STARTING OR SCALING YOUR BUSINESS
You hate working for others.??You want to be your own boss.??Is this the time to start a business???To put your money where your mouth is and take the leap???Over the next few weeks, my focus will be on the entrepreneurs out there.??The visionaries, who want to either start or scale their business.??I will begin this week by taking another look at the business model canvas, which I introduced you to in December 2022.
In an article in Inc. magazine in June 2015, Jim Schleckser advised:
“I believe that the best leaders never waste a good crisis because it affords you the chance to make the kind of large wholesale changes your organization needs that you've also been putting off for too long.??To put that another way, sometimes the best move is to let the fire do its work so that you can rebuild something stronger from the ashes.”
We are certainly in a crisis!??In fact we are facing many crises—climate change, political upheavals and unrest and the economic fallout and dislocation caused by these. While we may disagree with the characterization of any crisis as ‘good’, we should always take the opportunity to choose our response—to learn from the crisis and emerge better and stronger.??Many of you, micro, small and medium sized enterprises, mom and pop shops and sole traders, have been severely impacted by the Covid-19 pandemic and rising costs of basic commodities caused by Russia’s invasion of Ukraine—you may have had to downsize and think about new and creative ways to serve your customers.??Some of you are still worried!??Understandably so, but I have heard worrying described as praying for something bad to happen.
Therefore, instead of worrying you need to clear your head and take time to consider what the future may look like.??Start by turning off your WhatsApp and other notifications.??I am amazed at the amount of time people are wasting by reading and forwarding junk on social media.??Use the time you save to FOCUS and think about your response; to develop action plans you can implement as life returns to a new normal.??I would suggest that you start by looking at your business model.
Business Model
In their book “Business Model Generation”, Alexander Osterwalder & Yves Pigneur note:?“a business model describes the rationale of how an organization creates, delivers, and captures value.??(https://books.apple.com/us/book/business-model-generation/id599573920 )
What is your business model???How do you create value for your customers???How do you deliver that value???And how do you make sure that you are capturing enough of that value, after paying your suppliers and employees, to pay yourself?
Value Creation
Every business model should start with a look at customers.??Who do you serve???Can you identify your customers’ pains???What do you do to help them reduce or eliminate their pain???While I was at JMMB we were focused on making every client interaction easy and enjoyable and on ensuring that we always acted in their best interests.
Your Value Proposition is the answer to the question: Why should I buy your product or service as opposed to the product or service of another supplier?
I believe that you must provide answers to the following question: Why should I buy your product or service as opposed to the product or service of another supplier???The answer to that question is your value proposition.??And your answer to the question may be quantitative—lower price, shorter distance—or qualitative—quality of materials used, the special way you make your clients feel, speed of service.??What makes you special???What separates you from the rest???Why do people drive from San Fernando to Maracas to buy your product???Why do they want you to do their hair?
You also have to be clear as to how much your customers are willing to pay.??What do they pay now???How do they pay???How would they prefer to pay???How would you like them to pay???What percentage of your revenues do you earn from each product, service, or customer segment???Are you selling a product or the rights to use the product for a certain length of time???If you’re selling a service, e.g., counselling, is it better to bill on delivery, or can you offer ongoing access, a subscription if you will, at a discount?
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Value Delivery
This aspect of your business model was most probably seriously impacted by the virus.??You were most probably forced to close your offices or production facilities –your restaurants, salons, factories.??You may have also had to rethink your delivery options.??The questions you will need to consider here are:
You also need to take stock of the key resources necessary for creating and delivering value for your customers.??I believe that the most critical resource is the human resource—do you have the right people in the right roles???What are you doing now to ensure that they remain healthy and committed???Also very important are your financial resources.??Have you been communicating with your bank or credit union???Do you have the necessary lines of credit in place to weather the storm???What about your office???Given the impact of Zoom, Teams other team based communication software, do you really need all that office space?
I want you to take some time to think carefully about the key activities that you do every day to deliver value to your customers.??What exactly do you do to solve their problems and alleviate their pain???And you should also spend some time analysing your relationships with your suppliers—those who partner with you to deliver your critical activities.
Value Capture
The difference between the revenue earned from customers and the cost of delivering that value is the value captured.
Therefore, the last piece of the puzzle is taking a hard look at the cost of delivering the value proposition.??Costs can be broadly divided between variable costs (move up and down as sales move up and down) and fixed costs (are not dependent on volumes produced).??For most of you, these fixed costs, like rent and office staff salaries, are the most problematic at this time.??Therefore, you don’t want to lose this opportunity to take a hard look at these fixed expenses.??Working from home can eliminate those mind-numbing commutes, increase productivity directly and, through the reduced need for physical space, reduce rent expense.
I hope that you take the time to think about your business and plan for the post-pandemic world.??If you would like a PDF copy of the business canvas you can check out this link:??https://www.strategyzer.com/canvas/business-model-canvas .
Have a disciplined week as you work to build your financial freedom.??If you find this advice helpful, please share with your friends and colleagues.??As usual, I look forward to your questions and comments.??Be safe.??Take good care, and if you can, help someone in need.
Cheers, Nigel
Nigel Romano, Partner, Moore Trinidad & Tobago, Chartered Accountants
Ingenieur: Developpeur web/mobile, Game programming, Designeur, Manageur
1 年https://amzn.to/3zIiOek
Board Director|Entrepreneur| Visionary| Founder - Hall-Tech Consulting
1 年Starting or Scaling your Business ? Appreciate the details outlined in the article you prepared, it was not only well written but also the information provided was strategically aligned with your topic. ? Good usage of the Osterwalder business model canvas, one that I frequently use myself, as it is applicable at different life cycle of the business. ? I do believe in a lot of the points even though I believe in offering differentiated services/products with minimal ability to replicate thus decreasing competition. However, not all business can use this approach as it is dependent on the industry and nature of the business. My main point is the approach you presented is a good strategic approach to compete in the blue ocean. I have spent a lot of time looking on business models. Instead of JMMB, let's use retail businesses; Walmart and Amazon - On-line versus Brick and Mortar, but the interesting thing to note both business model adjusted so that Amazon strategy now includes cashless stores in the UK while Walmart also has an online business model. Now both companies compete but in a differentiated way as to create value for their respective customers. ? See my business page: https://www.dhirubhai.net/company/90532043/admin/
CSR | Businesswoman
1 年Great read Mr. Romano. the article raised very important questions when seeking to start a business.