Sometimes it is common to believe that the reason why a business does not work or is not profitable, is because the idea is not good or does not respond to a specific need in the market. These, of course, are indispensable factors in building a business but they are not the only ones. But if you already have these points covered, what can make your business not work?
One of the most neglected and neglected factors is usually the "business model". What is a business model? In simple words it is a design of the macro business strategy. It is what answers the business questions that begin with "how." It is not just about what service you are going to offer, what customers you are going to have, what need in the market you are going to solve, but "how" you are going to achieve all these things. This is the biggest question mark. Why? Because it can make the difference between "a fantastic idea wasted in a business that did not work" or "a good idea generated in a fabulous business model that made it profitable".
There are several important points to design a correct and attractive business model that is also profitable, but this time I will focus on you knowing these:
3 keys to have a profitable business model
Key 1 - A model of high added value services
Usually when I talk to entrepreneurs who have their business up and running, one of the questions that bothers them the most is "why can't I sell my services if I have super competitive rates ?!". My response to these types of concerns is usually "if the best you can say about your service is something related to your rates, you are competing for prices." And why is this wrong? Because if you compete for prices you are a number (as crude and direct as I tell you). And if you are a number, there is always someone who can have a number 5% lower, and it will beat you.
So… what's the answer? A high value-added service has more than just the fare number on the front. It implies a series of results and benefits that your client will achieve by working with you. Which are? That depends on you and how you design your service. The more differentials you have compared to the competition, as long as these are what your client needs, the closer you will be to being their "ideal service". And I assure you that when your client finds his “ideal service” and he has convinced himself that you are the one who can best help him, the rate will become second place. Something to solve, of course, but not the most important thing.
How about an example? Suppose you have to have a minor surgical intervention, nothing serious. You have time to analyze various doctors or clinics and thus choose the one that offers you the most peace of mind, confidence and security. I'm wrong? These three factors, peace of mind, confidence and security are paramount to you, and probably not the price. So you meet two doctors: one of them shows you his credentials, testimonies of those who have undergone surgery on him, tells you what your post-operative will be like, what will happen before and after, etc. And once you are clear about all that this doctor can offer you (risks, benefits, etc.) then it tells you what their fees would be. The second doctor you see receives you saying that your smartest decision is to hire him because he has the lowest price on the market.What do you think? I leave the conclusion for you to think about it…
Key 2 - A sustainable model over time
We are talking about a business being profitable and for this, it is important to consider what keeps it going. Any ideas? Your. If you. You are the engine of your company and your professional practice. So you must take care of that motor as if it were a critical machinery in your business. Because once it breaks…
The best way to take care of your motor is to consider two fundamental aspects: the first is physical and the second is emotional. Regarding the physical aspect, eating properly, having a healthy life, exercising, resting well, are ideas that will help you keep your engine running. For the emotional aspect I am going to give you two situations in which you would NOT be taking care of this side of your engine: the first, a personal-professional imbalance. The second, forgetting why you are doing what you do in your business.
Two tips
- Plan your rest and your free time. I advise my clients who need it (and I have forced some of them as part of their tasks to fulfill) to take half a day off per week. It is a simple exercise and allows you to enjoy the freedom and independence of your business (and reminds you that you are the one who makes the decisions). Celebrate your achievements. There is no worse feeling than working, working and working and not knowing why. Believe me, when your mind and body take their toll on you for this, it will be much more difficult to counter. For this, I suggest that you never lose sight of the fundamental reason why you wanted to have your independent professional practice or your own company, and that you celebrate your achievements. Every time you get a new customer, meet a goal, or just have a very good week of work, celebrate.You do not need to throw a party for 200 people, pamper yourself and treat yourself to something important to you, even if small, and remember while you are enjoying it, which is thanks to what you have achieved.
Key 3 - A scalable model
A scalable model is a model that can grow beyond what your physical time allows. If growing your business implies having one more client and thus working a few more hours, it will not be sustainable over time (key # 2). One of the simplest ways to grow a business in this regard is by generating residual or passive income.
First I have to make a clarification. When I talk about this model it is always within your professional practice or your company. I clarify it because you can also consider passive income to that income you get from making financial or real estate investments. This is not what I mean, but residual or passive income within your own company.
If your business is not yet stabilized (you do not have the income you expect or need, you do not have a good profit margin), what you need is to know that your model is scalable, that is, that it is liable to grow through these strategies. But I do not recommend that you implement them now because to generate these residual or passive income you need time to design, create and build a service or product that has these characteristics. And if your biggest concern in the business is that you don't have enough income, it will be difficult for you to take the time to create something new.
Exceeded this requirement, this model will give you more freedom and more profit. Because passive income is what you get by selling products that do not specifically require your time. For example, a book, a course, a membership, etc., it takes time to design, build and convert them into attractive offers (that's why I don't suggest you do it until you have very stabilized your business) but once you pass that stage you can sell them over and over again, and continue to earn income from them. You don't have to have a battery or a huge portfolio of these products. But having 1 or 2 of them will give you a shot of additional income when you need it most.
I hope that these 3 key points help you improve the business model that you have implemented today. And remember that one of the most important things that will keep your company at a high level of results is the mentality with which you approach each strategy.
