Posted on February 14, 2013 @ 06:34:00 AM by Paul Meagher
Amy Hoy has been making a name for herself of late based upon a successful workshop she runs called the 30x500 Workshop.
It is a workshop aimed at software developers in which she explains how to make money by selling software as a service (SaaS Business Model). If you charge consumers a monthly fee of $30 and you add a regular number of new customers each month, you could be generating this type of income:
Source: Amy Hoy - http://unicornfree.com/30x500.
Does this business model look familiar? It looks very much like the linear growth business model (or one with low curvature) I have been discussing in my last several posts. The parameters of the business model overlap as well - for example, I also configured the monthly customer fee to be $30 a month. I may have even been inspired by this article to blog on the topic of implementing business models as PHP programs.
Whatever the case, there are two aspects to a $30 (monthly fee per customer) x 500 (number of customers) business model that are not discussed in the marketing material for the workshop. The
business model does not discuss costs. What are the fixed monthly costs, the "rents", for opearating the business. Second, what is the cost per customer
of providing the service. If you have to purchase more server capacity and pay off more suppliers, then your cost per customer should be going up as well.
What is also not discussed in the Amy Hoy business model is the potential role of an investor. I think it would be a better business model if it could speak to that aspect as well. See my article, including investors in your business model, for more on this apsect.
I congratulate Amy for the success in her business and her efforts to educate software developers about alternative business models they might be using to earn a living. Amy also provides tips about starting up a SaaS business model that would be useful to know (i.e., sourcing of profitable ideas for services).
She also alludes to the "year of the hustle" as a critical element in her business model. The business model is not going to achieve it's guidance estimates if you are not prepared to engage in a "year of the hustle". The "year of the hustle" could refer to the collection of marketing techniques you plan to apply to the problem of growing your business. As you refine your business model, you should also be scheming about the collection of marketing techniques that might be used to help launch and grow your product or service. Then you execute during the "year of the hustle".
The "year of the hustle" is a timeframe that a startup might reasonably take to launch and start growing a business to a level where the income generated starts meeting bill obligations or lifestyle requirements again. If an entrepreneur can live cheaply and spend wisely, then they can potentially run a lean ship until profits start rolling in at a sufficient rate to justify the "year of the hustle". Your business model after 1 year can be used to project where you should be financially at the end of year 1. The end of year 1 totals for revenue, costs, and profits are, for startups, critical to determining the ultimate validity of the business model and its ability to sustain itself.