Most business owners want more revenue, right?
Yes of course.
Revenue is business health. But what about profit?
Well, investors don’t like paying tax on profits. They prefer to see funds go back into business growth. So we’ll stick with saying that revenue is business health.
However, most business owners are confused. They just don’t know the mechanics behind the specific act of ‘revenue generation on purpose’.
It’s time to get clinical.
Let’s look at the actual science of healthy revenue growth.
I get to see behind the scenes of many businesses. I’m often amazed at how little the precise act of revenue generation is truly understood.
You see, most business owners chase money. They go directly after it. However, in a strange way this makes it harder to reach.
The problem arises from our language. The term ‘make money’ suggests that you can go directly after it. It seems like you can get more that way.
It sounds like you can take a direct action and then money will be ‘made’. In fact, the terminology is incorrect. It has many people wrongly chasing the direct outcome of money.
Now, you can make a model. Or you can make a cake. You put in the work, build the components, use a great recipe, and the end product is made.
However, money and revenue don’t work like that.
Revenue is actually a side effect. A net result of something else.
Let’s Look At ‘Cause’ And ‘Effect’
How do you build muscle? You go to the gym and take part in some sort of resistance training.
The act of lifting weights builds muscle, right?
Lifting weights doesn’t build muscle. It breaks muscle fibres down. It can even damage your muscles beyond repair if you overdo it.
Building muscle actually happens when you rest, after a workout.
That’s when the blood replenishes your muscle tissue with nutrients to build more muscle fibres. This is where the growth happens, and a larger stronger muscle is formed.
So keep this is mind.
The ‘cause’ was working out. The ‘effect’ was building muscle.
The act you do (working out) doesn’t get the result you want. The opposite act (resting) is what builds the muscle up.
Building muscle is actually a side effect of lifting heavy weights.
Let’s look at another example.
If I get a drill and press it into a wall, that is a ‘cause’. The effect will be that a hole appears in a wall. I’m not making a hole in a wall. That’s just a nice tidy way of describing both the ‘cause’ and the ‘effect’.
I’m actually performing a set of actions that then results in a hole appearing in a wall.
Let’s look at one final viewpoint.
In a boxing match, the training that a boxer goes through is the ‘cause’. The ‘effect’ is that the boxer who puts in the best training and conditioning, will win the fight.
Yet most people think the fight is won in the ring. It’s not. That’s just where the ‘effect’ and the end result presents itself.
The fight is won way before the actual boxing event, during the ‘cause’ and training part of the equation.
There is a very slight (but very clear) distinction in all of these situations.
Experts Understand The Distinctions
When it comes to generating more revenue in your business, most business owners don’t understand the distinctions.
Do you want to be an expert at generating more revenue? Then you need to understand these exact distinctions.
Most business owners will say they want to sell more product, get more clients and sign up more customers. That’s how they think more revenue is generated.
However, each of those is an end result. It’s the ‘effect’ part of the ‘cause and effect’ idea.
Let’s look at the ‘causes’ of revenue generation.
Setting The Right Conditions And Building The Right Structures
Here’s a secret.
Achievement can be reverse engineered.
You have to work backwards from the desired outcome (the ‘effect’) and look at how it was created (the ‘cause’).
That’s how you’ll learn what the ideal conditions and structures are in any process. Especially one where you need a specific outcome.
Then when the process runs, your desired situation automatically becomes outcome.
Think of it like those big fancy domino sets.
When you set off the domino chain, one thing leads to another and the dominos fall as you expect them to.
That happens because of the conditions surrounding the dominos.
You already know that domino one will fall on domino two which will knock down domino three and so on.
There is a path of least resistance.
That path is built on purpose. The idea is that the most likely outcome is that the dominos fall down in the right order.
You’re not making all the dominos fall. You only set up the dominos in the right structure. Now, they’ll be acted upon by the most likely force.
This will knock the dominos over, and produce your desired outcome.
Just like before, there is a fine but real distinction.
You did not knock the dominos over. You only set up the correct conditions, so that they could fall at the right time.
The dominos falling, were an outcome. They fell over as a side effect.
The dominos fell over as a result of the conditions you set up and the initial action you took.
The ‘cause’ was that you set up the domino course and pushed over the first domino. The ‘effect’ was that the dominos fell over.
