There’s an old saying that something is “the thin end of the wedge”. When we use that term, we’re usually referring to something that starts small but has large or serious results later on.
Take splitting a log, for example. Have you ever wondered how craftsmen of old were able to take huge logs and split them into boards using only hand tools? It turns out that one of the ways they did this was using wedges – a technique that is still being used today.
To split a log, woodworkers drive the thin end of a metal wedge into a crack in the wood, or start a small crack with an axe. They then hammer the wedge in with a mallet or sledgehammer, and as the wood begins to split they place wedges in the newly opened crack and drive it in. Before you know it, the whole log splits end to end. True craftsmen can “read” the wood to split a log so that there is minimal work required to create boards usable for carpentry.
You don’t need to boil the ocean when you’re building your business. Often you will get bigger and better results starting with the thin end of the wedge.
The Minimal Viable Revenue Engine
When you’re building your business you already know that there’s a million things to do – and one of the biggest problems you have to deal with is overwhelm. I wrote the Beginner’s Guide to the Tornado Method to help business founders deal with overwhelm, but it’s not always easy to decide what you need to work on and what not.
Introducing the Minimal Viable Revenue Engine
One of the techniques I teach startups is that of the Minimal Viable Revenue Engine, or MVRE for short.
A Minimum Viable Revenue Engine (MVRE) is the minimum set of Revenue Engine activities that delivers revenue.
The concept is simple: find the minimum that you have to do in each stage of the Revenue Engine that will actually generate revenue. Rather than marketing in 10 channels, choose just two or three. Rather than overloading your leads with marketing messages every day, send something of higher value once or twice a week. And so on.
As it turns out, the concept of the MVRE is useful not just for startups, but also for businesses struggling to grow.
Why do less?
When you’re building a business your most precious asset is time. However you cut it, there are a thousand things to do, and until you’ve built up enough revenue to get a team to help you, you have to do a lot (or all) of it yourself.
Your time has to be split across everything you have to do. And when those slices of time become too small you end up doing nothing really well.
Trying to do too much results in piecemeal marketing, bits and pieces of lead nurturing, not enough time spent on making sales, and often no follow-up. In short, not the results you were hoping for, and therefore you have to work more to fill in the gaps. And that just leads to less time available for any specific task.
If you choose to do fewer things you will have more time to spend on each thing. You will have (more) time to do your marketing well, deliver real value in the Lead Nurturing stage, spend more time on sales and follow up well.
Setting up a Minimum Viable Revenue Engine (MVRE) gets you to market faster. And it’s only when you actually start interacting with your market that you really learn what works – and what not.
So how do you go about building an MVRE?
The first step in building a Minimum Viable Revenue Engine (MVRE) is to understand the concept of the Revenue Engine. In short:
- you need to market to generate leads;
- you need to nurture those leads to build trust;
- you then need to sell your products or services;
- after which you need to deliver those products or services; and
- finally you have to follow up to make sure they’re happy and come back for more.
(You can also watch the intro video to see how this works.)
Once you understand the concept, you can design your Minimum Viable Revenue Engine (MVRE). There are two ways to do this:
Method 1: Design and build an end-to-end chain
One way to design and build an MVRE is to figure out the end-to-end chain of events that you hope will generate revenue. What will you do in marketing? How are you going to capture the leads your marketing generated? How are you going to nurture them and eventually sell to them? And how are you going to follow up?
With an end-to-end chain you can determine which stage of your revenue engine is working, and which not. Once you know where the engine needs tweaking you can focus on just that stage to make it work better.
Method 2: Stage by stage
The other way of building an MVRE is stage by stage. Start just with marketing and do more (rather than fewer) channels to see which work. At the very least capture the leads you’re generating, but don’t spend a lot of time on the subsequent stages of the Revenue Engine.
The advantage of this approach is that you can figure out what works in the marketing stage before you start lead nurturing, then figure out your lead nurturing, and so on. However, this approach takes longer and potentially wastes the leads you generated if you’re not ready to take them to the next step.
