Competitive advantage increases revenue by 30% over the competition or decreases cost by 30%.
Here are five sources of competitive advantage:
–Recurring revenue
–Channel access
–Platform-based solution instead of singular products.
–Network effects in action–the value of the product increases with the number of users
–Virality (not the same as network effects) (users invite other users)
In today’s world, you would think every business has recurring revenue. Yet, I find most businesses who are raising funding did not structure their business that way.
Recurring revenue helps your business in several ways. It opens up your business to new customers who could not afford your product previously because the one-time payment was too high. By breaking the payment into smaller steps, more customers can afford it.
It provides a known revenue stream so you can plan your business better as you know how much you will have coming in. Overall this should increase your revenue in the long run by 30%.
Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies