Are You Running a Model Business?

25-Mar-2010

All successful ventures need a clear business model. However the word "model" makes the whole concept seem illusive, as if out there somewhere, just out of reach, is a boilerplate set of directions, easy-to-follow operating instructions for business success. Adding the word business to model causes instant anxiety; either you don't have one or yours isn't good enough. Now replace the word "model" with story. What's your business story?

There. Now we can talk about it.  Your business model is, at its core, the story that explains your business. It’s about how you make money: what you have to offer, the clients you serve, the way you deliver your services and the space you hold in the marketplace. A good business model, strike that, business story is essential to your success. If you’re working, you’re operating one already. If you take the time to write your story out, your business will run that much more effectively. If you haven't done it (or re-considered it recently), ask yourself these questions.

What value do I provide?

Can you summarize your value proposition in ten words or less? To be effective your answer must be simple and succinct. However, that’s easier said than done. To articulate your own value you first have to be sure you understand your clients’ problems. Then you have to describe exactly how you’re able to meet their needs, how you deliver the right solutions and how much that service is worth. Next you have to boil all those thoughts down to a one-liner. Your value proposition should be simple, dynamic and a clear expression of the tangible impact you have on your clients’ lives. It’s why a client should choose you.

Can I describe my ideal client?

Who do you work best with? Under what circumstances does your expertise shine? The more you align your clients’ needs with your skills, the better you perform. That’s why it’s so important to identify your market and be specific. Describe the group of clients you’re best equipped to serve and focus your energy on finding them (the baby boomers, small business owners, affluent families, executives, etc.). If you’ve identified affluent families as your market, don't worry about missing the baby boomers. By focusing on a distinct segment, you'll build a successful business more quickly than you ever could trying to be all things to all people.

Have I developed my people and processes?

Are your people aligned behind your firm's mission? More importantly, have you articulated your mission in a way they can internalize? Have you established processes and systems that allow your people to consistently deliver top-notch results? Too often firms build their business around a lead advisor’s ability to engage clients without taking the time to standardize that proven process. Close your eyes. Imagine business without your lead advisor. How much would sales fall? Now imagine all the other advisors in your firm delivering the same results as your lead. How fast would sales rise? Business would skyrocket and with a standardized system in place your support team could handle the increased volume. When you put time into developing your people and processes, it pays off exponentially.

Is my compensation in line with the value I’m providing?

You’re good at what you do. You’ve studied hard, trained with some of the best and spent many years mastering your business. You deserve to be paid, and well at that. Your business model should be one where you are paid a fee not only for the solutions you provide, but also for the clarity and value you add. Consider going to a doctor. In ten minutes he’s diagnosed an ear infection and prescribed an antibiotic. You don’t, however, simply pay for just ten minutes of his time; you pay a sizeable fee for the knowledge, experience and skills it took him to clarify your problem. Likewise, delivering the solution is easy for well-trained advisors. The clarity you provide is what’s most valuable. You’ll find fees are only an issue in the absence of value.

Do I know where I stand?

Do you have a clear sense of advantage? In other words, can you explain how you’re different than your competition? How is it that you do your job better than others in your area? Do you even know what those competitors are doing? Maybe you do. Maybe you don’t. Most likely, you’re not exactly sure what they’re up to.  That’s why it’s smart to study the industry landscape. Your business story is incomplete if you don’t know what strategies competing firms are using, the kinds of clients they’re attracting, how they’re delivering and where they’re likely headed. Armed with this knowledge you can build your capabilities in a way that your competitors can’t touch.

Do I have a roadmap for the future?

The key to any successful business is to plan ahead. Look beyond your current business story and see where the plot is taking you. Is it where you want to go? If not, what do you have to do to change it? Well then, put it in writing. Take the time to clarify what it is you want to achieve. Make sure your goals are specific, measurable and attainable. Then, and this is important, write them down and create a timeline. Committing your goals to paper not only helps set the process in motion, it helps create a roadmap to your success. Remember to review your goals frequently. The more focused you are, the more likely you are to achieve them.

Hopefully your business story is a good one. You might be thinking it’s time to re-write or begin writing altogether. Whether you’re just getting started or have been in business for years, it’s important to go back to your story, look at your business model critically and check back regularly. Many firms assume once they’ve done it, business will grow naturally. That’s not the way it works.  All businesses face stiff headwinds. Successful ones learn to adjust their sails, take a different tack and change course occasionally. If you write a good story, yours will be a model business.