This is Part 2 of a 3-part series on digital workplace transformation. Part 1 and Part 3 are also available on this website.
Continuing our conversation about bridging the digital divide, today we’re taking a closer look at the core of your business.
Which one of the following do you think is most important to a business owner?
An idea?
Money?
Time?
A customer?
An idea is what you do in your business. For example, you walk dogs, you design websites, you’ve created a new software solution, you have a bakery, or you’re a lawyer.
Money is how you fund your company, compile reserves for future needs, and pay yourself and your team.
Time is a universal measurement – we all share the same 24-hour clock.
A customer is someone who is engaged in buying or trying out your services. This is an important distinction, because it’s means that someone does not have to be paying you to be a customer.
NewPath’s Alex Sirota notes, “When I ask this question to all of our new customers and prospects, I’m surprised that fewer than 50% give what I believe is the ideal answer: the customer.”
One can make a case for all of these items being essential to a business and its owner, but the customer is always more important than any of them. And it’s your customer who helps clarify and specify the other three.
Do they like your idea? Are they willing to pay for it, and how much? How quickly do they need it, and by when? Elevating the customer to be more important than your ideas, time or money is what makes your business successful.
A brilliant idea isn’t enough
Most people will say the idea is most important, but Alex says that means they’re letting their ego speak. “When you have an idea you think is great you think everyone’s going to buy it,” he says, “This is a mistake too many business owners make.”
You get emotionally attached and think your idea is the best, but likely it isn’t as unique and original as you think. And there are a lot of bad ideas that succeed – just look at the late-night infomercials for ordinary products that still sell extremely well because they’re using such an effective sales formula.
“I hate to break the news to you,” Alex continues, “but if you don’t have customers for your idea you’re nowhere.” He cites this post from Derek Sivers about how ideas are worth nothing unless executed. They are just a multiplier; it’s the execution, even of a bad idea, that’s worth millions, while a 5-star idea is worth very little without execution.
When time and money are scarce
When a business owner claims that time or money are more important than customers, watch out! These are huge red flags. If time is most important to them, it probably means they’re not doing a great job at handling their time. Digital tools can help you save time, but they can only do so much. You likely have more work to do on time management before you can successfully run a business.
If money is the top issue, it means they may not have saved enough to run a business through lean times. There is a simple solution to this: Make the customer the most important thing, and the customer will pay money for the value you deliver. With enough customers and enough money, you’ll earn a profit and you can pay yourself.
If money was the most important thing in a business, anyone with money could succeed and yet there are countless examples of businesses who had money but failed. Why did that happen? They didn’t treat the customer as more important than time, money or their idea.
This question is a crucial litmus test for you as a small business owner. Get your head around the fact that that the reason you’re doing this is to get and keep customers – to get customers to buy more from you and refer others to you. Technology can save time but that is only useful if you leverage that time to earn more revenue or save costs.
It’s getting more customers that will make you run a better business because customers will tell you what they are willing to pay for and use, and how they wish to be treated.
Customer-centric marketing requires a modern business model
To get and keep customers, you have to have a functional business model. This is what many businesses have the most trouble with. By the time customers come to us at NewPath they’re already attached to a bunch of tools and technologies, but they’re unclear about their business model and how it operates. Your technology tools must support your business model.
At NewPath Consulting, we onboard all new customers by taking them through a business model generation tool called the Business Model Canvas, created by a company called Strategyzer.
This process helps us to understand their current business model and also how the business wants to evolve. This exploration and documentation greatly helps us address real business challenges with the cloud tools we have at our disposal.
These three videos explain more:
Why every business needs a business model
(This is part of a short series of videos you can watch here.)
2. The Business Model Canvas theatre – a helpful analogy
3. The sections of the Business Model Canvas
Note that out of all the elements on the business model canvas, ‘customer’ appears twice. Money is represented, but only as a measure of whether you’re making more than you’re spending. Your idea (value proposition) is at the center, but doesn’t stand on its own.
And what about time? It doesn’t even appear on the canvas. “A lot of business plans have time lines,” says Alex, “but really they’re irrelevant. The only time that matters is when you can start delivering value to your first customers. Then it’s about how you can scale to get more customers.”
At NewPath, we have taken many small businesses through the Business Model Canvas exercise. We have observed that many customers are clear about what appears on the right-hand side of the BMC: who your customers are, what you deliver to them, and where you interact with and find your customers, as well as how you make revenue.
What’s not usually as clear is the execution – all the things that appear on the left-hand side of the BMC (or backstage, as you’ll see in the video above): their key activities, the resources they need to make these happen, and the partners who will help raise visibility and even provide customer referrals.
Businesses earnestly try to find customers one-by-one, and hope and pray they will get word-of-mouth referrals, but this is rarely a scalable model. Customers should find you, when you execute superior sales, marketing and operational processes, build mutually beneficial partnerships, and deliver consistently on your value proposition.
How different businesses use the Business Model Canvas
If you want to see sample Business Model Canvases from Amazon, Disney and Lego, check out this video playlist. You can also try sketching out your organization’s canvas with this BMC template for Google Drive (save a copy to your own Google Drive account in order to enter your own content).
For the first time ever, we’re sharing the NewPath Consulting Business Model Canvas, Version 4, which describes where we currently stand. As you’ll see, we’ve identified one of our key costs as marketing, particularly content marketing, and the money we’re spending here is working.
One of our recent new customers has been on our mailing list for years. When we started writing about business models, they finally reached out because they realized they needed to identify who their target customers really were and whether they were effectively communicating with them online.
Too many small businesses don’t know where they’re spending their money and don’t reinvest enough back into their business. Service businesses charge for their time and materials and fail to “break the time barrier.” You have to invest wisely on the left-hand side of the canvas in order to drive new revenue. Unfortunately many SMBs don’t know where to invest or how.
If you read the NewPath BMC carefully you’ll see our key resources are writers and social media experts, as well as our sales relationships. It’s essential for a business to clarify who are its real partners, and who are the new partners you should be considering.
When clients come to NewPath Consulting, “I don’t ask what colour your website should be,” says Alex , “and we’re not just here to fix your technology issues. I want to first understand your business model, and the key activities and resources that will help your business model run better.”
Would you like to sit down with Alex Sirota and see how your business fits into the Business Model Canvas? Join him for a free 30-minute consultation where he’ll work with you to:
- Start to document your Business Model Canvas
- Recommend a few goals to help your organization grow
- Explore a NewPath Consulting business success plan that’s right for you
