Turn Red Ink to Black by Adding Companion Products, Services

Small businesses adding products and services

Build bridges to profit by adding new compatible products and services.

 

So you’ve launched your startup at long last, and voila … not too many months later, there’s clearly not enough revenue traction to achieve profitability

I got to know two steadfast social entrepreneurs, Adnan Khawaja and his wife Hina, as their volunteer coach for the Acumen Fund, a brilliant social venture fund whose investors seek “social returns” rather than cash. 

Adnan and Hina’s social venture, “Rixi,” helps thousands of impoverished Rickshaw drivers in their hometown, Lahore, Pakistan.  It’s simple: “Uber for Rickshaws.”  Rickshaw drivers in Pakistan subsist on meager incomes at or near the poverty line, and use “dumb” phones rather than far more expensive smartphones. 

The team developed an SMS-based operating system, with rides broadcast to drivers nearest each pickup, and a bidding and dispatch system to manage the process.

Rixi’s problem was compounded by painfully small transactions, usually a very few US dollars. The transaction fee as scarily low—15 cents per ride—to optimize drivers’ earnings.

Volume came slower then expected, ultimately reaching 8 or 9 rides per driver, or half the goal.  The financial future looked bleak, Adnan says, “but our passion for helping impoverished Pakistanis drove us to look at alternatives.”

Adding products to add revenue

Adnan and I quickly focused on increasing Rixi’s “non ride” revenues, and began exploring other ways to enhance the revenue stream, focusing on add-on products and services that could provide predictable “non-ride” revenue for Rixi and its drivers alike. 

Here are four in various stages of evolution today:

Job #1: Quality Rickshaw Advertising:

Local businesses advertise on rickshaws in this crowded city of 8-million.  Typically, ads are sloppily pasted on the outside and are tattered, dirty or both in 48 hours or less.  Big commercial advertisers and major retailers had no interest in rickshaw advertising for obvious brand-related reasons. 

The Rixi solution: beautiful, backlit Plexiglas signs for rickshaw backs and sides.  They’re surprisingly inexpensive to build and install in Pakistan, and an eager supplier cooperated to build some prototype units to demonstrate the quality to advertisers who’d thumbed their noses at rickshaw ads in the past. 

It worked!

After a summer 2016 launch, Rixi’s partial-year advertising revenues topped $120,000 from brands including Unilever, Mondelez, and Nestle. 

Drivers get almost half of every advertising dollar, which can increase their daily earnings 50% if they keep signs clean and neat, lights burning, and focus their driving in affluent, commercial areas wherever possible.  Advertisers want more Rixi ads in more cities throughout Pakistan. 

Best of all, 2017 revenue is tracking $350,000! 

#2. Oil Sales:

Most rickshaws burn lots of oil. Rixi drivers now buy oil wholesale for sale to their fellow drivers, and use wholesale oil themselves, profiting from sales and savings, while earning Rixi a margin too.

Next page- Stages of evolution #3 and #4 and Postcript

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About the author

Bob Dorf

Bob Dorf is among the world’s leading Lean Startup and Customer Development experts, who trains and coaches startups throughout the world, with a particular focus on Latin America.  Bob co-authored the Startup Owner’s Manual, a global bestseller, with startup legend Steve Blank. Now in 18 languages, the Manual details every step in transforming an idea into a repeatable, scalable, profitable business. Bob focuses particularly on training programs for the startup educators, coaches, and investors, and has done so repeatedly in Mexico, Colombia, Brazil and many more. Hes also an Entrepreneur-in-Residence at Columbia Business School. Earlier, Bob founded seven startups--“two homeruns, two base hits, and three tax losses.” His 30+ angel investments delivered 7 IPO’s and six disasters. Learn more at www.bobdorf.nyc or contact bob via bobdorf@gmail.com

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