What is a business model, and why should you care?
Well, a business model basically describes how you make money, so it’s kind of important.
And whether you realize it or not, you DO have a business model. All businesses do – either by accident or by design. Businesses with great business models make money. THIS is why you should care.
The specific business model you need depends on what type of business you have. Retail, service, manufacturing, wholesale, non-profit, online and offline – these all have different business models.
And what about YOUR business? What kind of business model do you have?
If you are a purpose-driven solopreneur and…
…You’re tired of chasing prospects and living month to month,
…You’re not sure where your next clients are coming from,
…You’re working harder than you ever wanted to – and you’re just getting by.
Then you most likely have a 1 on 1 business model. It’s the most common business model for solopreneurs, and it’s non-leveraged and deadly. It can literally kill your business, and put you OUT of business before you even know what hit you.
Here are the three main reasons this non-leveraged business model DOESN’T work:
1. It can be difficult building up a clientele that will cover your business expenses and let you grow. It can take a lot of time and effort to constantly find new clients – and that’s okay if you don’t mind the slight panic that occurs when you look at your bank account and wonder how you are going to pay your web designer or copy writer. And if you don’t mind chasing potential customers and feeling somewhat desperate when talking to them hoping they will “buy your stuff.”
2. If you are working with one person at a time you are trading an hour’s work for an hour’s pay. Even if you are being paid very well, there is a limit to how much you can earn. And trading time for money is NOT something most people can, or want to do, over the long haul.
3. To stay in business, you cannot be the only “product”! If anything happens to you — there is no business. And if you are not working, or perhaps you even dare to take a vacation or a break from your business, there is no income.
A non-leveraged business that requires you to do most of the heavy lifting (even if you have contractors or employees) means you have simply succeeded in becoming self-employed, and your business is probably draining your energy, if not your bank account.
It doesn’t have to be this way. With a few tweaks – you can create a business that is:
Scaleable – meaning you can increase your revenue with minimal cost to you, and often while working fewer hours.
Sustainable – meaning you can maintain your business at a steady level without exhausting your time, finances, energy and other resources.
Sellable – meaning your business can thrive without you, and you can sell it when you are ready to move on – or want to retire!
These are the hallmarks of a real business!
The good news is that great business models are fairly easy to design and build. If you want to make real money on a regular basis you just need to create the framework that provides predictable cash flow from month to month.
Doesn’t THAT sound good?! Predictable cash flow from month to month.
With the right business model, you can build your business as large (or small) as you want to AND enjoy the freedom to go on a vacation without worrying about lost revenue, (or saving money at a Motel 6!), or have a larger impact, or simply work fewer hours and make more money so you can reclaim your life!
I’ll be sharing more in the weeks and months to come on how to build a LEVERAGED business model – and I would love to hear your thoughts below!