Business models and business plans sometimes (ok, usually) get a bad rap. They sound scary, complicated and hard, and like something you probably need an MBA to figure out.
And they definitely sound super official, as if writing something down and calling it your ‘Business Model’ ties you down to doing exactly what you write on that piece of paper for the next 10 years. (at least:))
Or makes you feel like some super stiff banker in a bad 3-piece suit is about to approach you while you blog away at your local cafe demanding to see your financials.
What they DON’T sound like is a super-effective tool you can use to flexibly shape your business and your blog into exactly what you want it to be.
But I have news for you: that’s wrong. So wrong.
Business models are the single most effective and flexible tool you can use to help you reach your blogging and business goals.
And that means today I’m challenging you to see business models for what they are: fanstasically useful roadmaps that help you understand what your business and blog needs to run today, and what it’ll take to get you from today to where you want to be 1 month, 3 months, 9 months, even 2 years down the road.
How do I know? Because I’ve used them on my own businesses and client businesses for over 10 years now, and the results speak for themselves:
- Scaling from 100-200k/annual revenue to 7 figures in as little as a year
- Uncovering pieces of a model that didn’t align with a founder’s values or interests, and in the process stopping burnout and overwhelm in its tracks
- Countless businesses started on a solid foundation built to grow instead of the all-too-common “oh crap what did I build, I can’t scale this” panic that bloggers and online businesses run into way too often.
And don’t worry - no thousands of dollars or months of work is required to create your own and experience the same benefits. Nope.
In fact you can create a wildly useful one today (really in just an hour or 2) while enjoying your daily cuppa.
Because I’m sharing a super simple framework (and printable worksheet) to help you create your own here and now. For free. Today.
Your business is worth that, right?
Right. Good. Let’s get going then, shall we?
We’ll start with the basics:
What Is A Business Model?
I’m going to repeat myself here, because I think it’s a really important point to drive home: a business model is nothing more than a super-helpful (and super flexible) roadmap you can use to guide your business and blog to the next level.
It’s an at-a-glance guide to where you’re at and where you’re going.
And a pocket-sized reminder of all the reasons you’re doing this in the first place.
And mostly an ongoing sanity and reality check for you, to make sure you haven’t gotten off course and that you’re accounting for everything you need to account for.
The Two Sides of Your Business Model
Business Models have 2 sides to them: the Revenue side and the Operations side.
The Revenue side covers everything that needs to happen in your business to bring in revenue. This includes sales and everything that leads up to and follows sales, including what it takes to generate those sales and then keep customers happy once the sale is complete.
The Operations side of your business model covers, well, the Operations side of your business. This includes stuff like technology, fulfillment, expenses (both fixed and variable) and everything else it takes to actually RUN your business.
Makes sense, right? After all businesses by definition exist to make money, and in order to make money you need to both sell something (revenue) and have a way to sell that thing that delivers the promised product at a profit (operations), so both sides need to be covered in order to really understand what’s going on in your business.
OK. Now that we’re all up to speed on the basics let’s jump in and break down the Revenue and Operations categories further.
And remember, if you want to play along as we go, download your own business model planning worksheet right here.
The Revenue side of your business is made up of 7 different categories, all of which help you to sell whatever it is that you want to sell.
Customers: Who Are They?
This one’s pretty straight forward: Who are your customers? How many different segments do they fit into? What are those segments?
If you’re just starting out you probably only have one type of customer and don’t yet have to worry about different segments.
Larger or more complex businesses may have several different customer segments - for example, an established online business might offer 5 different online courses, and those courses probably each have their own specific customer segment.
Maybe those segments vary by expertise - there are courses for beginners and courses for more experienced people, or maybe they vary by interest - a photographer might offer one photography course for bloggers and another for new moms who want to learn how to photograph their families. Those are different segments.
Pro-Tip: If you’re just getting started and only have 1 segment now, think about how you might want to expand in the future and jot down any ideas you have for different segments you might want to look at later. This gets you thinking beyond today and into growth and will help you position your blog and business for where you want it to be a year from now, not where it is today.
Now that you know who you customer(s) is, what problem do you solve for her? This is your value proposition - the hot burning pain you solve for customers.
Note that your value proposition is not what you do, it’s the problem you solve. I know this sounds obvious as you read it, yet it’s probably the one single thing I see new business owners get confused on time and time again. Example: If you’re a photographer your value proposition is not the fact you take photographs. Your value proposition is that you preserve people’s precious memories for eternity (if you’re a family photographer).
Channels and Partnerships
Now that you know who you help (Customer Segments) and how you help them (Value Proposition), time to think through how you let them know you can help.
Enter your Revenue Channels and Partnerships. This is where you detail all the different avenues you use to communicate with potential customers. Think social media, email, website, phone, video conference, webinar, partnerships/joint ventures, advertising, speaking, Facebook group networking, etc.
Bonus points here if you can review anything you’ve tried in the past to rank the effectiveness of each channel for your business. If you can do this, take note of which channels have worked best for you in the past and prioritize those going forward.
Customer relationships are all about making sure you know what kind of interaction (what kind of relationship) each of your customer segments expects from you (and what you expect from them).
Think course (or coaching) execution and customer support. Think pleasant surprises and overdelivering.
Do all of your customers expect to hear from you directly? If so is it over the phone or over email? Or would some segments be ok hearing from an assistant or using self-service?
Think beyond paying customers, too. If you have an email list, what do those people expect from you? Are you delivering it? You don’t want to overlook customers who aren’t quite customers yet - take care of them now and they’ll become customers before you know it.
What else would we close the Revenue Section with but with, well, Revenue!
