SUMMARY
In this episode, we dig deep into what is needed to build a
profitable business model. There are different elements of it and the things
that need to be considered. We talk about one that is used to come up with an
optimal business model.
Six Piece Framework for Business Modeling
Under this model, there are two categories: Internal and
External. These two have three factors each: Players, Strategies and Outcomes.
External
External elements are related to the customer, marketplace,
team and others. They are:
- Who:
It is about who we are serving, who our customers and marketplace are. Define
the identity of a single or specific customer. Then extrapolate that identity
in the marketplace. Understand their geographics, psychographics and demographics.
Define your optimal customer. - How:
How do we give them what we are trying to deliver? It is about the connections
and channels. Define the relationship that we are trying to create with our
customers and other associated people. Specify the channels that we are going
to use to deliver the products, services or experiences to the clients. - What:
It is about what we are giving them in terms of value, products, services and
experiences. It is about the value you create in their life through transformation.
It should be holistic so that you serve everyone: customers, marketplace,
community, society, team and yourself.
Internal
These are the elements to move the product or service
forward that are internal to the organization, to you and your community. They
are:
- Team:
Who are the partners, team members, and the ones that will champion our mission
and vision? They may be internal organization folks or even outsourced people.
Know the roles that they play. - Actions:
Actions are built on activities and resources. They are the things we need to have
and do to move this forward. Define the activities, milestones, timelines and
the resources that you need. - Results:
It is about costs and revenues which are required for the business to be
sustainable. It is necessary for you to grow, and continue delivering the value
and experience. It has to be profitable in the long term.
— Begin Transcript —
Hey there, Mel Abraham here the author of the number 1
best-selling book, The Entrepreneur’s Solution and the founder of Business
Breakthrough Academy where we teach you to design a business and create a life:
A life of financial freedom and peace of
mind.
And welcome to this episode of The Entrepreneur’s Solution show.
Real excited to continue our journey, continue our discussion about business
models. In the last episode, we talked about what they are and why they are
important and gave you; tried to raise the awareness of where the problems are
and what it can do to your business.
In this episode, we’re going to dig deeper and talk about
specifically:
- What is a business model?
- What are the elements of it?
- What are the things you need to consider?
And I’m going to give you my framework, my 6 piece framework for business modeling
and coming up with your business model that is optimal, viable for your
business.
So, right after this brief introduction we’ll jump right
into it and just like all my episodes, they typically come with some sort of
tool, template, workbook, guidebook; something to bring this stuff to life for
you and the way to get that is go, for this episode, to go to MelAbraham.com/session031.
If you happen to not be at your computer right now and you
are either at the gym or you’re driving or you just can’t get to the computer,
go ahead and text. Text MYLEGACY one-word no-spaces to 38470 so you can get the
guide that goes along with this episode. And I’ll see you back here right after
this brief introduction. See you soon. Bye.
Hey there and welcome back, I’m Mel Abraham, the author of
the number 1 best-selling book, The Entrepreneur’s Solution and welcome back to
this episode. In our last episode, we started the discussion about business
models and I talked about the business model ladder and what happens when you
don’t have a business model? You don’t really think about it and you just end
up with a model or you adapt something from an industry that’s antiquated, that
doesn’t work and the struggles that it creates and the problems that it
creates.
I mentioned that I believe that most business successes are successes of business models and most
business failures are failures of business models. I gave you the 4 E’s that cause business failures in
the context of business models. Things like it’s extraneous, it’s a, it’s
trivial to your customers. They don’t value it, they don’t’ find it very
helpful, they don’t find it very meaningful to them in the process.
It could be that you’ve got the wrong business model. It’s
erroneous in the process. You’ve got the wrong business model in place and so
you need to change it, shift it, switch it and do things. There could be
external factors that come into play either legislative changes, technological
changes. I talked about Blockbuster Video. We talked about how Gmail and the
Postal Service, and Amazon and book stores, and Apple and how it affected Tower
Records—all those things that change. External factors that can cause your
business model to fail if we don’t focus on it.
And then the one piece that I think is really one of the
largest reasons that business models fail is lack of execution. So, we talked
about all of those things and we said, “Here’s the elements of a business
model”. Now let’s dig in. Let’s look at things so you understand the
concepts or the things that need to be implicit and considered in your business
model and designed in your business model.
And the key is in everything that I do, is not about,
“Hey this is the way I do it and it’s the only way and this is the right
way.” It’s actually about what’s right for you?
Now, there are a certain business principles that I think
that are universal so they ought to be followed. But by the same token,
When we talk about your success,
When we talk about your life,
When we talk about the kind of business you want
to build,When we talk about those that can say how much
is enough.
