‘So the last few nights have been hell. Ever since the President’s speech I have not slept much. Some are free, some will return to work, but not me. Not us. Not yet. No matter how careful I do my calculations, I just don’t seem to get ahead. Corona has hit me hard. Has hit US hard. I tried to get to bed early last night. Every time I closed my eyes I saw the company end-of-year braai replaying itself in my mind’s eye. I saw the staff, their partners and children … bright, shining faces … We had worked hard, but we were finally starting to see returns … and I started wondering … remind me, why am I doing this again?’
This is a good time to be stubborn
First, let me give you a quick reminder of the most common characteristics of successful entrepreneurs, so that you can remember the ‘why’ of being an entrepreneur. Spend some time remembering these. Then, we’ll discuss a nifty tool to capture the ‘what’ of what to do, now that you ARE here.
As always, remember these blog posts provide information – it points you in a direction. Contact Northwood Financial Services cc for a free consultation to discuss business coaching for these uncertain times.
Why are you choosing to be an Entrepreneur?
- You have an enduring passion for what you do – dig deep and you will find it again
- You are motivated and can stay that way – it isn’t always a fun emotion, but it can be brought on by sweat and tears
- You are courageous – not a reckless cowboy, but a strategic visionary
- You are a leader – and (most days) you actually like being the boss
- You pride yourself on your creativity, innovation, flexibility – you enjoy real-world puzzle-solving
- You are tough and resilient and a good decision-maker
- You know what sets you and what you offer apart from the rest
- You know what you know and build on this, you know how to source expertise for what you don’t know
With the doors closed, what do you see when you are looking in?
Entrepreneurs are doers. They see a gap, a need, a problem and they react. Often, things build momentum and somewhere in the future they find themselves running a business. Most business do not fail because they are built on bad ideas. They fail because basic planning was not done.
There are the Disciplined Ones who do spend time working on their vision and mission, the services they offer, their marketing strategy and their pricing. This can be a cumbersome, never ending process with data and figures that seem to go out of date as soon as they are generated. In these volatile times it may be difficult to keep all the components of your business in mind and respond rather than react. Because of how long it took to set up the original documents, you may think that a review of these will also take up a lot of your time and energy. And you just don’t have it.
You are also human. You may be truly gifted at the technical aspects of the service you are offering, but really struggle with admin. Some parts of your business is afforded a higher priority than others, because of what is important to you in life. You may also simply enjoy certain tasks more than others.
What if there was a way to capture your business in a snapshot?
The Business Model Canvas were initially proposed in 2005 by Alexander Osterwalder. It has stood the test of time and is especially useful because of its versatility. It can be applied to a start-up concern operated by a lone wolf from a dark and dingy basement. It can, as successfully, be applied to a multi-national concern with an army of minions in an eco-friendly business park.
Clear visuals help. It leaves a much more effective, long-lasting impression than convoluted words strung along in long sentences. It is easier to see what you need to focus more of your attention on. You can spot what is redundant, what requires tweaking and what you could develop further. You can assess what the strengths, weaknesses, opportunities and threats are to your business.
The point of using the Business Model Canvas is to cut through the clutter. You want to capture the important aspects in bullet form.
The nine components of the Business Model Canvas
The blocks on the right capture all the factors that bring in revenue. The blocks to the left captures all the factors that require expenditure and cost. Though people differ on the order in which the blocks should be tackled, we have found the following order to be best:
- Customer Segment
Consider the type of customers or clients you serve. Do you supply products to the mass market or a service to a niche market? Do you offer products or services to a mix of these? What are their needs, desires and requirements? In future, could you develop or diversify these?
- Value Proposition
Building on the above, consider what it is that you are offering? Why are YOU offering these services? What problems does your offering solve or what needs or desires do these meet for your clients? What makes your services unique or better than that offered by your competitors?
How are you getting your products or services to your clients? Are these the fastest, most efficient and cost-effective ways of doing that? Are you dealing directly with the public through a storefront or your own salesforce? Are you using indirect channels, such as websites or franchises?
- Customer Relationships
Consider what level of relationship you need to ensure the greatest customer satisfaction. Is ease and speed of use established by automated interactions best? Do you want the customers to feel like family? Whether you are leaning towards the former or the latter, make sure that there are different ways to capture their experiences. This could take the form of customer satisfaction surveys, rating scales at till points or calls to action on your website. Remember, it is more effective to spend your energy on return customers and word-of-month referrals than cold calling.
- Key Resources
Here you need to consider what makes it possible for you to create value for your clients. These resources could be human, financial, physical or intellectual. It is important to review these on a regular basis and to plan investment in these – whether this means upgrading technology, upskilling or investing in your staff.
- Key Activities
It is easy to get sucked into micromanagement of staff or get stuck doing busy work – that which seems urgent but not important. This is especially true for entrepreneurs who built u their companies up singlehandedly and who may find it difficult to trust staff. It is important to review what the most important activities are that directly influence the execution of your company’s value proposition. Reviewing who does what when and what the priority of different tasks are can help everyone work in a streamlined manner and lowers the risk of duplication or key activities falling by the wayside.
- Key Partners
The downfall of many businesses is a breakdown in relationship with stakeholders – particularly suppliers and distributors. It is vital to build relationships of trust that goes both ways. This means you have to invest time, resources and effort into your interactions with those at different touch points in the supply and demand chain. It is a paradox, but spending the extra effort required to form robust working relationships will actually free you up to focus more on your core activities. It is also important to build strategic alliances with others in your industry, even if these do not in the short term seem to benefit your company. The value of this in terms of referral, sharing of information, and street cred should not be underestimated.
- Cost Structure
This is not just about how much it costs you to offer a service or produce a product. If you are serious about looking at your business from a strategic perspective, you will bring in the big guns – discuss your financial strategies with a financial planner that have a background in business finance and business coaching.
You need to consider questions such as:
- Is what you are offering cost-driven or value-driven?
- Do you charge a fixed fee, or is there room for price elasticity?
- Does the scale or the regularity of orders make a difference?
- Does competition make a difference in how you price things?
- Which indirect factors impact on pricing, such as import duties, tax, warehousing, or licencing?
- Revenue Streams
This relates to how you make your money – do you sell, lease or rent? Do you offer licencing or franchise options? Do you offer advertising opportunities? Do you charge fees? It may be worth your while to discuss these with a business coach to see if there are ways to expand your revenue base. One of the sure-fire ways in which businesses run into trouble is by not keeping an eye on cash flow. It is not only about whether your income exceeds your expenditure. It can be a timing issue – do you have enough money coming in at the right time to cover all that is required, going out? The raw materials, tax, salaries and so forth? Again, speak to your financial advisor. They can help you do a thorough analysis of this and help you devise a strategy to mitigate these difficulties.
A lot of thinking is needed to complete the Business Model Canvas that’s for sure. However, remember that all the information can be captured on a page or two. You will thank me afterwards. This is not only a handy tool for you as the entrepreneur, it is also useful when training new staff and provide an oversight of what you do to potential investors and partners. During times of social turbulence when there are undertows of fear and anxiety all around us, it is easy to transfer these feelings onto our work and business environments. Emotion can override fact and reason. This is the time to be stubborn. Cling to your belief in self-determination. Sharpen your vision. Take stock. Innovate. You can do it. Partner with Northwood Financial Services cc. We can help to make it easier.