Revenue. Money. Sales. List all the ways your business or blog generates revenue. Think 1:1 services, group programs, courses, affiliate revenue, etc.
Now list the prices associated with those different revenue streams (noting if your gut tells you any of them may be too high or too low) and which of your customer segments (if you have more than one) feeds each revenue stream.
Bonus points if you can assign a percentage of total revenue to each revenue stream.
Pro-Tip: I advise my clients to have at least 7 different streams of revenue. This protects you against sudden changes in the market or even against slow months. If you’re just starting out and only have 1 or 2 revenue streams, take a minute to brainstorm how you could add a few more.
Need more ideas? Check out this post where I cover 6 ways to add a revenue stream to your business this week.
Congratulations! You got through the Revenue side of the model. Now it’s time to turn attention to the Operations side, which is much shorter than the Revenue side with only 3 categories.
What Resources do you need access to in order to fulfill the Value Proposition you listed on the revenue side?
These include the Physical (office space, machines, equipment, vehicles, etc), Intellectual (what do your business need to know to deliver on its promise? How about trademarks and copyrights?), Human (who do you need on your team?) and Financial Resources (do you need start-up cash? Monthly reserves?) you use.
Mark those things you need but don’t yet have, and bonus points if you think ahead by listing the things you’d like to have in order to grow, but that aren’t completely necessary to run your business today. That list will show you exactly where your next investments should go.
Look back at the products and services you’ve listed to this point. What do you need to do in order to deliver on them? Unlike your resources, which are the physical things and tools you need to deliver the job, fulfillment covers the tasks that need to happen to deliver on your promises.
What are the daily tasks that need to happen? Do you rely on any partners to fulfill any of these tasks? If so write down those key partnerships.
Another terrifying term to most new business owners (and experienced ones to boot): cost structure. Sounds like a recipe for a 20 page spreadsheet. It’s not. #pinkypromise.
At its simplest your cost structure is nothing more than recognizing where the different costs come from in your business and categorizing them into fixed (paid no matter what you sell) and variable (paid based on how much you sell) costs.
To break down your cost structure start by reviewing your resources and fulfillment categories and listing down the cost of everything you identified as needing to run your business.
Now look at those costs and categorize them into buckets like partner costs, HR/Outsourcing costs, Technology/Software, Production costs, Marketing costs, etc.
Group your costs as best you can, and then note whether any of the buckets look out of line with the benefit they give your business. (for example: are most of your costs tied up in technology subscriptions you never use? That’s a red flag. Or maybe you spend a ton of money on courses and programs but never actually go through them? Another cost to pay attention to).
Also note whether or not the majority of your costs are fixed (you pay them whether or not you get the sales) or variable (costs increase as sales increase).
Now that you have a full outline of your business in front of you, do a quick gut check. Anything feel completely off? Anything working much better than you thought?
Write down those gut impressions and make a note to yourself to go back and see if there are changes you can make for anything that doesn’t look like it’s working.
Where Do You Go From Here?
At this point you’re probably thinking “Great. Now I can say I have a business model written down. But what good does that do? What do I do with it now?”
And this, friends, is where what you’ve just written down goes from a static piece of paper that you create one day and forget about the next to the most powerful planning tool you have for your business.
Here are my 3 favorite simple, quick and wildly-effective ways to use your newly-created business model. Put these 3 things in place and your business will grow and transform seemingly on its own.
(And by the way, these are the exact 3 I’ve used over and over again over the years to create and the 7-figure businesses I’ve built and consulted on...)
1. Quarterly Review: Schedule an hour each quarter (note: NOT a major time commitment, you can do this) to see what, if anything, has changed since last quarter. Maybe you’ve added a customer segment. Maybe you’ve made a major investment or 2 and it’s time to update your list. Maybe you’ve cracked the Facebook ad code and your revenue is skyrocketing.
Whatever’s changed, write that down and update that section of your model. Then (and this is the important part) go through the rest of your model and see how that change affects everything else. If you’ve added a customer segment, what do you need to add to make sure they’re as well taken care of as your original segment? If you’ve gone all in on advertising, how has that affected your cost structure? Are you still coming out ahead?
Reviewing this for just an hour a quarter makes the difference between staying ahead of your growth and getting caught behind the growth 8-ball, which is the quickest path to overwhelm and burnout.
2. Inform Your Goals: Too often I see bloggers and online business owners pulling goals from thin air - maybe they’re tied to what a friend or mentor did, or maybe they’re just random numbers from wishful thinking.
Problem with that is that when goals aren’t grounded in something real it’s REALLY hard to make them happen. So instead of taking random guesses, look at your business model, where you’re at and where you want to be, and craft your goals from there. That way you’ll make realistic goals that factor in where you want to be and the resources currently avaialble to you, and when you return to your model each quarter for your review you’ll be able to see the progress you’ve made and update your goals accordingly.
And nothing makes goals become reality than seeing the progress you’ve made towards them, and what you’ve already accomplished. It’s incredibly freeing.
3. Recognize Your Plateaus - And Move Past Them: Every business and blog plateaus at some point. It’s natural. But it’s also hard to spot, so it’s easy to get stuck on a plateau for way too long.
When you’re reviewing your business model each quarter, though, it’s really hard to NOT realize you’re on a plateau when you reach one. Your goal review, your revenue review, even your review of who and how you serve your customers will point out very quickly if things have stalled. And show you exactly how to get out of that stall pattern by illuminating your next obvious move.
Whoo (*wipes forehead) there you have it - why and how to create a business model, and the 3 super simple things you must do with it in order to create mind-blowing change in your business and blog this year.
Ready to dive in? Don’t forget to download your business model template worksheet that walks you through each of the categories we talked about above.