Please, please have a revenue model! You will need a real one in order to succeed in todays tough times

Whenever I hear about a new start-up, one of the first things I look for is what is the Revenue Model. The second thing I do is make sure that the revenue model is not based on Advertising. Often trying to find a sustainable revenue model puts a damper on the excitement of starting a new business, but remember that the key word here is "business" and without revenue you may have a nice hobby, but it aint no business!

Now while it is possible to earn significant revenue from advertising once you have hundreds of thousands or more of daily users, that should not be your sole revenue model but you should consider it as icing on the cake. Also, it is ok when you are a start-up to temporarily use advertising to bring in some cash, but it should not be your long term revenue goal.

So is it ok to start a web application or another web 2.0 project just for fun and worry about revenue later? Sure you could, and should! As long as you are not expecting it to pay any of your bills, you look at it as a hobby, and you don't expect anyone to invest in it. I don't want to put a damper on innovation and if you have an idea that you would love to bring to the world, I say go for it! But don't call it a business start-up. Perhaps an internet start-up would be more apprapo, but then again when people hear internet start-up they are also thinking it is a business.

Just call it "This Good idea I'm working on".

Sometimes a great idea really takes off even with no revenue model in site. For example; Twitter. (You can follow me on Twitter here).

Twitter is a great idea, but when it was started and still till today, they are not sure exactly how to monetize it. And even when they do, I'm sure it will be advertising based, but you never know.

But Twitter is the exception to the norm. The one in a million, the lucky few! You can't build a start-up hoping you are going to end up like Twitter.

The good thing about when you become so huge as Twitter is, you can find other smart people that are more than happy to help you out with a revenue model. See this post below and check out the links to read the whole article published by AlleyInsider.com where they suggest 11 different revenue models for Twitter. They actually ran a contest asking all of their thousands of readers to suggest a twitter revenue model and they bost the results here:

Deadline for entry into our Create Twitter's Revenue Model contest
is up and we thought we'd share some of the best entries. We haven't
decided on a winner yet, so check them out and let us know what you
think.

We'll consider your feedback before we choose a winner. When we do
pick one, we'll re-post that person's plan and resumé here. We'll allso
email both to Twitter CEO Ev Williams, whom we hear is busy building a
business staff at the startup.

Start Here or skip ahead:

• Twitter Market Research
  

• Twitter Coupons
• Twitter SMS, Branding, and SEO
• Twitter Split Into Three
• Twitter Contextual Ads
• Twitter Corporate Accounts, More Market Research
• Twitter As Craigslist
• Twitter Premium Developers Platform
• Twitter Suggested Ads To Re-Tweet
• Twitter SMS Advertising
• Twitter Premium Accounts, Contextual Ads, Search Ads, Virtual Goods, Affiliate Marketing

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