- Being Boss: Defining Your Business Model to Create and Deliver Value - April 10, 2018
The following excerpt is reprinted with permission from “Being Boss” © 2018 by Kathleen Shannon and Emily Thompson, Running Press.
If the business side of being a creative entrepreneur makes you feel out of your depth, you’re not alone. Most of us didn’t study business in school, but that shouldn’t hold anyone back from making money (and good money!) doing what they love for a living. Our very own business mentor, Tara Gentile, is a genius at making business approachable and getting all of us a little more excited about it.
BEING BOSS: The phrase “business model” can sound fancy or intimidating to a new entrepreneur. How do you define it?
TARA GENTILE: Your business model is simply the system you use to create, deliver and exchange value. Or, in more straightforward terms, your business model is the system you use to get paid for creating something people really want.
BB: So for example, if you are a website developer, clients give you money to deliver a well-designed and functional website to them. The system that gets your potential customer from knowing what you do (develop websites), to hiring and paying you (to develop their website), to the final delivery (of the website) is your business model. “Value” is a word that doesn’t seem entirely tangible. What does it mean to create value for your customer?
TG: “Creating value” means creating a change for your customers: helping them do something faster, with less hassle or with less anxiety. Whether you sell a physical product, a digital product, or a service, your customers want to accomplish something. What you offer is just a tool to help them achieve that. When they do achieve it, you’ve created value for them.
The way you “deliver value,” then, is through that tool—your product or service. This tends to be where business owners get hung up. They put all their focus on the delivery mechanism and forget about what they’re actually delivering.
Finally, you can’t get paid if you don’t include a way to “exchange value” with your customer. Getting paid tends to bring up a lot of demons for a new entrepreneur—but it doesn’t have to.
First, remember that money (currency) is just one form of value. You create another form of value (the change the customer wants) and you ask for money in return. As long as the two sides of the exchange balance, everyone is happy.
The bottom line, when considering your business model, is to remember that it’s a system. You don’t want just a mishmash of products or services. You need to have a set of offers (generally not more than two to three) that work together and encourage customers to grow with your business.
BB: What do you want every creative entrepreneur to know about business models?
TG: Your business model is also a plan for the relationship that you want your customers to have with your business over time.
Ideally, customers will stick around and buy multiple products or services from you because the value you create for them helps them achieve more than they could on their own.
To continue with the example of the web designer, after you complete your customer’s website, you may continue to sell them ongoing site maintenance on retainer, or have a strategy for checking in on site updates or redesigns every six to 12 months.
Remember that more offers doesn’t equal more money. Just like in any dating relationship, you don’t want things to get complicated. Make your business model simple and straightforward. Focus on having just one to three core offers that work together to help your customer become who they want to become and help them become an evangelist for your brand.
BB: How can defining your business model help you make more money or achieve more success?
TG: The biggest benefit of better defining your business model is that it saves you time (and hassle… and headaches, although, I suppose that’s more than one benefit). Most business owners create, create, create and then forget to actually market what they’ve created. They think the only way to make more money is to make something new.
A web designer without a clear business model won’t have a process they’ve mastered or an offering they can easily market or opportunities for upselling their clients for years to come. Instead, they’ll find themselves always scraping by project-to-project and earning about the same thing every year—no matter how hard they work.
The real money is in going deep with each thing you create. Every time you create a sales campaign for a product you already have on the “shelf,” you don’t have to work as hard to sell it as before. You already have systems in place, and people are already familiar with the product.
Plus, when you have a clearly defined business model, your products help to sell each other. For every hour of work you put into selling one offer, you’re saving time on selling others because of the natural systems behind your business. Once your customers have a taste of what you do, they’re going to want more, and your business model ensures that you make that easy for them.
Tara Gentile is the founder of CoCommercial, a digital small-business community for entrepreneurs serious about making money, impacting their communities, and transforming the lives of those they love. She’s also the host of Profit. Power. Pursuit., a podcast that takes you behind the scenes of successful small businesses.
“Being Boss” is available at fine bookstores today, and can be purchased via StartupNation.com.