TES 030 - What Is Your Business Model

Hey there, real quick before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience live. It is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. Hey there. I'm Mel Abraham, the author of the number one best selling book the Entrepreneur's Solution and the founder of Business Breakthrough Academy where we teach you how to design a business and create a life, a life of financial freedom and peace of mind. And welcome back to this episode of the Entrepreneur Solutions Show. This one really excited about because it's we're going to talk about or we're going to begin talking about one of the most critical elements of business, and that's your business model. And many times when someone says what's your business model? They automatically talk about how they make revenue, how do they make money? And it definitely is that, but it's much more than that. And this is the area that I think is the result of most business failures because they've got the wrong business model. So right after this brief introduction, I want to come back and we're going to give you an idea of what happens with business models. And then in a later episode, we're going to talk about how to structure a business model, the key elements of a business model so you can go out and build your business and your business model in the correct way to have optimal growth, optimal success and optimal profitability. So I'll see you back here after this brief introduction. And remember that every episode has a downloadable tool template or worksheet or guidebook. And in order to get that for this episode, go to melabraham.com session0.

And if you're not at your computer or you're out running or you're at the gym or you're driving, go ahead and text and that way you'll have the link right on your phone. When you get back to the computer, just text mylegacy one word, no spaces to 38470. We'll get that link to you right away. So I'll see you right back here after this brief introduction. See you soon. Bye.

Welcome to the Entrepreneur Solution where highly successful entrepreneur Mel Abraham becomes your entrepreneurial mentor. Here, Mel reveals his business building strategies and even gets a chance to answer your questions. Mel Abraham, a CPA by education, but an entrepreneur by exhilaration and a true believer in the entrepreneurial way of life. It's through entrepreneurship that we create community, support society and live our dreams.

It's where possibility meets reality again and you can have the life and lifestyle you want. One of freedom and peace of mind. Welcome to this episode of the Entrepreneur's Solution where it's time for you to be bold, dream big, and live life your way.

Hey there. Welcome back to this episode of the Entrepreneur's Solution Show. I'm Mel Abraham, the founder of Business Breakthrough Academy and the author of the number one best selling book, the Entrepreneur's Solution. And in this episode, we're going to talk about business models, give you an idea of some of the elements of business models and the things that will indicate whether you've got the right business model or not. And then in a later episode, we'll talk about the ingredients, the things that you need to design the proper business model in this context. Now, some people say, well, what is a business model? What does it take and what happens with it? I think that most of the great business successes and failures are successes and failures of business models. And I think we need to think through this and with, with what's going on in today's world, in today's economy, we see business model modifications, business model innovations coming out regularly. You look at things like just what seems to be inconsequential, but it's dramatic. For instance, Gmail and what it does, what it's doing to the U.S. postal Service or Netflix. It's Netflix. In fact, Netflix was, was created by Reed hastings back in 1997 because Reed rented a movie, Apollo 13, and he got $40 of late fees from Blockbuster Video. And he got so upset, he decided, I got to do something. And so he came up with this idea of Netflix. And this was before Netflix was streaming. And it was the sending of the DVDs and that type of thing. But Netflix from 1997 to today has gone from inception to over 60 million subscribers. Now, did he really modify or come up with new inventions and new creations? And the answer is no. What he really did was he took current capabilities, current capacities, current technologies and said, let me put them together differently to serve what was a perceived need, at least in his mind. And that was to be able to do things with movies, to have movies, movies out without getting hit with a bunch of late fees and to Give access to it and serve the consumer at a higher level. And so that's where Netflix came into play. And they continue to grow now with their streaming service. And like I said, there are over 60 million subscribers. And we know what's happened to Blockbuster Video in that timeframe because Blockbuster Video refused to change their business model. They refused to move with the times. They refused to look forward and say, what's happening, what's developing? What can we do that's different? What can we do that takes into consideration what our current consumers are, what our future consumers are, what the current technology is, where the future is going, and use that in a way to serve their market space, to serve the people, to serve the needs of their constituents, of their consumers. And that's really what we're here to do as entrepreneurs, and that's to continually serve. And if we're not coming from a place of service, if we're not looking at it from the perspective of our market, our consumer, our customers, saying what are their unmet needs? What are the problems they're looking to solve? What are the things that we can do? And without putting the boundaries on it, at least momentarily, the boundaries of what's been done in the past, how could we serve it at a better level? And that has been the death knell of Blockbuster. They wanted to rest on their laurels. They wanted to say, no, we're a bricks and mortar store. And they did not want to shift with the times. They did not want to take in consideration new technologies, new, new ways to deliver service to their current customer base. And we see what's happened with them. And Netflix has overtaken them, and now Redbox is out there and Blockbuster video is no more, for the most part. And in that context, and we see this in a lot of different industries. In fact, look at what Apple has done with tower records, with the itunes store and with music in that context, when itunes, when Apple was able to.