> That stuff that’s defined by you. The key is not what’s
right for me. The key is what’s right for you and that you do it intentionally in
the process and when you design your business model part of that is what’s the intention behind it for your own
business as you move forward. So, that becomes really important.
So, let’s start to take a look at things and look at what I,
my 6 piece framework that I look at.
What are the things
that a business model needs to consider?
– Now, in this
framework that I said, there’s 6 pieces of this framework but we look at things
in two different categories—one is internal
and the other is external.
So the internal
elements, there’s three internal elements that I want to consider which is:
- Internal to the organization,
- Internal to me,
- Internal to our community if you will.
> That is moving the product or service forward.
And then the second is external.
External is:
- To the customer,
- The marketplace,
- The team, and
- Those that are external potentially to the
organization.
When we look at, when we look at what it is we’re dealing
with there’s three aspects that I need to consider in my business model. So
I’ve got, remember the six factors? So, we’ve three internal, three external.
So let’s just look at the aspects of it:
- Who are the players?
- What are the strategies? And
- What are the outcomes?
So your, the each of the six will fall into these and this
is helpful if you download the guidebook because you’ll have the graphic there
in doing that.
But let’s start with the very first thing. We’re going to deal
with the external first and that is “Who?”
When we talk about who, this is really about :
- Who are we serving?
- Who’s our customers?
- Who’s the marketplace?
- What it is that we’re looking at?
And there’s two elements that we can dig down. Now when we
do this, when I do this in a workshop we really design and we dig down, we roll
up our sleeves and we really go into a lot of detail that I can’t go on here
but this will give you the primer. This will give you the fundamentals for you
to consider and start thinking about in your own business.
And when we’re talking about who it’s about our customer but it’s
about the segment of customers. How are they being served but also the “profile”. When I say profile, what
I want you to do is define a specific customer, a single customer. Not a
customer group per say. But if I can get the identity of a single, optimal
customer and then I extrapolate that identity in the marketplace, it works a
whole lot better.
And when we talk about identity,
- I want to understand the geographics.
- I want to understand the psychographics.
- I want to understand the demographics.
- I want to understand what they’re thinking.
- I want to understand what they’re feeling.
- I want to understand all of these things.
And like I said, we go into this in a much more detail to
really design this and research it when we have the time to do it. But right
now, I want you to think about,
Do I really know a customer
profile?
Do I really know who my customer is?
Do I know what their name is?
And do I know what they feel?
What they wear?
What they eat?
Where they hang out?
Do I know that?
Do I know that if,
what customer segment, how they’re segmented?
- Are they in the mass market?
- Are they in a niche market?
- Are they in a segmented market?
All of those things come into play in defining the who in
the process and we flippantly, we sometimes flippantly go out and say,
“Anyone that will buy.” And I can tell you that if you go out into
the marketplace saying, “Let me just find anyone that’ll buy”, no
one’s going to buy. You’ll be doomed to failure. So let’s find your optimal customer. Let’s define:
- Who they are,
- Where they are, and
- How we can get to them.
That’s the “Who” in the business model framework. And
then the second is “How?” so who and then how. How is how do we give
them, how do we deliver to them what it is we’re trying to deliver. It’s about
the connection and the channels. And it’s:
- What kind of relationship we’re going to create
with the customer? - What kind of relationship are we going to create
with the people that are associated with our business? - Is this going to be this intimate personal
relationship? - Is it going to be something that is more
self-service? - What kind of connection are we creating and then
how are we going to deliver the products or services? - What channels are we going to use to deliver the products or
services or the experience to the customer, to the client that we’re talking
about?
And then the last on the external row is this outcome which
is “What”. This is really about what. What is it we’re giving to them? It’s the value we create and what
is it that we’re giving to them—products, services, experience; all of those
things.
And I want it to be holistic. We talk about holistic, I talk
about holistic entrepreneurship. It’s
really about serving everyone.
- It’s about serving your customer.
- It’s about serving a marketplace.
- It’s about serving the community.
- It’s about serving society.
- It’s about serving your team.
- And it’s about serving you.
When we do that, entrepreneurship
is about everyone winning. It’s not
about someone has to lose for someone to win. So, really that’s what the “what”
is. What’s the value you create? It’s not about giving them a product. What’s
the value you create in their life through transformation?
Then we go to the internal and that internal is about team. The first piece is about team, the
players remember? It’s about the players.
- Who is the team?
- Who are the partners that are going to be in
this battle with us? - Who are the ones that are going to champion the
cause? - That are going to cheerlead the mission and the
vision for us. - And what roles do they play?