I recommend the end-to-end method
From experience I know that the end-to-end method of designing and building a Minimum Viable Revenue Engine (MVRE) works better than trying to do it stage by stage. Here’s why:
You may not get everything right in the first pass, but chances are pretty slim that you’ll get everything completely wrong. So when you have a Minimum Viable Revenue Engine (MVRE) that is ready to nurture leads, make sales and has some form of follow-up built in, you know that you’re not letting your leads out in the cold once you’ve capture their information.
Give yourself time to figure out what’s working
Rather than trying to market on Linkedin, Twitter, Instagram, Medium, Pinterest and Facebook, choose just one or (at most) two channels to start your marketing. Rather than trying to tweet 5 times a day, keep it down to one or two. Go for quality rather than quantity.
The process of building an MVRE is a process of avoiding temptation.
When you start marketing on a channel you don’t know what’s going to work – or even if that channel is the best way to get to your potential clients. So you have to design your marketing in such a way that you know how you’re going to measure success.
There’s an old saying that 50% of marketing works – the catch is that you don’t know which 50% that is. With the tools we have today that excuse is no longer valid – you can measure audience engagement across almost any channel. But to figure out whether your marketing is working or not you have to know what constitutes success – otherwise you’re wasting your time.
But what happens if my MVRE doesn’t work?
The whole point of an MVRE is figuring out what works and what not. You can do as much customer development and idea validation as you like, but until someone actually pays you money for your product or service you don’t really know what will work and what not.
The chances of every stage of your MVRE failing are pretty slim. You’re going to find that you’re not generating enough of the right kinds of leads – in which case you need to change your marketing. Once that works, you may find that your lead nurturing is working but no one is buying – in which case you have to look at your sales process (or even your product offerings).
Once you have an MVRE designed and built you work on it from left to right to get it working. And only once it’s working should you add more to the Revenue Engine – but always making sure you have measures in place to determine what works and what you should stop doing.
My business is up and running so an MVRE doesn’t makes sense, right?
If your Revenue Engine is delivering enough revenue, and those revenue streams are stable enough for you, you have a successful business.
Congratulations – you don’t need an MVRE.
But if your revenue streams are not what you want them to be, or they’re not as stable as you would like them to be, the concept of a Minimum Viable Revenue Engine (MVRE) can help you. Here’s how:
- Document your complete Revenue Engine using the Tornado Method Revenue Engine Worksheet (the Revenue Engine Worksheet is part of the Beginner’s Guide to the Tornado Method).
- Figure out which parts of your Revenue Engine need attention by rating each stage using the key question.
- Working from left to right, drill down into each stage that needs attention, determine what’s not working and move it to the Testing / Needs Improvement row.
- If you have something left in the Working row for each stage of your Revenue Engine, you have a Minimum Viable Revenue Engine (MVRE). You can now work on those bits that need improving.
- If you don’t have a Minimum Viable Revenue Engine (MVRE), you need to design, build and test one.
Here are the key things you need to take away:
- A Minimum Viable Revenue Engine (MVRE) is the minimum set of Revenue Engine activities that delivers revenue.
- By focusing on fewer things, you have a better chance of doing those things well so you can determine what works.
- Using the end-to-end approach (rather than one stage at a time) means you won’t leave potential clients in the cold as you figure out what really works.
- The concept of the Minimum Viable Revenue Engine (MVRE) is useful for startups and for growing businesses.
The thin end of the wedge
Splitting even a huge timber log can start with the smallest of wedges and just a mallet or sledgehammer. But keep at it and the end results can be amazing – a log split into smaller, usable pieces.
Designing and building a Minimum Viable Revenue Engine (MVRE) is like that thin end of the wedge – start small, do it well, and the end results will be amazing for you and your business.
What to do next
If you’re starting up, or you would like to improve your Revenue Engine, use the concepts in this article to design, build and test your Minimum Viable Revenue Engine (MVRE). Do fewer things well and make sure that you can test whether it’s working.
The Beginner’s Guide to the Tornado Method was written to help entrepreneurs and business owners deal with overwhelm – but you can use the concepts and worksheets from the guide to help design and build your Revenue Engine.
Download the guide from the Britewrx website here.
And if you have any questions or comments, drop me a note!