Here we are, pootling along in our micro businesses, trying to grow revenue or impact or customers. Perhaps it's hard work and perhaps you've felt a little stuck now and again.
What if it was because your business model needed a little love?
The definition of a business model is (according to Strategizer.com the inventors of the Business Model Canvas) is nothing more than how a business is, or plans to, make money. More broadly other experts say it's the way in which a business delivers value.
Examples might include manufacturing, bricks and mortar retail, fee for service, subscription or fremium (when you give something away for free but all the good stuff is in the paid version).
The thing is, we tend to just have one business model and that can be hard work, get stale or perhaps not even serve the customer in the best way any more. Perhaps your business model is simple or perhaps you do a few different things. Maybe the way you do business means that there is a ceiling to what you can earn. Maybe you are always searching for the next customer or your income dips and dives all over the place. Maybe you just wish you were making more money from the effort you put in.
If some or all of this sounds familiar and I've got you pondering about your model and whether it needs some love, then here are some ideas to get you thinking about how you currently bring money into your business, how much effort it takes and what value you are actually delivering.
Start with your value proposition. This is the reason why a customer comes to your business over a similar one. For example, you sell handmade socks and people come to you because they are handmade or pure wool or in funky designs or they're British or they love your ethical brand. Here are some questions to ask yourself - write it all down for best effect:
think about why people are buying from you over someone else.
understand the 'magic' that you personally bring to the business
what do your existing customers say about you?
what is special about your products or services
what elements of your business are unique (desing, you, location, recipe etc)
What is you current business model? Now it's time to write down what your current business model is. Better still draw it out so that you value propositon is in the middle (check no.4 with a nice grid to fill in). Here are the elements to note:
who are your current customer segments i.e. the different groups of people who currently buy (women, young people, couples, schools etc)
what is the relationship you have with the customer i.e. how to do attract them and keep them, how do you record your relationship, is there personal engagement or do they regularly refer people to you etc.
what channels do you currently use to reach your customers e.g. social media, email marketing, delivery service, online, in a location, at markets etc.
what income streams do you currently have e.g. is it buy once, subscription, deposits, projects, ongoing contract etc. What are the numbers too.
think about what partners are essential in your business e.g. Mailchimp, Xero, Quickbooks, a local supplier, co-workers or Etsy etc.
what are the key activities you undertake in a week/month e.g. are you making, delivering a service, creating content, providing expertise etc.
what resources do you need to deliver the above e.g. raw materials, ongoing training, your expertise, good weather and so on.
finally, what does it cost to run your business well e.g. costs of training, supplies, service charges, utilities etc.
Now that you have a list of how your business model works now, get a red pen and connect all the elements and think about how you could give your business model some love to improve what you do, how you deliver or perhaps how tired your are. Here are some examples or ways to tweak what you do:
Could you convert one off clients to a subscription model?
Can you add extra value to your offer and charge a premium?
Can you create a refer a friend scheme that offers future discount to the referrer?
Could you collaborate with a micro friend to share resources or space?
Can you upsell a premium offer to exisiting services e.g. all in one service, free delivery over a certain spend, new products that complement a core offer etc.
Could you offer workshops, experiences or new training in an existing retail or hospitality space e.g. workshops at a holiday cottage, cooking classes at a cafe, pop up stall in a retail space.
Can you upgrade your customer management so that your system automatically sends out incentives to buy or reminders on their Birthday etc?
Can you set up a VIP area that creates asuper fans who will try out new products or services first?
Could you replicate what you do in a new location?
Could you get a manager to help you with the day to day to allow you to develop a premium offer or develop a new income stream
Do you need to put up your prices by upgrading your brand to a more exclusive feel?
Can you re train or gain new skills to compliment your current value proposition?
Here's the Business Model Canvas grid to us for your analysis above. You could do one for your existing business and use another to map out where you'd like your business to go in the future. Download a PDF here.
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