Make Money by Knowing
your Business Model
Rosemary Hossenlopp © 2006 All Rights Reserved
You are busy running from one appointment to another. Are the activities and action items you must do growing longer each day? Do you think to yourself you hope you are working on the right activities and calling on the right customers?
If you want to make more money you need a business model that provides value that customers will pay for. Your business model describes how you uniquely create your product or service in a way that provides something that no one else can deliver. When you are able to describe your how you provide a special set of capabilities, competencies or improvement in their lives….you have harnessed the power of understanding your business model. Your business model will allow you to serve your customers and create personal wealth.
Four Powerful Steps
to Define your Business Model
Powerful Step One. Write a clear description of your product or service. A product description example would look like this…You help internet marketers build better subscriber lists. A service description example would look like this…You provide engineering services to manufacturing companies in the Midwest. Each of these statements is crisp. Your product or service description defines who you are and you aren’t. This clear statement of identity can immediately be put on your website, your letterhead, your email signature and in your marketing material.
Powerful Step Two. Have a clear message of how you solve challenges for your customer. Next add to your description of products or services how you deliver benefits to your clients. For example, you provide product cost reduction thought leadership to mid-size metal fabrication companies in the Midwest. This shouts competency. You feel 10 pounds lighter when you have a clear and confident business message.
Powerful Step Three. Create a revenue forecast. This is the first step to make sure that your business model makes you money. You need to write down how much you will get paid over a period of time. For example, you can forecast that you will sell six contracts a year at an average selling price of $90,000. Your mind now swings into action to figure out how to make these six contracts happen.
Powerful Step Four. Figure out your expenses. Your next step is too list all your business expenses. This will become your budget. For example, expenses might be $10,000 a month or 40% of each contract.
Now the step that is most important….subtract the expenses from revenue. Does your business idea make you money? Lots of money? When you have a winning business model, you will sleep well at night knowing you can pay the bills and retire early. You need to be confident that you will pay taxes on your revenue rather than carry forward business losses to the next year.
Create a description of your business model to identify how you provide business benefits to your customers. Next you ensure your money-making system will return the revenue you need to make providing these products and services profitable. When your business model makes you money, you have more energy and passion to serve your customer.
Rosemary Hossenlopp, MBA, author of Step into Your Future, A Businesswoman’s Path to Profits, advises business owners on how to make more money with less stress.
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