Negotiate the ability to buy one song instead of a whole album in that process, it changed the dynamics of an industry. It changed the dynamics of how artists get their music out there. It changed the dynamics of how consumers were able to consume the music that they wanted to get access to, the music that they wanted. We effectively have the ability to have all the albums, everything we want, right here on our phone or on our devices or on our computers or on those types of things.

When you look around, you see things like this all the time. Wikipedia and Google and how it had an impact on encyclopedias. Look at Amazon and the impact on Borders Books or the book bookstore industry. So. So when we look at business models, they're constantly changing, they're constantly shifting. And it's not just about revenues, it's about the whole model. It's about service, it's about serving the consumer needs, it's about serving the, the market needs. It's about serving a lot of the needs of the people that, that we're working, the team that we work with. So what I want to do in this episode is really start to talk about the business models and the concepts of business models so we can understand why it's important and what are the dynamics of that. I'm going to talk to you about this business model ladder that I have, because in that process, you'll have a chance to look at this ladder and say, gosh, this is where I might be. Based upon where you are in this model and in this framework, it gives you an idea of where you need to focus and the things that you need to do in doing that. So let's just start off with this concept and it's understanding what gear you're in. The first thing is that most entrepreneurs that I see, not most entrepreneurs, most starting out entrepreneurs, they get an idea, they don't really have a business model. They've never really thought about it, they've never really looked at it. And so they just go out and.

Start to do things. But what happens in the process is they've got no business model. There really is no value created to themselves or to the consumer, and it's simply an idea. And in order to transition, to start to make money, in order to do some of the things that.

Are necessary to become a viable business, the piece that we need to do is make a decision. We simply got to make a decision that we're going to be serious about it. And when we make a decision, we then start to look for ways to serve a community and we create a model. Okay, it may not be the right model, but we created a model. And when you create a model, I now know how I'm serving the consumer. I know how I'm getting my product out there. I know what channels and some connections that I'm doing. I know who the customers are and I'm doing stuff. The challenge is that when you just grab on to any model. In fact, some models you grab onto because they're what's been done in the past. And you look at what Blockbuster did, or look at even the industry that I came out of, the CPA industry, the concept of swapping hours for dollars. It's an antiquated concept. The timesheet was created in 1919. You know, things have changed since 1919, and our industry, the industry and most of my colleagues in the CPA world haven't changed along with it. And so they've got a model that doesn't serve. It doesn't serve, it doesn't support, it doesn't allow them to create a good life for themselves as well as taking care of their clients in a way that is most appropriate. But they've got a model and you've got a model. The question is that, how did you take on that model? Where did it come from? In most cases, what you've done is you've elevated yourself slightly from an idea to what I would call is a hobby. Until we really get serious about it and define which is the next transition point and define the things that are really important.

