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 U.S. 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 eight 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 plexiglass 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.
#3. Food and Package Delivery: If you can deliver a person, why not a dinner or a package? While new, this revenue stream is quite promising, including talk of some citywide "last mile" delivery contracts in Lahore and other cities.
#4. Selling Rixi Software: I don't know where Adnan finds the energy, but he's resold his software to another transportation provider in Canada, the first of many potential customers.
Through relentless hard work and experimentation, Adnan closed the profitability gap and approaching breakeven. With more rides, cities, and services, sustainablility has arrived, awakening investors and over $120,000 in new funding!
What can you do?
Don't have a rickshaw? What products or services will your happy customers be willing or glad to buy from you?
- Does your product require pre/post-sale service, installation, training, support?
- Might related products accompany or complement yours?
- Is auto-replenishment a sales-enhancing service for consumable goods?
- Can a dog walker offer trips to the vet, dog grooming, food delivery, training?
The easiest way to find these opportunities: talk to your customers! Don't sell'em, converse with them. Let them tell you how else you can help them. It could be your next giant step forward.
Postscript: Inbetween selling ads and dispatching rickshaws, Adnan was awarded a Fulbright Social Innovation Challenge award. Hina also launched an award-winning energy startup that encouraged consumers to reduce peak hour energy consumption. Together they launched Rixi's parent company, Ideacentricity, in 2013.