Starting A Business – With Facts, Not Faith
Hi,
Glyn with a ‘y’ from Don’t Think, Check!® Limited again.
This is the fifth and last episode in a series called Starting A Business – With Facts, Not Faith.
In this episode, I discuss Business Models in more depth and I summarise what we covered in the series.
Business Models
I previously defined a Business Model as a Value-Exchanging Machine, or crudely as a Money-Making Machine For You (or me).
There are a number of good definitions of what a Business Model is, but the one I choose for now is the one that explicitly refers to an exchange of value from the customer’s perspective.
A Business Model consists of the value a business creates for me, what it charges me in exchange for that value, and what value it erodes for me. Unlocking the Customer Value Chain, Thales, S. Teixeira.
People don’t simply buy stuff aimlessly. They do it because they want to derive value from the transaction. Even someone pity- buying your stuff only because they feel sorry for you is deriving some value, that is, they’ll feel better about themselves even it they throw it in the bin when you’re not looking.
Let’s pick apart that definition:
- A business creates value in the form of solutions, a bundle of products, services, and experiences that it knows customers will want to pay for, that is, that they will value.
- Customers will exchange something they value a great deal, money, for the benefits (value) that your solution will provide.
- Customers also figure out or are sensitive to the value you erode (take away), or the work you force upon them, during the entire purchasing transaction.
Why the formal-speak?
The formal(ish)-speak is an attempt to be clear, correct, and concise about what is happening when businesses make solutions and customers buy them.
It’s all to avoid you making something at great expense that you and you alone think is the most brilliant idea only to find that no one agrees with you.
To quote Steve Blank again, and I will do so frequently, “[b]uild it and they will buy is not a strategy, it is a prayer,” “you cannot create a market or customer demand where there isn’t customer interest.”
Tattoo that somewhere!
And another thing, the Business Model is the product, not what you think you are selling.
What this means is that for the Value-Exchanging Machine to work, it matters little what the value is that you create, so long as customers are prepared to exchange something that they and therefore you value, for it.
I know it matters to you whether you’re making the most gorgeous scented candles ever dreamt of as opposed to providing buckets of muck. But the point is this. If customers value buckets or trailer-loads of muck for that matter and are prepared exchange something that you value, say money, for that muck, then that is all that the Value-Exchanging Machine requires.
Summary
We’ve covered a lot of ground in these episodes, and there is much more to cover. My eBook Starting a Business – With Facts, Not Faith dives deeper into the details and what to do with the information that these episodes suggested that you need.
So, what did the episodes cover?
In Episode 1 – I introduced myself and my company Don’t Think, Check!® Limited, and I tried to discourage you from ever starting a business because it will take more work than you realise, and the risk of failure is high. If you’re reading this then I guess I failed on discouraging you then.
In Episode 2 – The Facts Of Business – I presented some facts of business and tried again to discourage you. A large number of businesses fail, and that’s a terrible waste of wealth, energy, and credit ratings etc.
In Episode 3 – Why Business Fail – I presented some soul-destroying statistics on business failure rates and what is behind those failures. Again, repeating Steve Blank, “[b]uild it and they will buy is not a strategy, it is a prayer,” “you cannot create a market or customer demand where there isn’t customer interest.”
In Episode 4 – Six Factors For Success and Jobs To Be Done – I introduce the Six Factors For Success, explain what they are and I go on to define Jobs To Be Done. All previous episodes were building up to this one, Episode 4. To be successful in business, these are the minimum you need to understand and get right. Simple isn’t it!
Finally, in this episode, Episode 5 explained what a Business Model is. To recap, a Business Model is a Value-Exchanging Machine, the Business Model is the product, not whatever it is that you think you are selling.
That’s it. That concludes our peek into what is required to start a business.
If you want to know more, please visit my website https://www.dontthinkcheck.co.nz.
There you will find lots of resources and information. Included on that website are two links SMB and RMB which point to my two other websites StartMyBusiness.co.nz and RunMyBusiness.co.nz respectively. The theme and speciality of those two websites is alluded to in the domain names.
You will also find my shop, and in there you will find my eBook Starting A Business – With Facts, Not Faith. There are a number of options:
- Download a peek
- Download a copy
- Buy a Consulting and eBook bundle
Hopefully you’ll find something that is useful to you. If not, please contact me.
Also, if you need any help, you know the drill – please contact me, I’m here to help.
All the best
Glyn
#DontThinkCheck #BusinessResultant #StartMyBusiness #RunMyBusiness #SeeANeedFillANeed