In our business model. We can't cross what I call the money line. So what this is really about at this stage is being extremely intentional about who you're going to serve, how you're going to serve them with what. What you're going to serve them with in a way that it creates revenue, that it creates cash flow, that it creates profits, that it creates value. That is what I call holistic value. So from a model, you get what's called a workable model. And when you get a workable model, all of a sudden now you're working it. I mean, you've got to put a lot of work in. But now all of a sudden, cash is coming in, you've got things working in a way that you can say, yeah, you know, this might be a good idea. This might have some legs, this might have some room to run, if you will. The key here is that when I get to this stage where it starts to prove itself out, I now need to refine them. I need to get rid of the things that aren't working, and I need to bring on more things that do work. I need to elevate the things that are working, and I need to start picking things apart. When I do that, I elevate myself to the next level of model, which is what I call the viable model. Now things are flowing, and now we're looking at it, and we start to grow and we start to scale. And what we need to do now is now further refine, which is what I call elaborate, really elaborate on those elements that are really the key value drivers to our customers, to our team, and to ourselves. Until we find ourselves in a place where this is the ultimate goal, where we're in what I call the optimal business model. When we're in the optimal business model, we are at a stage that we know who we're serving, we know why we're serving them, we know how we're serving them, we know what we're serving them with. We're creating value that is value that's perceived as high value in our consumers eyes, in our market's eyes, in.

The people that surround our business. This is really the key behind all of it. Now some people say, well, how do I know? How do I know that, you know, where am I on this ladder? And so the way to figure it out in some cases is to look at the symptoms. It's not a whole lot different than going to a doctor. They check your symptoms, they check your temperature, they check your blood work, they check your symptoms and try to figure out the cause of those symptoms. And so the same thing, if I have no model, what you're going to find is that your cash flow is typically negative. You're going to find that you have really no systems and you're not making a whole lot of effort. So I mean this, if you identify with those things, and I'm not criticizing you in any way, shape or form, I'm just, it's to create awareness. And when we create awareness, we can then make some shifts and changes to start to move in a direction that's more appropriate or more desirable, depending on what you want to do. Remember, this isn't about me telling you what's right and wrong. It's about you living intentionally by defining what it is that you want with your life, with your business, and being intentional about it. So if you find that you've got negative cash flow, no systems, really no effort, then you're still dealing at that idea stage. You have no business model. At the next stage you start to see that we have sporadic cash flow. Maybe you're, you're doing some T shirts and one or two T shirt sales come in and friends are buying from them. So you are getting some cash flow. But it's sporadic and from a system standpoint it's really dysfunctional. Every time you got to do an order, you're on the phone, you're doing it. You've got no real systems in place and the effort that you need to put in at that point is really frenetic. And so if you identify with those things and maybe you're sitting down at this level of what I call a model, but not a workable, viable or optimal model, which we need to cross the money line and move beyond that. Well, when we cross the money line and we get to that workable model, what starts to happen? We start to see that the business starts to have regular cash flow. We have regular systems, although many times those systems are inefficient. And we are working, we're now putting in a lot of hours and we're putting in a lot of work. We're putting in a lot of effort. So, so we may see, and I know a lot of entrepreneurs that are at this stage. And so what we need to do is start to refine. Remember that the key word here is to refine the business model so we can move to a more viable business model or the optimal business model, if that makes sense. And when we do that, now, all of a sudden the cash flow is flowing, you've got effective systems in place, and now you're able to delegate the effort out to other people. That starts to relieve you of a bit from the business. And I know I'm throwing a lot at you, but I think it's important for you to try and understand the dynamics of this. And at the same time, it may be helpful for you to make sure that you download the guidebook on this so you have this graphic in front of you and you can actually see it pictorially because I'm throwing a lot of terms and things at you. Now. Once we have a viable business model, we've got cash flow that's flowing, we've got effective systems in place, and we're able to start delegating the, the work. We can now elaborate some of the systems, processes and the business model that we're creating. Now all of a sudden we get to ourselves, get ourselves to what we, what I call the optimal business model. And the optimal business model allows us to have high cash flows, efficient systems, and leveraged effort. And what I mean by leveraged effort is that at this point, if I step away from a business, I and it continues to run, it doesn't decline because I'm not there. I've got leveraged effort. This is what we want to do. If we are to create a business that's going to give us life, to give us, give us a future that we want, to give us value, then it is important to start to find what is that optimal business model. Design it with intent, design it with intentionality, so we create something in the vision of what it is we want. And so the whole Purpose of this episode was really to try and open up your awareness of understanding where you might be in your business and what you might need to do. Whether you need to focus on making decisions, whether you need to focus on defining the business model, whether you need to focus on refining your business model, whether you need to focus on elaborating on certain systems and processes that are in place to allow you to start delegating more until you can amplify everything and be in a leveraged position with high cash flow, efficient systems and leveraged effort. That's really the key. And to give you an idea of how important this is, I was reading, I was going through the Internet a while back and looking at businesses and I went to this one business that I'd gone to before and lo and behold, I'm looking at their website and they've shut the business down. And they shut the business down for a business model reason. And here's what they posted on.

