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The Benefits of a Business Model

Apple’s revenue was on a steady decline and the company was struggling during 2001. That year, they opened the very first Apple store for the purpose of positioning the newly developed and released iPod.

By 2002, there were about twenty-five Apple Stores producing $100 MM in total revenue.

By 2004, iTunes had hit $50MM in sales revenue. The company would have found it tricky to plan around and deal with such an unexpected revenue stream if it had not captured it in their 2001 Business Model.

In helping business owners build value in their business, one of my team’s goals is to help entrepreneurs stay focused and true to their business passion and purpose.

We often find ourselves talking to business owners who want to “grow,” but don’t really even know what that means to their company–much less how to make it happen!

Make it grow

There are really only two ways for $3MM to $200MM businesses to grow–

1) They can expand their existing market/expand their existing market share.
2) They can create/innovate a new product or service.

Obviously, Apple was able to grow into the first way by accomplishing the second. But without creating and following a business model for the product launch, they may have lost their way. After all, a business model is actually a map.
All the reasons why not

So it’s always a puzzle to me why a business owner doesn’t take the time to create a business model so that they can see where they are and see where they are going. Objections I hear are–

We don’t have the time to stop to do this.
I can’t get my key management team to work together on this.
Why create a model when I’ll probably change directions before the ink is dry?
I don’t see how a business model can help me build value in my business.
I have no idea where to start or how to create a business model that is unique as well as beneficial to my business.

Hmmm. Does this sound like the voice in your own head? Let me help you understand more about the importance of spending time to go through our Business Model Canvas.

All the reasons why

First and foremost, taking the time to create a business model will create a point of focus for you and your key management team. Just like any entrepreneur, you probably have a hundred ideas a day. You are creative and energetic. You are convinced each of them is the idea that will make you wealthy. It’s exciting and fun to explore each and every possibility. But is it really necessary–at the expense of your business success?

Building a business model shows you the place to focus, the products and services that will work, the audience that will buy them, and the end result that will grow your company. What could be more fun and exciting than that?!

Creating a business model will give you a fresh perspective and clear direction.

And very importantly, it can clearly indicate your target audience–you know–the companies or consumers who will buy this great product or service your company offers. The people who buy what you are selling are as integral to your success as what you are selling! Don’t lose that focus!

By targeting one type of customer in your business model, your company could start to move in a very different direction. And this type of targeting will help your key management team know where your company needs to go–and be on board on how to get it there!

But maybe you’re still shaking your head. How can you be expected to drop everything and spend two or three weeks with your key team huddled in a room, trying to figure all this out? Well, what if I told you that with the Business Model Canvas we’ve created, in only a 2-3 day Strategy Session, you can have the same type of plan created by Apple as they launched the first iPod in 2001?

The Business Model Canvas (created from ideas from the three books listed at the end of this article as well as from extensive client experience and feedback) is usually completed by companies at the end of their fiscal year or when they know they must expand their market share or create a new product line (grow).

The key management team participates in strategizing, group exercises and identifying solutions. About 25% of the Strategy Session time is spent creating and understanding the business model, while the remaining 75% of time is usually spent brainstorming and planning how the business model can be applied as a solution to the question, how do we grow?

With a focused Business Model, Apple not only successfully launched the iPod, but also was able to rise to the top in a struggling industry (music), going from a competitive challenger to a market leader within three years.

The same Business Model template used by Apple is available to you. But do this not because you want to be another Apple. Do it because you deserve to build the business value that will reward you for all the years of hard work when you are ready to cash out–and move on to something else fun and exciting!

Reference Materials:

* Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers; by Alexander Osterwalder and Yves Pigneur.
* Good to Great: Why Some Companies Make the Leap… and Others Don’t; by Jim Collins
* No B.S. Price Strategy; by Dan S. Kennedy

Starting A Business – What You Need To Know Before Starting

Before starting a business this is what you need to know before you sign-up with any company. With the job market being too unstable there are so many people looking to start their own business. People realize that they need to start looking less to the job market and more to a home-based business. Nobody is really safe now-a-days. One day you can have a job and the next you could be given your walking papers. Having your own business means YOU are the boss. Your future is in your own hands.

