Chapter 4 – Choosing the Right Business Model
A conscious choice on a business model that is harmonious to your aspiration and goals.
Thinking about starting small and growing your business one step at the time?
This was the way small business owners used to think. But the internet has changed everything. We are living in a time where customers can buy anything from anywhere almost instantly. The online market has 2 billion potential buyers. If you are selling specialised products, especially think globally.
But when I say, think globally, I do not mean aim for global businesses like Starbucks which now has over 22,000 stores worldwide providing jobs for hundreds of thousands of people. If what you want is to grow your coffee shop to become the next Starbucks, you are talking about building an empire and it is a completely different ball game.
SmartZen approach to building and growing a business is based on the combination of your definition of success, remembering why you want to be an entrepreneur. As an entrepreneur, you want to a business that will generate an income from assets so that you no longer have to trade your time for money. The whole idea of starting and growing your own business is so that you create freedom, wealth and happiness without working crazy hours and sacrificing your health or your love life. Sure, you may have to work extra hours and at the start-up until you set your business up and running but if you choose your business model carefully from the beginning, you will reap the rewards many folds.
Let me give you an example of a successful micro-entrepreneur who previously had a relatively successful career in law. He left his job and started his own business 10 years ago, but building a business empire was not his aim. His business has multiple facets whereby he earns his income from different areas of business activities. He still does not employ anyone but himself and he divides his time between two homes, one in the UK and the other in a Greek island. He has the freedom to travel to other places in between, sometimes for weeks on business and for pleasure. He earns more income than he did when he had a job but spends less time working.
This is because he has set up his business with a smart model which allows him to generate income, some of which is automated so that he does not need to spend long hours running the business or to be fixed in one location. Basically, he has created more time and freedom as well as money. We call this a ‘digital leverage’ or a ‘lifestyle business’. But, we are talking about a business model that is very different from building an empire or owning several coffee shops.
It is easy to get caught up in the traditional way of thinking when it comes to growing a business or earning your income. Some business owners still run their business based on the idea that you get paid per hour, per piece sold or produced. This is seen in what most people call ‘cottage industry’ where the majority of small businesses are classed as.
A small business like this can be successful to a point. You may be good at running your business and as your business generates more sales, you naturally become busier, and more of your time needs to be spent in your business to keep up with the demand. So, you try to release some of this pressure. Traditionally growing a business happens by expansions, acquisitions or by mergers. Commonly you decide to employ staff to cover some of the work you used to do, but it affects the profit margin as the cost increases. You also have additional responsibility for managing your staff as well. This is when being your own boss starts to look exactly like having a job. That is why thinking about a business model is important. If employing staff is how you want to grow your business, there is nothing wrong with that and you will need a team of people you can trust and rely on so that they help you with the progress rather than hinder you. Your business may get to that level anyway as you grow organically.
But first of all, I would like you to consider how you can scale your business without having to earn the money per time or having to employ staff.
In the last 20 years, the internet has brought small business owners new opportunities and created new business models by being able to access customers globally as well as to automate activities. A business model with digital leverage is one of the simplest ways for you to grow your business while also to achieve a good work-life balance.
Having a good balance is crucial for the long-term success of your business.
In SmartZen program, I teach in more detail how to design a business model either from scratch or to transform your existing business to create a lifestyle business.
It is time for you to get your creative juice flowing. Think of a suitable business model which allows you to lead a lifestyle that meets your definition of success, remembering the reasons why you wanted to start your own business. There is no need to invent a wheel, simply focus on the business model. Answer the question by writing the detailed business model down.
It is okay to mix different business models as you grow your business. But having the right business model to adopt within your long term life plan is essential to consider at the beginning.
Especially for a service-based business which may require more time as you grow and increase sales.
Try to think of a way in which you can increase sales and supply of services without having to use more of your time.