8 Ways to Improve Your Business Model

Looking to improve your business model?  Here’s a list of places to start:

1.   Evaluate

• The best way to improve your business model is to evaluate where you currently stand. To facilitate this process, we have created a business model and valuation tool at www.businessmodelevaluator.com  take the quick 28 question assessment and see which areas of your current business model are strong and which are weak. Once you know which of the eight areas of a business model has the most opportunity, you can begin the process of fine tuning your business model.

2.  Compare

• How does your competition’s business model stack up versus yours? If you are like most companies, there are areas of your business model which are superior and areas of your business model that are inferior. There may be an opportunity to emulate the business model aspects that are superior to yours. For example, the Android operating system emulated the ease-of-use of Apple’s operating system. In addition to comparing your business model with others in your industry, you should compare your model with seemingly unrelated industries. Companies within a single industry tend to conform to a norm. Sometimes it is helpful to see how other businesses and industries compared to yours.

3.  Borrow Best Practices

• All businesses have competitors, direct and indirect. Your competition’s business model provides opportunities to emulate best practices. Even Google copies Apple. In the most objective fashion, look at what your competitors do better than you. Are there any opportunities in these competitor’s best practices. Remember, to truly innovate your business model you must do more than simply emulate. There’s an old saying, “The fastest way out of business is imitating your competition.”Imitating your competition is not innovation.  However, taking a good idea started by your competitor and taking it to an entirely new level is innovation.

4.  Become a Futurist

• Hockey great Wayne Gretzky claimed that the secret to his success was skating to where the puck was going to be versus skating to where the puck was. Gretzky lacked the natural talent of many other hockey stars. However, his ability to predict the near future outweighed pure talent. The ability to look into the future and spot trends can be a valuable asset. Many business people avoid predicting the future because they are afraid they will be wrong. This is a terrible reason not to predict the future. No one can predict the future with 100% accuracy. It’s a question of how wrong you will be not if you will be wrong.

5.  Play with the channel

• If your business model has become stale, moving towards different parts of the distribution channel or value chain can greatly improve your business model. In many instances, the vendors or retail sellers of our products may be getting the best part of the value chain. Adjusting the channel or value chain can radically improve your business model.

6.  Exploit the latent market

• Studies have shown that the average product or service seizes only 13% of the potential market. Where is the other 87%? This large percentage of buyers is typically undesirable, unseen, underserved, or undetected. The average American home has 2.73 television sets and 2.55 people. That’s nearly 400,000,000 television sets in the United States. In the 1940s, major television manufacturers were happy to sell one television per block. Television manufacturers assumed they were saturating 100% of the available market; today we have televisions in refrigerators.

7.  Up your technology investment

• Superior technology can be a competitive advantage.  If your business model needs work, there may be an opportunity leveraging technology. Much of Wal-Mart’s success is due to their superior distribution technology. Don’t think that small companies can leverage technology too. Here are some examples how small companies can better leverage technology:
  • Virtualize the sales process on the web
  • Create custom plug-ins for accounting packages such as QuickBooks
  • Create WordPress plug-ins for their customers or vendors
  • Utilize offshore freelancers
  • Use voice recognition technology for customer service just like the big companies
  • Create an iPhone or Android app
  • Use mobile asset management technology

8.  Be bold

• Creating a better business model is all about versioning. Much like software, the beta version has kinks. Don’t sweat it. Nothing ever works perfectly on the first version. You must be willing to experiment with business model innovation to enjoy its benefits. Not trying a business model innovation simply because you are concerned it might not work is a lousy strategy. Instead, try Cheap Fast Failure with Upside©.  If the business model experiments you try will not put you out of business, go for it.