Q&A: How Do You Make A Big Change To Your Business Model?

Apr 23, 2021 | Business Models, Podcast

Tara McMullin is a writer, podcaster, and producer who explores what it takes to navigate the 21st-century economy with your humanity intact. Click here to support this work.

How do you make a big change to your business model without making it harder than it has to be?

How do you navigate sunsetting an old offer (or a few), raising your prices, or shifting your target client?

After spending a whole month talking about simplifying on What Works, I’ve had more than a few people wonder what it was actually going to take to make some big changes to the way they do business.

This question happened to come up during this month’s Insider Hour—a Q&A session I host each month for What Works Network members. And I wanted to share my answer in case it’s helpful to you and the changes you’re considering for your business, too.

You might also find it helpful to check out these resources:

Hey, it's Tara on what works. We've been talking all about simplifying and I've heard from more than a few people that they're thinking about making some pretty big changes to their business models. They want to eliminate offers or change how they deliver value or dramatically increase prices, which is great.

But this often gets pretty tricky in terms of execution. So how do you make a big change to your business model without making it harder than it has to be? How do you make a big change without causing too much disruption to how you pay the bills for yourself or your team? This exact question came up during our insider hour, this month inside the what works network. And I thought you might find my answer valuable if you're considering simplifying your business model. So here we go.

So I think the very first component of making this plan and figuring out how to do this without over-complicating things and without making it harder than it has to be... Because sure, there might be some longer hours and longer days in there as you're building out something new while also, you know, maintaining what you've got. But we want to keep those things to an absolute bare minimum and it shouldn't take a whole lot of work to transition into a new model if we're doing it intentionally.

So the first thing I do is actually identify where I want to end up. Once you have an idea of the path you want to walk down, journey on, I would actually lay it out in terms of: what does this business model look like?

Who are the customers? Are they any different than the customers I have today? What is the value proposition? Did the value proposition evolve as I was re-imagining things? How is this being delivered? What are my expenses? What is the price of this offer? And actually like lay it out. This is not going to be set in stone. Right. But it gives you a point to orient toward. Having that future business model as a way of orienting the action that you take now just helps to make sure that you have a way of pointing yourself in the right direction.

Okay. So that's the first piece or the first two pieces, I guess, identify where you're going and actually build out the business model. And within the Stronger Business Playbook, there is a tool for answering those kinds of things, answering those kinds of questions for your business model.

And this is a place where focus on simplicity, right? This should not be a business model that you envision requiring multiple offers to work. It's fine to have multiple offers, but by and large, I think we'd all be better served, making sure that our core offer is actually capable of meeting the needs of the business, including your needs.

Right. Can you generate enough revenue from that offer to support the business, as opposed to trying to piecemeal things together? Let's let's not look at like what five things, or even what three things I can put together to hit my revenue goal. It's what, one thing when done super well, when it is the focal point you have in every single Workday, what is that one thing?

What does it need to be priced at? Who do you need to be selling to, to meet your goals and to meet your needs? Okay. So those two things. The next thing I would take a look at... so once you have that point of orientation, then we need to pull back and look at what's actually going on in the business itself.

What is actually generating revenue? where is most of that revenue coming from? Not in all businesses, but I would say again, probably in most businesses there is, and offer, or there is a style of delivering that offer. So like there's a particular type of problem that you work on, or there's a particular type of deliverable that you create for your clients.

That is the source of the majority of your revenue. It might be like an 80/ 20 situation. It could be more like a 60/ 40 situation. But I think if you look back over your years of consulting and say, you know, there's this particular type of client that they pay me more, they're more fun to work with.

they stay on track more. They bring in the majority of revenue or other forms of satisfaction that I received from this business. Or like I said, it could be a particular kind of deliverable, a particular kind of problem. If you have multiple offers or for those of you who have multiple offers, it could be a specific offer that's already on the table.

But identifying where the majority of your revenue comes from. It's going to help you see where there might be extraneous activity happening in your business right now. So activity that might feel necessary or it might just feel like, well, that's the way I do things. But it's not really generating results.

It might be tied to things that are generating results, or it might be adjacent to things that are generating results, but that activity itself doesn't generate results for you. identifying those activities can help you see what you can pull out because, before we start adding new stuff on, before we make a new offer, do a new marketing thing, kind of reach out to new customers, whatever that new business model is going to require of you.

We got to pull back on all the extra stuff. One thing that often happens, um, I find when people are shifting business models, like this is, they've been doing a lot of marketing activities and some of those marketing activities do bring in business. it's not that they're not working. what they realize is that if they were to pull the plug on those marketing activities right now that they actually have enough of a pipeline or could very easily find enough of a pipeline not to grow the business, but to maintain the business at a level that allows them to pivot underneath.

And so that might be a situation for you as to think about as well is, you know, what am I doing now to fill my pipeline for the future that I don't actually have to do, because I don't want this pipeline that may or may not be part of your plan or not, but it's one of the things that I, I have often run into with folks.

Once you look at your actual model today The next question. I would encourage you to ask yourself is how you can make space for change. Making space for change should not default to, well, I can order take out more and work a couple more hours in the evening.

Like I said, at the beginning, there might be a day or a week or even a month where that is truly what needs to happen. but I think we should be looking at what can be removed from your business, from your schedule in order to make space for you to start shifting things. So we'll call that step number three, okay. The next piece. So we've got our goal business model. We've got our current business model. Most of the time, I find that people can build out an interim business model. So you said you've, you're wanting to make the shift over the next few years. That's great. So your goal business model is let's say, 20, 24.

What business model can you aim for for 2022? And what do you need to change between now and the end of 2022 to hit that interim business model? So that might look like it's accepting two less contracts, two less projects in 20 22 than you will in 2021. And what are you going to do with that time either to build something new, to replace that revenue, to start building a new pipeline, get into a new part of the industry, whatever it is that you're shifting, it might be all of those things, whatever it is that you're shifting, what can you start to incorporate?

If you say I'm going to take two less projects or I'm going to work 80% of the time on the business that I have now and 20% of the time on my future business, those are some of the things that I would be looking for in terms of that transition. And I really do find that intentionally building that interim business with a goal date or a goal timeframe in mind helps you make the shift less intimidating because if we just look at well, here's what you have now. And here's what you want to have by the end of 2024. That's a lot of change. There's a lot of time there in which you can get lost. And we want to stop that so that the timeframes are shorter and the changes are smaller, but that over time they add up.

📍 So now you've got a goal business model. You have your current business model, and then you have an interim business model that's happening somewhere in, in between those two things that gives you direction for your initial changes. And then you start working toward that interim business model. Once you've hit that interim business model, or once you've learned something new that you need to shift in either the interim model or the goal model, then you can start making a plan for working on the next stage.

So, again, map out where you want to end up then map out what your business model looks like right now. And take note of what's actually generating revenue and then create an interim business model where you're not fully operating in the new model yet, but you've made a distinct departure from how you're currently operating and then set some milestones and timeframes to pay attention to.

So you know what to change when. Remember, you may not get it right. And that's totally okay.

Just by making the plan, you'll have a way to measure what you're learning and what you want to adjust as you move forward. As I mentioned, this is a clip from a session that we do every month inside the what works network it's called insider hour. And it's a session where our members bring their questions and conversation topics to me.

And I get to refer an hour about what's most important to them. It is truly one of the highlights of every month. For me, if you'd like an invitation to our next insider hour, along with all of the other support events, tools, templates, and training we offer inside the what works network. Go to explore what works.com/network and request your invitation.

That's explorewhatworks.com/Network the doors open to new members on Tuesday, April 27th. And I hope to see you inside.

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