You set up the domino course and pushed the first domino over. The most likely outcome would be the remaining dominos falling over.
What just happened?
You wanted an outcome. You also used a predictable way to make the desired outcome real.
A similar pattern exists in business.
However, our ideal outcome is more revenue.
The good news is that revenue is like dominos falling over. Revenue can be reverse engineered.
Revenue is the ‘effect’. Revenue is literally a side effect.
So if revenue is the ‘effect’, what is the ‘cause’?
The ‘cause’ of generating revenue is building and delivering value bridges.
What Exactly Is A Value Bridge?
Imagine there are two islands.
The first one is called ‘present island’. The second is called ‘future island’. Your prospect wants to go from their ‘present island’ to their ‘future island’.
Your job is to build a bridge from the ‘present island’ to the ‘future island’.
Your bridge represents value so it’s called a value bridge.
Remember, your prospect wants to end up on their ‘future island’.
The value bridge solves a direct and specific problem that exists right now. The bridge will take your prospect from their present place to a future place, that they want to get to.
The urgency and importance of the situation, is how you will determine the price of your bridge.
What Does This Look Like In The Real World?
Let’s say that your ‘present island’ is that you have a dry mouth. Your ‘future island’ is one where you want a fresh feeling mouth. The value bridge here, is a pack of chewing gum.
Is the situation urgent? No.
If you don’t have the gum right now, you will simply wait until later.
The value bridge in this situation is not very important either. In the grand scheme of life, you will be just fine if you don’t have a pack of gum right this minute.
So you will only pay a small amount of money for pack of gum, in order to get to your ‘future island’ (where you have a fresher mouth).
Now, let’s imagine a different scenario.
Imagine that your ‘present island’ is that you have a hole in your heart. You want to get to a ‘future island’ where you no longer have a hole in your heart. The value bridge here is open heart surgery.
It’s an urgent situation. Your life is at risk. You need the surgery quickly.
It will also take a skilled specialist to carry out the work too, and that is a rare find.
That means the value bridge is very important in this scenario. It’s extremely urgent and valuable.
You are therefore happy to pay a surgeon a lot of money in order to get to your ‘future island’ (where you no longer have a hole in your heart).
To build your very own value bridge, all you need to do is:
- Define your ideal prospect
- Understand their ‘present island’
- Learn about their ‘future island’
- Build the value bridge, getting your prospect’s feedback as you go
The steps listed above are literally how to build winning products that matter.
Most startups fail because they skip this step. The founder starts a business based on a passionate idea. They literally start building it on day one.
After three years of work they try and sell it. That’s when they realise no one wants to walk on that value bridge. Passion alone does not create a revenue generating value bridge.
Even existing companies mess this up. They can sometimes release a new product without doing this sort of foundational work, and it will bomb.
This is also why most established companies only stick with line extensions when they have a winner.
They simply don’t understand value bridges.
Build A Business Around a Value Bridge
A value bridge is so important, that once you have it, you can use it as a foundation to build a successful business.
A good sales page, and good marketing is literally just clearly explaining what your value bridge is. Talk about your prospects life before and after they have the value bridge, and you will propel sales.
Can you build a value bridge that increases the status of your prospect (makes them richer, faster, cooler, stronger, more good looking etc)?
If so, you will generate even more revenue. A strong value bridge can be the core of a successful business.
The Real Secret To Revenue Generation
Let’s go back to cause and effect.
If the end ‘effect’ is revenue coming into your business, the ‘cause’ is delivering value bridges to your prospects.
Revenue generation is a side effect of delivering value bridges.
It’s a simple idea.
Most business owners do not look at revenue generation like this, however. They don’t understand that you can set up the right conditions to deliver value bridges on purpose.
That’s how the strongest companies lock in predictable revenue.
Moving a level upwards, you need to lock in two more things – distribution and automation.
So you will notice that some companies have:
- A solid value bridge(s)
- A way to distribute the value bridge(s) to a large group of people
- Automated business practices that run the above two tasks
These companies will tend to be the million and billion dollar companies that you know.
They understand that distributing value bridges and getting them into the hands of ideal prospects is the ideal action to take. They do it on a wide scale.
What is the side effect? They generate millions and often, billions of dollars in revenue.
Have you built your value bridge yet?