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Antidotes to the Tyranny of Project Revenue Models

Running a business based on project revenue models can be a roller coaster ride. Money comes in only when a project lands, and business owners are sucked into high-risk projects that make it difficult to budget, plan, hold onto skills, stabilize suppliers, and scale. Every project feels like a game of roulette due to factors beyond your control, such as weather and the availability of resources.

To build an Asset of Value™ and escape the tyranny of project revenue models, some businesses have changed their approach. Let’s take a look at a few examples:

Construction Firm: This 2nd generation family construction business was hit hard by COVID-19 as big developments stalled. They responded by creating a designer-shack that was quick to erect, multi-functional, and aesthetically pleasing. It could be used for versatile spaces including a home gym, an office, a bar, a DIY workroom, garden shed or a kids’ playroom.

They found opportunities in multiple channels to market, such as website sales, retailers in hardware and building supplies, gym equipment distributors, realtors and estate agents, office furniture stores, architects, furniture stores selling bar-related furniture, liquor stores, and overseas markets for flat-pack, easy-to-erect versions of the product.

Software Developers: Two partners in a software development firm solved problems for big-brand corporate clients that the big-brand tech companies could not. They analysed all of their past projects and identified localsation trends, orienting their business around software solutions to manage complex SME value chains. .

Advertising Agency: Two partners in an advertising agency prided themselves on bespoke, thinking-outside-of-the-box solutions, but they struggled with a project-driven business model.
After positioning their service to zone in and focus on developing and producing brochures for vehicle manufacturers, their understanding as to how the brochures were used to promote, educate buyers and support the sales and marketing efforts of dealers allowed them to secure a consistent and reliable stream of projects. This flattened out their event based revenues into a steady stream of revenue, allowing them to hold onto talent, increase their return on marketing spend, build distinction and competence, and secure a capital buyout.

To get it right when changing your approach to building an Asset of Value™, you need to understand your purpose and intent, make a commitment to achieve that, create a path to exit, focus on a single goal, dedicate the first 90 minutes of every day and the last two hours of every Sunday to this goal. you may need to split responsibilities and fund one from the other, set milestones that shift time, attention, and resources, hire with the end in mind, and chase the transaction in the old business while building relationships in the new one.

Unfortunately, not every business gets it right. The construction firm sold two of their designer units and got sucked back into a new project, and nothing has changed. But for those who succeed, the rewards can be significant. The software firm has built a product that aligns with current trends and now generates approximately 85 million in annuity revenues across 350 clients. The advertising firm specialized in motor vehicle brochures and POS, created a repeatable, teachable process, built brand and reputation, and sold out in 2017 to a big agency for R23m.

In conclusion, by changing their approach and building an Asset of Value™, businesses can escape the tyranny of project revenue models.

However, it takes commitment, focus, and a willingness to take risks to make it happen.

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