You can NOT work on growing your business without first taking a look at your business model.
Your business model is the blueprints of your business. It’s the roadmap. If your business was a human body it would be the circulatory, nervous and skeletal systems...probably. Your heart? That’s your passion which, is also important but it’s not your business model. Your business model is the thing that outlines how your business is going to make money. Which would be the blood (and breathing) if we’re going to stick with this vaguely anatomically correct business reference.
There is a lot of hype about growing a business these days. It’s hard not to jump on the hype train when you see an environment of Tai Lopez Facebook ads, new crypto millionaires every week and guys like Gary Vaynerchuk motivating you to hustle harder than you think is even possible. But, even with all the hype and plugs for mentorship programs (shameless plug: be sure to check out my new group coaching program if you’re thinking of finally taking the plunge) and get rich crypto strategies, lots of people still forget to take a look at their “business’s” underlying business model.
At its most basic purpose, a business model answers the “how” question when it comes to you delivering or creating value for your customers. If you plan on being successful, which most people do, you need to make sure your business is organized and your foundation is solid before you can go off and start executing some the business growth strategies and tactics du jour.
If you don’t take the time to really flush out your business model then running your business ends up being kind of like taking a shower with your clothes on. Sure you’re in there and sudsing up with your favorite lufa but are you really getting clean? Probably not and now that sweater vest is never going to really fit right again.
Below is a quick blueprint you can use to see if your business will function how you want it to when you are ready to start executing your business growth strategy. Not only that but sometimes you are so involved in getting your product or service out, dealing with customers, and making sure you are doing enough marketing that you lose track of how your business is actually working.
Wing’ing it is never a good business model.
Think about these concepts and use them to help tighten your business up - most importantly don’t wear your clothes in the shower.
Customer Value Proposition:
- Who are your target customers?
- What important job are you doing for them? What need are you fulfilling?
- How are you packaging that offering so that it is the most effective way to communicate your value to your customer?
Profit Formula:
- Think about your revenue and where is your profit coming from? What kind of volume do you need to have to reach your profit goals? Are you selling at low prices with the hopes of high volume or high price low volume - does that match your market?
- How are costs allocated? Keep track of your spending!!! Remember your time and overhead count too.
- What is the minimum level of margin you need to earn on each sale to reach your profit goals?
- How fast is the turnaround time on the inputs you need to sustain your businesses activities? Think and plan for those cash flow needs.
Key Resources:
- What are the most important factors in bringing your business and strategy to the next level?
- These include people, strategic alliances, technology, how information flows, distribution channels and any specialized equipment.
- When you map these out it makes executing your strategy a lot more efficient!
Key Processes:
- What are the processes that are repeatable (and eventually scaleable) that you use every day to deliver value to customers?
- What are the metrics you use to keep track of your success? What gets measured gets managed!
- What are the norms in your market or industry? Understanding how business is done in your market will help you get in front of your customers faster and in a way that they are familiar with. It will also help to build your social credibility and proof as a business in your market.
These four major concepts help you better outline the model that your business follows. When you break everything out it will help you better focus and avoid doing things in your business that are wasteful or that even are too far away from what you actually wanted to be doing in your business.
Model first then grow!