profit to ready it for buy-out by a larger company.  For many scalable businesses, they may operate in the red for the first year or so as they build a customer base, a reputation, and gain market share.

Decision Point

What business type will you be starting?

☐  Cash-Flow Business

☐  Scalable Business

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