Digital Business Nugget #17

"Know your company's Business Model DNA (BMDNA) and use the insights to achieve your business goals as quickly and efficiently as possible!"

A Data-Driven Approach to Understand and Boost Your Business

Today, let's take a closer look at a smart way to boost your business using metrics and data. It's like having a data-driven toolkit for your business challenges, especially if you're into techy stuff. This method treats your business like a big math puzzle, helping you model, understand, improve, and scale your business step by step.

Understanding the Basics: the Business Model Mechanism (BMM)

In general, a business model is a journey/process that starts with the identification of customer segments, moves through marketing and sales channels with conversion funnels, incorporates products and services with their respective revenue models and pricing strategies, and finally leads to the generation of revenue and profit. I refer to this dynamic and iterative sequence of converting your customers into revenue as the Business Model Mechanism (BMM). This mechanism is the same at a very high level for every business, but in detail is almost as unique as a fingerprint, as each business has its own individual combination of the above process steps and elements.

Deciphering the Business Model DNA (BMDNA)

Each element of the Business Model Mechanism (BMM) can be represented by specific metrics as follows.

Customer segments can be modeled with their market sizes and growth rates.

Marketing and sales channels can be represented by metrics for resources and performance. Resource metrics could be the marketing budgets or the number of full-time sales employees with their salaries. Performance metrics could be cost-per-click (CPC) prices for online marketing or the number of companies that can be approached per sales representative per month. Based on the resource and performance metrics, you can calculate / estimate e.g. the number of new customers approached.

Conversion funnels can be represented by conversion / churn rates and optionally by the cost and duration of each conversion step.

Revenue models can be modeled with metrics such as number of transactions per customer, pricing, margin, subscription fees, lifetime, etc.

By modeling each element of your company's BMM and merging all metrics into one list, you get your company's individual and unique business model DNA (BMDNA). The BMDNA represents the core of your business model in the most compact way.

The BMDNA and the Business Goals

Each metric in the BMDNA plays a specific role in achieving your business goals, such as achieving profitability and / or rapid growth.

If you dive a little deeper, you'll find specific key metrics - these are the ones that are really important to your goals. So you should focus on them as they are the key to achieving your goals.

At the same time, look for blocking metrics, i.e. those that could slow you down or prevent you from achieving your business goals. If you spot these, it's a sign that you should intelligently change your business (perform a pivot) by replacing the elements of your BMM that are related to the blocking metrics in your BMDNA.

Making Smart Choices Early On and Identifying Chances and Risks

With your BMDNA in hand, you can run through different scenarios to better understand your business and see what might work best. You can perform an opportunity and risk analysis and play with different metrics and their values, even if you don't yet know what metric values you will achieve. This will help you make smart decisions from the start and recognize and avoid a potential "dead horse" model where you probably won't be able to reach your business goal.

Growing Step by Step with Lean Analytics and the BMDNA

Once you're in the market, you can use the BMDNA in a lean analytics approach to incrementally improve the key metrics, which have the biggest impact on the business goals. Therefore, you can use a management dashboard with the BMDNA metrics to decide for each stage which activities and to-dos to focus on to achieve your business goals quickly and efficiently.

Convincing Yourself and Telling Your Success Story Data-Driven

The BMDNA approach can also be used to convince founders, managers and investors that it is possible to achieve the company's goals and what the associated funding requirements would be. Therefore, plan the various future activities in terms of marketing and sales, product release planning, revenue models and pricing, as well as the required resources such as internal and external staff and budgets to improve the values of key metrics and achieve the business goals.

In this way, you can demonstrate a track record (traction) for past activities and tell a fact-based and data-driven growth story in terms of the planned activities for success and the associated needs for resources.

Taking Finances, Decision Making, and Execution to the Next Level

Don't just do the math - make it work for you! Insert the BMDNA into your financial plans by modeling each step of your BMM with the associated BMDNA metrics and planned activities to improve the values of key metrics step by step and achieve your business goals.

It's not just a classic financial plan, but an intelligent simulation toolkit / management dashboard to help you make decisions and plan your way to success efficiently.

Embrace this new way of thinking and turn your organization's unique BMDNA into a data-driven growth story. You can even use the BMDNA metrics and associated tasks as the basis for defining the right OKRs for your team.

Deep Dive into the BMDNA

Let me know if I can support you with deep diving into your BMDNA and how to create a BMDNA-based financial plan.

Watch my video masterclass in German / English for a detailed introduction into the BMDNA including examples and exercises.

Feel free to use the following voucher code for 20% discount: "DBNsubscriber" :)

Learn more

Join my webinars, video masterclasses, workshops, and coaching sessions to learn more about successful data-driven business models and scaling, metrics-based financial planning, investor readiness, and how to leverage technology and AI to move your business forward.

I speak tech, product and business.

Let's work together to build successful digital and tech-based companies! ??

Visit my?website: www.arndtschwaiger.com

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I am looking forward to your feedback?and?comments!

Thank you for reading and sharing!

Best regards,

Arndt