- Who do we need?
Now these may be internal organizational folks. They may be
outsourced people. They may be contract people but who is the team? Let’s
define the players in an internal basis. Once we understand the team, we then
need to understand what are the actions
we need to take? And the actions are built on the activities and the
resources.
There’s certain things that we’re going to need
to do to move this forward.There’s certain things that we’re going to need
to have to move this forward.
- Define the activities.
- Define the milestones.
- Define the timelines in which these things are
going to work. - Define the resources you need.
And look at where are those resources are going to come from
which could come from the partners, from the team, the outside partners and
that type of thing. But we need to understand specifically the actions.
Those of you that know me, that have worked with me, that
I’ve mentored and worked with on a one-on-one basis or in group, you know I use
this 90-90 rule. I try to do things in 90 minute blocks, in 90 day blocks. I
think that those are manageable timelines and I put things into those 90-90
perspectives to really start to drive things.
Then the last piece is this, about results. This is about
revenues and costs. I have to know. I have to know:
- In order for my business model to be
sustainable. - In order for me to grow.
- In order for me to continue to provide the
value, the experience and the shifts and the transformation in people’s lives
that I want to provide.
> It has to be profitable.
I know some people want to be really more difference makers
and, “Gosh don’t want to talk about money.” But without the
money—it’s not a bad thing, it’s just a vehicle—but without the money your
cause just can’t go anywhere. So, we need to make sure that it’s going to make
money.
- How is it going to make money?
- What are the costs associated with generating
it?
And it needs to be profitable in the long term. In other
words, I need more revenues than it’s costing me in the long term to make it
happen. So this is really the fundamentals of your business model.
Ask yourself the questions,
Who are we serving?
How are we serving them?
What are we serving them with?
Who are the players on the team?
What are the actions I need to take? And
What are the results that I expect or that I
need to go for to allow this to grow?
That’s it. That’s it. It doesn’t get any more complicated
than that. We dig into it deeper. We design it very internationally and there’s
a lot of little pieces that go into play. But it comes down to it; we’re
answering those six things.
- It’s the who,
- It’s the how,
- It’s the what,
- It’s the team,
- It’s the actions, and
- It’s the results.
I hope that you found this of help to you. I hope that
you’ll take this and use it as a checklist and use it as a vehicle for you to
start to evaluate your business if you’re already in business and say,
Do we have this straight?
Do we have this right?
Do we have this clear?
Or use it as the design mechanism if you’re just starting
out in business to sit back and say, “Let me make sure that we don’t make
the mistakes that others have made.” That we don’t fall by the wayside
because we didn’t consider all these things and use this as the design
mechanism, the map for your business to design:
- Who it is,
- How it is,
- What it is,
- The team,
- The actions, and
- The results.
So, remember if you haven’t done so already, download the
guidebook. Download the information, the tools, the templates that go along
with each of these episodes. For this episode, you can download it at MelAbraham.com/session031.
Or you can text. If you’re not at your computer text
MYLEGACY one-word to 38470. We’ll send you the download link right away so you
can get access to the tools and start designing your business, start changing
and shifting the way you do things, start getting more clarity in business so
you can accelerate your success.
Remember, from the last episode it’s about putting yourself
up at the optimal business model so you can be leveraged. You can have cash
flow at a high level. You can have efficient systems and working for you, for
accelerated success.
And if you found this of value, do me a favor. Just do me a
favor and share it with a friend. Share it with someone to give them the tools,
to give them access to bringing their entrepreneurial dreams to life. This is
the mission for me. It’s about creating these micro-economies of entrepreneurs
out there that realize that they have the ability to have their life, to have
their life by their own design and by their own hands to create something
that’s intentional and directed by them and
- Not waiting for someone else to give it to them.
- Not dependent upon the government.
- Not dependent upon hand-outs.
- Not dependent upon anything else like that.
And if you haven’t done so already subscribe so you can get
access to these tools on a regular basis. This is my way of giving back. This
is my way of being your entrepreneurial mentor through this process. And I hope
that this serves you. I hope that you found it of value. And I look forward to
helping you out on your journey, on your epic journey.
And if you have questions in the process, do me a favor. Just
go to AskMelNow.com and you can leave me your question. We’ll make sure we get
it answered on one of these upcoming episodes. So in effect you have me in your
back pocket.
Until we get a chance to see each other in the next episode,
May your vision be grand, your journey epic and your legacy
significant!
See you soon. Cheers. Bye!!
— End Transcript —
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Like this? Please share it and help a few
more people bring their dreams out of the darkness and give life to them
again. Cheers, Mel
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