5 Reasons to delay monetization

Rafat Abushaban

- Articles and Thoughts #  O 3.8K views   اقرأ بالعربية

When launching a new startup, one is tempted towards creating revenue soon so that the start-up can grow quickly. That's the stereotype for many.

On the contrary, reality is different. While the main purpose of startups is generating revenue, monetization strategies that help startups create actual money are better planned strategically and often delayed.

Here's five main reasons on why you should consider delaying monetization:

1- Get things ready before selling

Creators today tend to promote and advertise their new projects before their actual launch so that they can refine them and allow customers and fans to test them out before the final product or service sees the light. This is essential in terms of quality control.
If your product or service starts selling (or making money) from the first day, the chances are that quality will not be in its best shape. Imagine getting into a newly created website with ads all over. Won't that turn you off?

2- Build traction before monetization

It is vital for the success of any startup to have customer traction. Traction is something that needs time, trust, and resources to be gained. Larger startups that have grown today into huge tech empires have started this way. Take Facebook for instance: once it has gained enough user base and traction, it started to capitalize and make money utilizing ads and other techniques.

Building communities is hard, and tech startups today need to grow, curate, and nurture their own followers and supporters so that they form the base of their own community once they realize their initial strategy and turn into monetization.

3- Focus before monetization

In early stages of startup conceptualization, getting things right is a crucial step towards the growth of the startup. This requires a lot of resources including time and effort. If you are trying to monetize very soon, these resources will be divided against growing the startup, collecting the sales, and monetization. It is best to focus on developing the structure of the startup and the shape of the wanted products or services first, and then go for the money.

Furthermore, focusing on a singular product or service can help you realize how to grow and develop this product or service even better. This doesn't mean that you have to only sell one thing, you can focus on a few values to offer to customers- but the truth remains that less is more.


4- Monetization quickly will get you old too soon

Nobody likes getting old too soon, and the same goes for any business. If your business starts monetizing from day one, your startup will be treated as a "business". You will now have to pay taxes, wages, and other commitments just to keep things running. By delaying the monetization you are actually gaining additional time to experiment and find out the ins and outs before getting committed financially.

5- Carefully choose what you monetize for

Entrepreneurs should think strategically about monetization and what strategies to employ for it. In the early stages of the startup, it makes sense to nurture communities by providing added-value free of charge, but in many cases this alone is not practical. Thus, it is essential to come up with a strategy that offers free value to nurture a following community, while offering a premium service for a selected few members of that community for the purposes of testing out the waters and gradually introducing the monetization model.

Take an expert SEO blogger for instance. She does provide free value through her writings and posts throughout her blog for her followers as she is building a community, but in the same she offers premium consulting services on SEO auditing services and advice for a selected few customers so that she can sustain her operations.

Once she has an established process she can standardize things more by employing part-timers to help her run and introduce this "exclusive" service to her community, and later she can grow with a full-time staff by making this paid service available for the masses.

Don't miss the monetization train

Having explained some reasons on why it is useful to delay the monetization, you should not delay it so much that you are burning cash from your pockets so much that the business itself has become a liability and a costly adventure without signs of pay back. You should delay monetization just until you have gained enough traction and enough feedback to back your idea.

In the life of an entrepreneur, it is all about timing. You have to pick your times wisely: when to start, when to grow, when to monetize, when to enter a new market, and when to pivot or exit. You have to start thinking of monetization from day one, but you have to wait just enough before you actually start monetizing.

Monetize too soon and you will lose on the quality and sustainability; Monetize too late and your startup will not become financially profitable.

Rafat Abushaban

Founder of Riable and consultant to several international organizations in entrepreneurship education and researcher in innovation systems and seed funding methods with 10+ years of practical experience in the MENA region, Europe, US and S.Korea
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