Not about a portfolio of businesses, but rather for a business to have a portfolio of income streams from a single (or small number) of core products / services.
Several recent conversations in Bristol, Leeds, London and elsewhere have shown that a winning business model could be through diversification of income. A number of excellent projects have been initiated with funding from the Government or charitable foundations. These usually have a section on sustainability, but they tend to be very light.
When the funding ends, the crunch bites. Obviously you don’t want to kill the service, goodwill and community that’s been built up, but without a cash flow, any service will end or at best stagnate.
I’ve found examples of deep community knowledge and solid data even without Facebook / Phorm style tracking. The challenge then becomes how to identify income streams to sustain the service/community once the grant funding runs out.
The models that are intriguing me most at the moment are blending sponsorship models (basically brand association), membership fees, and the possibility of consultancy / expert witness type activity.
If you’re managing a community (however lightly) then you know the demographics, levels of engagement, patterns of engagement, areas of interests, what’s current, what annoys, etc. And that’s valuable knowledge, knowledge that another organisation wishing to work with that group, or develop products/services for that group may pay for. This is not about selling your email list / registration database, there are good data protection laws in place to stop that.
So that’s part of what’s interesting me at the moment; mixed business models blending sponsorship, membership and consultancy. The other two two oft-cited business models (freemium services & advertising) are also of interest for commercial clients, but less so in the situation of many foundation initiated projects.
What are your experiences of transitioning from grant funding to revenue funding?
