***The Best Small Business Model In The World

Have you ever wondered what the best business model would be? I guess it has to do with what you want your business to do for you (but that's a whole other article). The idea behind this article is to throw a bunch of ideas on the table that would make up the best small business model in the world and you can then see how many of these ideas you have in your business.

If you read my recent article covering how the business terrain is changing you would understand that it is essential for a small business to be flexible and have an inbuilt series of processes that keep them aware of trends and changes in the market and they need to be a bit more scientific than a gut feeling. This means that the ideal business model would ensure that would be “least and last” effected by any shifts in the market rather than being “First and most” effected as many small businesses are as we have witnessed in the aftermath of the GFC and more recently the floods in Queensland and earthquakes in Japan.

Another way of “insuring yourself” is to spread the load of income dependence over a number of income streams. Perhaps one of the worst models is the business that only has one big customer or even a few big customers, as their decisions or mistakes can destroy any small business that are totally reliant on them.

Another great business model has a database or group of customers that continually keep buying consumables or pay a subscription or membership on a regular basis, which means when you add a customer to your business you get ongoing income from them rather than just making a “one off” sale and then having to go and find a new customer to sell to. It is valuable to understand that from 1992 till now the cost of getting a new customer has tripled and that customer only spend half the amount with you than they did back then. This should make it a no brainer to ensure your business model is very focussed on getting a customer and keeping them for life as it would be probably cheaper to change your businesses services or products to suit the customer’s desires rather than the business staying the same and looking for new customers.

Having a business model that can build something once and sell it many times is a great business model. As an example the newsletter you are reading right now only had to be created once but depending on how many members we have determines how many people pay for the newsletter, but if we add more members to our family the still only has to be created once but revenue goes up. An even better example would be digital products (eg recordings, videos, PDF's etc) as not only do they need to be created once but there is no storage or delivery costs.

A business model that creates a feel that their customers are members rather than customers is also part of a great business model. The difference between having members instead of customers is it creates a higher degree of loyalty, you can gather information from your members more easily to help you keep in touch with what they want as far as service and product, and of course the “biggy” is that having a membership program that encourages and rewards current members for finding new members for your business not only saves huge amounts of money but also creates a better quality of customer as they already have trust and connection with people who already do business with you.

Having a business model that is committed to delivering what the businesses target market wants is the way to go. Far too many businesses are created around a product or service that the business owner thinks is a great product or service, and can even see a tremendous need in the market place for it, but the market doesn’t either realise they have the need or can’t see the connection between their perceived problem and your solution. You will often hear the small business owner say “we just need to educate our customers”. If you need to educate your market you are in for an uphill battle. You are far better off asking your target market what they want and how they want it and deliver it.

If your business model is based on attracting business by competing on price it is fundamentally flawed. At best 20% of people shop on price only yet most business set themselves up as if everyone shops on price alone. Set your business up so you attracted people who want value, not cheap prices. The best part about this business model is you get rid of the “pain in the butt” price shoppers that have no loyalty and deal with less customers for a greater profit.

Focus your business model on constantly finding ways to increase the number of times your customers buy from you in a given period and increasing the average sale value. The fatal error we see most often is the business owner equates making more money by finding more customers. Whereas by working on strategies to keep the same customers coming back more often and spending more with you when they do come back, you end up with a much more profitable business with less customers. Fewer customers means less work, less problems and a customer base you can get to know better and therefore learn how to look after them better and keep them longer. It’s all good.

Ensure your business model is designed around serving the people in it as a priority over serving the customer. What I mean by that is make sure your business model has a commitment to ensuring that working in your business is fun, challenging, provides the opportunity for learning and growth and puts the needs of the team members very high on the list of priorities. Just think out it, if your team members are happy, healthy, are looked after financially and feel appreciated and part of a team, imagine how well they will look after your customers, even when you’re not around!