Posts Tagged ‘Business Model’
David F Smallman, Managing Partner of Pathfinder Team Consulting, invited participants in The Inspired Group to ask him any question about business. These are his answers:
Q. What advice would you give someone in their first year of business?
A. Don’t lose the passion. Ever. Not even in your 42nd year.
Q. Is it wise to use an untested business model?
A. No. Get it tested.
Q. How do you make sure a new idea doesn’t get stolen before you develop it?
A. Keep it out of the public domain until you’ve had it patented, trade marked etc. Non disclosure agreements are hard to enforce.
Q. What is the best way to price your services?
A. Price the project according to the value to the customer. This may mean that you charge two very different prices for the same work. Charge 25% up front, then two further instalments of 25% and 50%. In over 40 years in business we’ve never had a significant bad debt or had to waste time chasing money. Cash flow is vitally important and this way, your expenses are covered before you start.
Q. What is the single most important ingredient in creating a successful business?
A. Passion (as above)
Q. What one channel would you choose to market a business?
A. It depends on the type of business:
Manufacturing – distribution / sub contractors
Service Provision – figure out how your customers/clients like to buy and meet them there
Accounting / Financial services – traditional routes are still working
Q. What will the future economic power of the UK be like?
A. Look out for a debate between David and Phil Jones of Excitant Ltd on this topic. David recommends reading The Big Short by Michael Lewis.
Q. If the three essentials of business are producing the product or service, managing and marketing, what time should a business owner spend on each.
A. In a 60 hour week (which most business owners admit to working)
Marketing 55% – 33 hours
Making 35% – 21 hours
Managing 10% - 6 hours
Anyone spending more than 6 hours managing a business needs to streamline or outsource and ask themselves if they using this as an excuse not to do the marketing.
Similarly, when marketing, use the same equation:
Existing customers 55%
Short term prospects 33%
Long term prospects 10%
Q. Should we strive to continuously make our services or products better?
A. Excellence can sometimes be the death of a business. Quality is what is good enough to satisfy the customer.
Q. Is social media providing businesses that use it with an advantage?
A. Many big businesses just haven’t got it yet but many smaller businesses are using Social Media to great advantage so it gives them an edge in engaging, listening and providing what customers want.
There are more questions and answers on the LinkedIn discussion http://lnkd.in/Hw4QVb
Questions that David didn’t have time to answer:
Is there a particular hobby or pastime associated with business success?
Is there a difference between leadership and management? (See http://lnkd.in/xMdyjG for this discussion)
What is the best strategy to cope with a business failure?
Why so many businesses don’t grow
Lots of people have great ideas for businesses.
Lots of people start new businesses.
Not many grow them into thriving enterprises that provide employment and contribute significantly to the economy of the country.
Too many people spend all their time working IN their business and hardly any time at all working ON it.
There’s nothing wrong with “lifestyle” businesses if that’s what you set out to achieve but so many people set out with different aims: to build a business that can exist without them; that can be sold; that won’t die when they retire; that will provide them with a pension; that provides other people with a good living; that is more than simply swapping their time for money.
A good idea is not enough to grow a great company.
Being great at what you do does not mean that you have a great company.
Companies consist of three main things:
Product + Process + People
Many businesses have a good product and great people but it’s the processes that allow them to grow.
This means that any job does not rely on just one person being able to do it.
Invest as much in the processes as you do in the product and the people.
Poor pricing is what keeps most businesses small.
Too many new businesses think they have to compete on price in order to get into the market. This is only true if everything else you have to offer is unremarkable and will only work if your whole business model is based on very small margins.
Keeping control of cash flow and understanding management accounts is probably THE most important factor in growing a business.
Money allows you to take the right business decisions at the right time but often the biggest decision that needs to be made isn’t a financial one but “Are you the right person to run your business?” Just because you started it doesn’t mean you have the right skills or temperament to do the day to day work of managing it.
If your aim is to grow a business rather than create a job for yourself, assuming that you already have a great idea, these are the top tips to make it work:
- Get enough capital before you start. Working just to cover your own wages is not a business.
- Estimate what you need and how long it will take to turn a profit and then double it.
- Don’t do any job that you can hire someone else to do better or quicker.
- Understand the finances of how a business works. It’s the most important job.
- Invest in processes so that no one person is irreplaceable – especially you.
If you are frustrated because your business isn’t growing as you’d like it to, give me a call. Sometimes a fresh perspective finds simple solutions that you are too close to see. I’ve seen lots of ‘slap head’ moments when talking to business owners about what can be done to make real progress! Call me on 07711 705038.
Why copy when you could innovate?
The world is a funny place. You come up with a good idea and work at it and do the research and hone it and make mistakes and work some more and get things working and then someone comes along and sees what you’ve done and decides they’ll just copy it.
I’m not against competition and have always taken the view that there is enough work out there for everyone. When people are open and honest there is often a chance to co-operate rather than compete and to create new opportunities.
However when someone just copies your business model, pricing structure and pretty much everything else it’s a bit galling. When they set out to compete in an area where you’re already operating you have to wonder about their motives.
I started wondering if I’d been too open and shared too much and if I should be more cautious in future but then I found this and realised its not me that needs to change.
People are unreasonable, illogical, and self-centered.
Love them anyway.
If you do good, people may accuse you of selfish motives.
Do good anyway.
If you are successful, you may win false friends and true enemies.
The good you do today may be forgotten tomorrow.
Do good anyway.
Honesty and transparency make you vulnerable.
Be honest and transparent anyway.
What you spend years building may be destroyed overnight.
People who really want help may attack you if you help them.
Help them anyway.
Give the world the best you have and you may get hurt.
Give the world your best anyway.
Mother Teresa hung this quote on her wall and if it was good enough for her, its good enough for me.
Don’t imitate – innovate!
What do you think?