Their website. You know, this is called Speaker Mix and it says Speaker Mix will be shutting down on December 31, 2012. And it says, in short, we were unable to find a viable business model that made sense. Most business models, I mean, most business failures are failures of business models. And most business model failures come from one of four things. One is that there's some that it's extraneous, that what you're providing, what you're creating is extraneous. In other words, it's not valued by the customer, it's considered trivial by the customer. The second is that that it's erroneous. It's the wrong business model. We just are in the wrong business for where we're going. Let me look at.

Blockbuster Video. In a sense that as things shifted, they didn't shift with it. They had the wrong business model in place. The third is external. There's some environmental change or shift or timing issues, things like legislative change, technological change. Those kinds of things can affect your business model and cause it to fail also. And then the last, and I would tell you that this is probably one of the biggest reasons business models fail. And that is execution. And it's bad execution, sporadic execution, not disciplined execution, not an execution loop where we're executing, getting feedback, changing, shifting and moving. This is a dynamic process. It is not set it and leave it. This is something that we need to continually work on. And so the key to your success is getting yourself to a place where you've got a viable or optimal business model, that you're moving yourself up that line that you're considering the services and those types of things in the process, how you're serving your community, how you're serving your marketplace, the needs that are being served, the problems that are being solved, the way you relate to them, the way you communicate with them, the connections that you have. We're going to go a little bit deeper into that in the next episode where we start to break down, well, what is truly a business model and take you deeper into that. This really, this episode was solely to try and bring the awareness in to what it is that you're looking at. So in the process, it's really about coming back into this position to understand what that business model is. And we'll give you more information in the next session. So I hope that this raised your awareness as to what business models are, where you might be in that business model ladder, why it's important that you have the right business model, what are the symptoms or the indicators that maybe you're in the wrong place right now, the ability to change it and how to change it. And what I would ask you to do is, again, get the guidebook. It'll start helping you bring this together. And we'll use it in the next segment also, but by going to melabraham.com session030, if you're not at your computer, you can text at mylegacy1word to 38470 and do me a favor, if you would share this with a friend. You know, those that are out there trying to put a business together, thinking about putting business together, maybe they've stagnated or they plateaued and they're trying to figure things out. Business model may be the key. Share it with a friend. Let's give them the gift of some of the tools, the templates, the tactics and the strategies that you're getting to elevate them. And if you haven't done so already, make sure you subscribe so you can get my regular training. And this is my way of being your entrepreneurial mentor through the process to give you access to the things that we're doing and we continue to do in this place.

I am champion of the entrepreneurial way of life, and I see it as the vehicle to shift and change the things that we're doing in society, to give us a life that is a life by our own design. And if I have even an inkling, even a minor little possibility of helping you in that process, I feel blessed, I feel honored, and I feel like I'm doing what I was here to do and taking those decades and decades of experience and background as an entrepreneur and as a consultant and providing you some tools to move you to the next level. So hope you find that of value. Remember to get the Guidebook Subscribe Share it with a friend. See you soon on the next Episode until we see each other in the next episode, may your vision be grand, your journey epic, and your legacy significant. Cheers. See you on the other side. Bye.

We hope you enjoyed this episode. Make sure you subscribe so you get access to all of Mel's business and success tips. And if you like this episode, share it with a friend. If you have a specific business or success question, you can ask it at www.askmelnow.com. remember, it's all about being bold, dreaming big, and living life your way. Because the world needs you. Until the next episode, may your vision be grand, your journey epic, and your legacy significant.

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