Business Models

A business model succinctly describes how your business will make money. It is shorthand, insuring that all your business bases are covered, detailing only the essential elements: how you produce a product or service people want, how you tell people about it so that they want it, how you put that product in their hands, and how you make a profit.

What model best represents the unique way your business successfully delivers its products and services? A turnkey business model is based on the McDonald's principle: to deliver a product of identical quality in an atmosphere of identical ambience and with high customer satisfaction every time across 14 000 or 15 000 stores. Of course, you don't have to aim that high, but it is important to view the business modeling exercise exactly as it is intended: how would you build this business in a way that can perfectly replicate the ideal prototype of your business?

The key to the modeling approach is delegation of roles. It is almost universal that business owners struggle with the concept of delegating key roles in the business. Being stuck with a problem about delegation is being stuck in a kind of trap where you will continue to work in your business rather than on it. It's your role to give leadership by creating a business that will duplicate itself as required. Rather than thinking that you are somehow a critical part of the work flow, ask yourself, 'How can I get my people to work to a level without my consistent interference or supervision? How can I spend my time doing the work I love to do rather than the work I have to do?'

The challenge for you and your key people is to make a business model that is a complete system. The set of practices and procedures in the model become the essential tools of the business, making it incumbent on you to teach everyone in the enterprise how to use them.

Modeling creates clarity about roles and it facilitates order rather than chaos. This is good for business: it creates an environment where customers receive consistent service. It creates confidence amongst staff and it creates confidence amongst suppliers that there is order. It creates confidence and goodwill with bankers and partners who demand order and organisation rather than an individual's personal whims.

The business, after all, is there to ensure you realise your business, financial and perhaps lifestyle goals. Thus the business, rather than being a provider of a job that you created, should become a model for others to work in. This will leave you free to create what you want to create from your business. The idea of a business model should also serve as a warning for those who see business as being just a job: if they do, it will be guaranteed to remain their job.

Business models can take all shapes and sizes and do not need to be complex. But all require two essential ingredients:

* All the parts that go to make up the whole of the business - the processes and procedures - are documented. These become the procedures manuals for each part of the whole (system).
* The model must manifestly demonstrate consistency of product and service. If you need to write up the specifications for this beyond the procedures manual then some training will be in order.

Strategies become the cornerstone of a model; often the simpler they are the better.

Note that, by definition, models are designed to simplify work roles and processes so that you are not inexorably bound to any individual skill or talent. In other words, by producing a model you are in effect ensuring that the skills required to run the business are available and accessible - and can be replicated - to you both inside and from outside the business.

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