Micro Blog: Quality Revenue Week 5

By Lauren Bahorich - December 16, 2019

 

Today, Lauren Bahorich, Venture Partner with GST shares with us how she and the GST team advise Growing B2B SaaS Companies to have regard for the Quality of Revenue sought.  

Quality Revenue: Diversity

We have spent the past four weeks coming back to the basics: quality revenue. Quality revenue is marked by predictability, profitability, strong unit economics, and diversity. This week we will complete this series discussing diversity of revenue.  

You’ve heard the adage to not put all your eggs in one basket. The adage applies in business as well. You don’t want to put yourself in the position where you are a slave to one customer. This is not a healthy set-up for you or your team and opens your company’s financial position to an unacceptable level of risk.

A good rule of thumb is to not allow any one of your customers to make up more than 10% of your revenue base. As an early-stage company, you will naturally have fewer customers and so revenue may be more concentrated than this benchmark. Work proactively to improve your revenue diversity. It is natural to identify a few accounts as key and to manage them with more refined, personalized attention.

Instead of designating key accounts solely based on contract size, we recommend considering additional factors, including account growth potential and “lead bowling pin” accounts that have the potential to open new markets to you with their good reference. Focusing on these factors will naturally lead to greater revenue diversity over time.

High growth numbers are exciting, and quality revenue possibly less. Quality revenue is the foundation, however, of your long-term profitability. 

As always, we love hearing from you as to what you're experiencing as you drive growth for your company; please reach out below.

We'd love to hear from you!


 

 
GST042606

Actionable insight for seed and scaling B2B founders and teams

Learn how to build a great company

GST Labs is a community of experts in strategy, finance, technology, product, development, sales, and operations. The collaborators each have significant insight for B2B SaaS firms. Subscribe today to keep in the loop and get special access to world class content and tools.
SUBSCRIBE
Comments

We promise that we won't SPAM you.