So, before you decide to start your own business there are things you really need to think about and realize BEFORE you sign-up with any company. You need to realize that with any business there will be some kind of start-up fee or website cost. Many people do not realize this. You have to realize you are buying your own business. The costs of start-up fees are nothing compared to what it would cost you to buy a franchise. Starting your own business for $300, $400, $500 is actually very cheap. Starting your own franchise costs thousands! The cost sets up your business and then there is usually a reoccurring fee for your own website which is usually not very expensive. This website is how you get your business in front of people. Instead of setting up a store on the corner where people come to your business it is all online.

Another thing you need to realize is that having your own business takes time. Don’t think you can just sign up with a company and your business will take off. That just does not happen. You need to have patience and realize that is takes time to build a business. It DOES NOT happen over night. There are so many people that don’t realize this. They start a business and after a few months of having their business they aren’t making the money they thought they would be making right away and they give up. It takes time and dedication. Many people start their business and right away approach their family and friends. Once they run out of people they know they don’t know how to find anyone else to show their business to so they give up. You need to realize that there are thousands of people to show your business to but you just need to know how.

So, this brings us to the next point, how do we find these people? More importantly, how do THEY find YOU? We need to advertise your business. People don’t just open their doors and expect to make a ton of money right away by people just stopping in. Seeing as your business is online it works the same way. You don’t just get a website set up and all these people will find it. You need to advertise for people to find you. There are many ways to get your business in front of thousands of people. You can set up a blog, find advertising websites, write articles, Facebook, Twitter, LinkedIn and much more.

Now, when you are advertising there are ways to advertise online where you can get the search engines to find your business FAST. They are basically the “secrets of the search engines”. There are ways of writing your articles, using links, etc to be found much quicker. You can get you posts to rank at the top of the search engines by paying for it but did you know that you can get them to rank just as high by the way you write you articles, blogs, etc?

So, realize just because you have your own business doesn’t mean you don’t work. It is a lot of hard work but it is very rewarding. One way to think about it though is that all of your time and effort will pay off for YOU in the long run. You are not working for someone to build THEIR business which is making money for them, you are building YOUR business and in the long run will make you a lot of money and your life so much easier.

Running A Business

Running a business is the art of managing people in a way to collectively achieve productivity and accomplish certain goals. One of the most important of those goals is making a profit. A company that isn’t making profits will not survive for long. There are many challenges every business owner must face on a daily basis. Further small business owners face some unique challenges. The smaller the business, the more tasks you have to take on by yourself.

If, as a business owner, you find yourself with entirely too much on your plate, you should hire and develop or outsource a self-sufficient team. The more tasks your team can tackle on its own, the more you can focus on growing the business. As your business grows in complexity, unanticipated problems will arise. A self-sufficient team will help you deal with these problems by being a part of the solution.

With your team in place, it’s time to go after more customers. Here are some steps to help you build your client or customer base;

1. Understand your target market – Invest in research, or do it yourself, and find out who your business can help the most. All businesses offer solutions to a problem. As a business owner, you need to target the people who have that problem and offer your business as the solutions. You need to be able to clearly articulate why your business will meet their needs.

2. Give them an offer they can’t refuse – Research your competition to learn the prices they charge and the quality they deliver. Your goal needs to be to deliver a quality higher than your competition at the lowest price possible while still generating the profit you need to survive. This is known as delivering value. Resist the temptation to sell on price and instead focus on what you can creatively meet the needs of the customer in ways that are unique to your business.

3. Don’t forget to follow up – Don’t let the relationship with your customer end after only one transaction. Find ways to stay in touch. Encourage them to follow your business on social media networks and offer loyalty promotions to get them to return. Stay in communication and be prepared to make changes as your customers’ needs change. In face-to-face communications with clients, it will take at least 5 attempts on average to gain their business. When doing business online, you can anticipate that you’ll need to ‘touch’ your potential client at least 8 times before they will purchase. The easy you make it to do business with your company, the more likely people will do it.

As you grow your business, this will all be too much for you to handle on your own. Remember that those with the best people always win.

Every now and then, every business experiences a downturn. How a business responds to a slow down can be the difference between success and failure. When business falls off, consider this a time to get busy on building, not on cutting back. While you might need to scale back due to financial considerations, consider this time to be an investment opportunity for the future of your business. Now is the time to fix what is broken and concentrate on marketing. This might also be a time to reflect on the solutions your business provides. Perhaps your customer needs have changed. If that is the case, you need to change as well.

Finding a mentor during times of trouble can help as well. Every successful business owner has experienced troublesome times and has learned from it. Rather than suffering through those times on your own, get some help. Allow yourself to learn from the experiences of others. This is the quickest way to recover from a downturn and vault yourself towards further success.