A clear-cut business model is the baseline for your highest earning potential
Having worked directly with dozens of business owners over the last few years – hearing and rectifying their challenges – I know what’s getting in their way …
… the absence of a business model.
How they earn, from whom and how they attract the customers that bring in predictable earnings is at best, fuzzy … or at worst unknown.
Many entrepreneurs seek expert advice because they don’t know how to reach their goals. That’s when they Google “business coach”.
A coach can help an owner to feel unstuck, but before they will receive value from that investment, they still have to discover their business model.
Having a clear business model is the hallmark of any successful venture, from Apple to the local apple seller at the Farmer’s Market. Large or small, business models are important to every entrepreneur.
Having a clear business model helps you:
- Understand what your customers want to achieve so you can ensure your messaging addresses those desires. This increases your conversion.
- Save money on marketing. Instead of trying to attract anyone you spend your budget on getting in front of likely buyers. A business model identifies your best client.
- Feel confident that all of the monthly & daily activities you do (or outsource) lead you to your revenue goals.
- Identify pricing that covers expenses, fuels you and your team and has profit leftover for investing in future growth.
- Create branding that supports your positioning – the positioning that supports your pricing.
What is a business model?
In simple terms, it is the container for your business. A business model helps small companies or entrepreneurs realize the economic value of the goods or services they provide. It does this by clearly highlighting how and where the business adds value (the value chain) and what the consumer will get out of it.
Each plan is unique to the business, but still each area must be addressed to understand the capabilities of the business required to thrive. The business model shows the distinctness of the value offered and that helps a company know how to position itself in its industry, relative to other businesses.
It also maps out all the other critical inputs and outputs that allow the business to operate efficiently.
How do I create my business model?
Your business model expresses the passion that you have for your industry and the needs you seek to fill. Many people choose to enter into an existing industry and offer an improved product or service, rather than a new one entirely.
These entrepreneurs seek to change the way that their industry addresses the needs of the customer, or enhances the service that the industry typically provides. The more innovatively and efficiently you address the gap in the market/problem the client is experiencing, the more successful you will be.
A recent example of this is Uber – the company sought to provide travellers with easier access to rides and their solution was to approach this transportation issue in a an entirely different way. It revolves around the concept of filling the gap of unused resources – cars that would be otherwise idle.
Airbnb and the fairly new co-working space company Spacious, have also applied this concept in their industries.
How could you do this in yours?
Your business model should incorporate the product or service you are offering, along with your philosophy behind it and the ways you’ll deliver better than most.
What value does my business give to my customers?
A good business plan doesn’t just create a roadmap for you to follow from conception to profit. In order to create a workable, sustainable business, you also need to consider why customers should select your business to meet their needs.
Small ventures are growing faster than ever before. And thanks to the internet, customers have many choices for products and services similar to yours. In order to stand out from the crowd, savvy entrepreneurs consider the value that they give to their customers.
The most important way to define value for your business is through your value proposition. Your company will project to your customers what value you will create for them when they choose to do business with you. This can come in the form of showing them how your product can solve a problem in their lives. Or you can show why your company is the best one to provide a service for them.
The best companies introduce products or services to their customers that the customers either didn’t realize they needed before or how their products or services will enhance their overall lives, more so than a competitor’s product or service.
The other way your business model becomes unique is through your values and beliefs (your big why) that you share. This can tie into your mission statement and be shared with your prospects and team. They aren’t a hard sell, but rather can evoke an emotional response from your customers.
Your mission statement and values determine how you plan to capture your customers attention. And it does the important job of giving them a reason to become repeat customers – buying into your company culture.
Your values make a difference
Last week I asked a new client who found me on Google why she chose to work with me. Her answer was because she felt a connection to me personally after reading my website copy.
The best business models offer value greater than other products on the market while addressing a need or desire that the customer hasn’t realized they have.
In Uber’s case, many people may have realized that they needed a ride in a pinch, or help when they weren’t able to drive. However, travelers didn’t realize how much better their needs would be met by an easy-to-pay-for ride on demand service.
