In this episode #1 Bestselling Author and Highly Acclaimed business & Entrepreneur Expert, Mel Abraham reveals in-depth about one of the most critical elements of business which is your business model. He talks about what business models are and their ingredients, where you might be in the business model ladder, the importance of having the right model and the indicators to tell if you are in the wrong place. Business successes and failures are directly related to business models.
Business Model Ladder
Based upon where you are in this framework, it gives you an idea of what you need to focus on.
No Model: Most starting entrepreneurs do not have any business model. Value is also not created. It simply is an idea and there is no cash flow. A decision is required to begin the transition and start making money.
A Model: You have elevated the idea to a hobby. Now you know how to get your products out there to serve consumers. We need to define the things in our business model to cross the money line.
Workable Model: You have to put in a lot of work and cash comes in. We need to refine it to get rid of the things that aren't working and elevate the things that work.
Viable Model: Things are flowing and we need to start to scale. We have to elaborate the key value drivers to the customers, team and ourselves.
Optimal Business Model: We are at a stage where we know who, why, what and how we're serving. We are creating value that is high in our consumers' eyes.
Your Position on the Business Model Ladder
To know where you are on the ladder, look at the following symptoms or indicators:
- No Model: You have negative cash flow, no systems in place and you are not making efforts.
- A Model: The cash flow is sporadic, the system is dysfunctional and you need to put frenetic effort.
- Workable Model: Regular cash flow but with inefficient systems which require a lot of effort.
- Viable Model: A flowing cash flow with effective systems in place and you can delegate it.
- Optimal Model: There are high cash flows, efficient systems and leveraged efforts.
Business Model Failures
Business model failures come from one of these four things:
- Extraneous: When what you're providing is not valued by customers.
- Erroneous: It's when we're in the wrong business for where we're going.
- External: Environmental changes can cause your business to fail.
- Execution: Bad or sporadic execution is a reason behind business model failure.
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ABOUT MEL ABRAHAM
Mel is the founder of Business Breakthrough Academy and Thoughtpreneur
Building Your Money Machine