Your business model is the underlying structure of how your business creates value. But what does this really mean? And why is understanding your business model important?
What is a business model?
Your business model is the underlying structure and organisation of your business activities. It defines in general:
Who your key stakeholders are
The value you provide to your stakeholders
The relationship you have with your stakeholders
The channels and resources you will use to deliver value to your stakeholders, and
how all of the above differ from your competitors.
Why is your business model important?
Your business model is important as it defines the parameters of what your business can, and does, do. Your business model influences your strategies.
For example, your business model ...
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We all have our reasons for being in business - what are yours? And more importantly, what do you want to achieve next with your business?
Why what you want matters
As the owner of your business, your business exists to serve you.
As the leader of your business, your passion and commitment to your business, or lack of, influences your whole team.
Therefore it is important to clarify your personal goals for your business, before working on the business goals you will share with your team.
So, what do you want from your business?
Increased profitability and cashflow?
Are you working hard, but not seeing the financial rewards?
Growth?
There is no point growing your business, if the headaches are only going to grow too. Why is growth ...
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Harness the double wealth power of your business
Building a business is an effective way to create wealth as it offers two ways to create wealth:
1. Providing an income to you as owner. Income is the profit your business earns from its day to day operations after everyone has been paid (including you, for your work in the business).
2. Increasing the value of your business. Value is the price someone would pay, to buy your business.
Profit and value are related. Value is largely, but not solely, influenced by profit. Here are two strategies to increase the profit and value of your business.
Strategy 1: Establish yourself as a profitable business
Here are some basic guidelines:
1. Establish a real profit
In your sale price, ...
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Businesses follow a common path of development as they grow.
Each stage of business development has its own unique challenges to overcome and requires different management skills.
There are three main stages of business development:
Startup
Adolescence
Maturity
You are in Tips and Tools
How to identify your stage of business development
The above sales turnover and staff numbers are just a guide. We have worked with businesses with 120 staff, that are still at the adolescent stage.
The best way to know which stage your business is at, is to review the below challenges, and see which group you identify with the most.
Start-up Challenges:
Surviving!
Finding sales opportunities
Converting sales opportunities
Managing cashflow
Juggling many hats
Appearing professional
Dealing with the admin/paperwork
Overwhelm! Everything is new
Adolescent ...
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There is a lot of hoo-ha around 'strategy'. But is strategy really that complex to understand?
Simply put, 'strategy' is how, in general, you intend to achieve your goals.
As there are many ways you could achieve your goals, it is important to clarify how you specifically plan to achieve your goals. That is, what will your strategy be?
Defining your 'how' facilitates engagement, efficiency and differentiation from your competitors.
Strategy is HOW, in general, you intend to achieve your goals.
Strategy requires deciding what you will and won't do
"Business strategy is the creation of a unique and valuable position, involving a different set of activities." (Michael E. Porter)
In business, your strategy defines how you uniquely intend to achieve your goals which differentiates you from your competitors.
To have clear strategies ...
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There is only one thing more important than strategy, but unfortunately it is often overlooked, or even forgotten. So what is more important than strategy?
The results your strategy is designed to deliver.
We have seen organisations become so focused on implementing their strategy that they forget about the original results their strategy was designed to deliver.
We call this being 'activity-based', rather than 'results-baseed'.
'Activity based' is where the focus is on planning and completing activities.
'Results-based' is where the focus is on achieving results and activities are assessed in the context of what impact they make on the results.
Results are what matter. Results are what your strategies are designed to deliver.
Avoid getting sidetracked by all the activity
It is easy to get side-tracked by activity. Activity is the ...
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