Just even thinking about – let alone determining – your business model probably leaves you feeling like Dorothy in the Wizard of Oz – so many unknowns – it’s be a bit scary and confusing – which way to go?   You even may be confused about what a business model is and why you even want one!

Not to worry – the ‘Cliff Notes’ version is that your business model is your answer to the question: “How do you intend to operate and make money in your business?”  An important question, since most entrepreneurs want to make money to provide for themselves and their family.  In addition, they often have lifestyle considerations like being able to work flexible hours to care for family or to work from a different location for parts of the year.

So where to start?  Well, I am a chart kind of gal, and like this format from Digital Business Model Guru :

I use a whiteboard or flip chart and sticky notes with the same categories of

• Partners,
• Key Activities,
• Key Resources,
• Value Proposition,
• Customer Relationship,
• Channels,
• Customer Segments,
• Cost Structure and
• Revenue Streams;

Then I also add 2 sections: “Offerings” underneath “Value Proposition” and “Lifestyle” underneath “Partners”.  Digital Business Model Guru also has an app and a book -but I haven’t tried either of them.)

When you fill in this visual graphic and post it on  wall nearby, it will quickly remind you how you intend to earn revenue and make a profit. Like so many things, it’s important to have it written down, rather than trying to keep it your head.  Unfortunately, many businesses and professionals don’t have any kind of profit-making plan.

So Where Do You Start? 

You start at the outset of your business by deciding how you will initially earn money.

For service based businesses, you typically start by selling your service on an hourly basis, like a massage therapist.  You can also charge for a bundle of your service (like 2 dental cleanings a year), by the day, half day, week etc. (like a coach), on a retainer (like an attorney), or on a project basis (like a graphic designer).

If you actually make something, you can charge a flat fee for single or bundled items (a necklace by itself or with earrings or an audio with the transcript), use a subscription or membership model (wine of the month), or use the ‘razor and blades’ model where you provide an item like the razor at low or no cost and make your profit on the consumable replacement part (blades).

But there are also combos like mobile phone carriers who sell mobile phone sets (a physical product) at very low prices and generate most of their revenue from their service plans (which are based on the text or airtime services consumed).

Then, as you grow, your model will probably expand – and most companies typically use a hybrid/mixed model – but just start where you are and take it one step at a time – take action to write it down and use it for a while, then evaluate, tweak and move on.

So how is your business model working (or not) for you?  Share your comments or questions below so we all can learn more.

And if you are not making the income you’d like from your business, or you are just starting out and would like some help deciding what to work on first, check out our services.