Your Business Model today is Starting Point for the Future!
Updated: Jan 8, 2019
In working with many clients in various industries and of varying size, there seems to be one overwhelming theme that I continue to come across, and that is not being able to clearly and concisely define, "what is my business model?" Although this may seem like a fairly easy question to answer, most businesses started from a good idea, an opportunity, or some other happenstance, but not necessarily a detailed process of defining the "what is my business model." Meaning, who are my customers, what is my value proposition, what are my channels for communicating my value proposition, what relationships do I maintain with these customers, what resources, key activities, and partnerships do I maintain in order to generate the revenue, and ultimately the profits for my business.
In working with my clients to develop strategic plans for the future, we must first understand who we are today.
Or, as stated differently, if you don't know who you are today, how can you possibly determine your potential for the future.
When a business grows, it tends to grow because opportunities have presented themselves, not because there was a specific, targeted approach to that growth. Let's face it, when a business first starts out, the opportunities to generate profits and cash tend to move the business in a certain direction. However, as the business grows, there is a need to be more focused on defining who and what we are and who and what customers we serve and why. Regardless of the size of your organization, these questions will continue to resurface.
So, what are some of the things you can do to refocus and align your organization and your team for the future? Ask yourself these questions:
What customer segments do we aim to reach or serve?
What is our value proposition? Why do customers turn to our company over another
How do we communicate with our customer segments in order to deliver our value proposition?
What types of relationships do we establish with these customer segments?
What are these customer segments willing to pay us for?
What key resources/assets must we have to make this business model work?
What key activities (most important things) must we do?
What key partnerships, including suppliers, and those with a vested interest do we need to have?
What costs are incurred to make this happen?
Knowing your business model today allows you to further evaluate what is working and what is not, where you're being successful and where you have gaps, what opportunities exist and what potential threats may derail your current model. This then becomes the roadmap for the future state business model. Who you want to become, and ultimately the strategy and action plans to get you to that next level, all start with who you are today.
Typically, when I have the initial discussion with clients regarding their current business model and where they see their future business model, many of them give me a description of products offered. Or, they state that they are an opportunistic company and as opportunities present themselves, they will evaluate the validity of that opportunity and whether it makes sense to move in that direction. Now, that is not a plan, but rather a hope that things will work out, or as stated previously...."But if you feel reluctant to plan something about it, then someone with guts would define it for you." Are you willing to take a more deliberate approach to your business such that you can create the clarity of vision and alignment within your organization, or does the approach of "let's see what opportunities present themselves" work for you?
As leaders within our organizations, it's our job to define the vision of where we want to go. However, in order to define the future, we must first define the present. For it is "now" that we are experiencing, and it's only "now" that we can prepare for the future, for "The future belongs to those who prepare for it today." (Malcolm X)
Jayne McQuillan, CPA, MBA, CEPA is a strategic management consultant, and the owner of Journey Consulting, LLC, in Green Bay