Now, services like Uber have imitators and the original company is expanding rapidly into new markets. This is all based on their successful business model.
How do my company values affect my business model?
If you have a passion for the industry you’re in and are well established in your business, you have probably incorporated your mission statement and core values into your business plan.
Now let’s examine how your value affects your business plan, and how you will execute it.
Your business model and plans that emerge from it are your blueprint for success. Your values represent your reason for existence. Thinking of your company as an organic, changeable entity, versus a straight transactional operation, gives you the ability to grow and adapt. And when the time comes, to scale and change according to the whim of your customers as well as ever-changing priorities and technology.
Begin thinking of your essential value as the catalyst for innovation and business growth.
Your marketing supports your core value, not the other way around. So nailing your value proposition is critical to any successful marketing campaign.
Although many companies begin deliver value in one primary way, over time as their business model changes, the way they deliver that value also changes. For example, some service providers start offering products as a way to deliver information to their clients.
However value is promised, sold and delivered, great companies always keep their core value at the center of their business development. And this leads to consistent experience of their brand promise over time.
When you consider making changes in your company, keep your core value in mind. Always ask yourself “Do these changes improve my ability to execute my brand promise?”
If they do, you’ll always end up enhancing the customer experience. If the changes you propose seem to run contrary to your company core value, then you will likely lose sight of your company vision. And you risk compromising the unique service you provide your clients.
Branding – putting the stamp of your core value on your brand
You’ve probably heard the phrases “branding” and “build your personal brand” and felt like a deer in headlights. If you are unsure about the meaning of “branding”? Don’t worry!
While it’s been around for a long time, crafting a brand is a strategy is critical at a certain phase of a business’s maturity.
Essentially, branding is the idea or image people have in mind when thinking about specific products of a company, either from a usefulness standpoint (e.g. “the shoe is lightweight”) or an emotional way (e.g. “the shoe makes me feel powerful”) or a physical way (e.g. “I like the look of the shoe”).
Branding is how you craft your company’s image to represent something beyond the transaction, and how you make your products and services memorable.
There may be many similarities between products in a genre, but the brand identity is what makes them unique. For example, Nike and Adidas both produce athletic wear for many different sports. However, some people prefer the look of Nike, and others have a connection to Adidas.
In the end, a brand is a person’s visceral feeling about a specific product or company. Brand connectivity is sometimes an emotional connection, and brands can gain or lose popularity depending on how the market – and consumers – continues to view them.
By crafting your company’s brand intentionally, you tie your company values into the business model and elevate the customer experience. In order to turn customers into repeat customers, and repeat customers into raving fans, you need to help them connect emotionally with your company. This is accomplished through branding.
Using your brand to market authentically
The reason authenticity is so important today is that people are better able to discern when a brand is trying to snow them. This marketing strategy goes beyond gimmicks and embraces the philosophy that “truth sells”.
Authenticity has become a powerful marketing tool, mostly in response to this shift in consumer power.
Authentic brands exhibit a discernible realness and transparency, removing the corporate component that sets them apart from the consumer. Instead they replace it with the “person next door”, a relatable element that encourages connections.
Many marketers create a “story” of the brand, connecting the brand with their customer’s lives and showing how the product can enhance the customer’s life.
What type of offers should I create to align with my business model?
Your offers should highlight the value you present to your customers while working within your company’s values.
Offers need to be clear and concise – you only have a few seconds normally to grab the attention of your potential customers. You need to package, position and price your offers in a way that the potential customer can immediately see how they will benefit. This is the secret to their choosing to buy from you, over a competitor.
Do you need a business coach who knows how to build successful business models?
Creating a business model is only the first step in crafting a lasting business. Incorporating basic business strategies with an authentic marketing message and transparent communication is the key to building and sustaining your business.
Aside from the usual accountability that comes from hiring a coach or consultant, I advise businesses on how to set up their business model and walk them through a step by step plan to create their value proposition, branding, packages and marketing.
Want to learn more? Click here to book a complimentary consultation.