There can be confusion about what a business model is since many people use the term, but they often mean different things. The most important thing to remember is that your business model outlines how your business works. The five big questions a business model answers are:
In the StacDek Framework, we look at the nine elements of any business that need to work together in unison to make a business model repeatable and scalable.
A repeatable business model is one that will continue to work the same way for a long time. Many businesses get started using unrepeatable business models. For instance, they landed their first big client through a connection they had but couldn't land more clients in the future. Or a business gets started and grows because they have access to new technology, but before long, its competitors will have access to the same technology. If an unrepeatable business model isn't turned into a repeatable business model, then it will either fail or barely hang on for years without growing.
A scalable business model is one that will work the same way when you have a thousand customers as it does when you have a hundred customers. For instance, if you sell handmade furniture from one manufacturer, your business is only as scalable as the amount of product the manufacturer can supply. If you have a thousand people wanting to buy your furniture but only five hundred pieces to sell, then your business model isn't scalable.
There are a lot of factors that determine whether a business model is repeatable and scalable. In our experience, most companies don't know for sure if their business model is repeatable and scalable. In large part because they never asked some very important questions.
Here are the seven parts of a business model that we focus on in the StacDek Framework.
If you have a great product that people really want, but you don't have the right price point, then you have a business model problem. Lots of businesses fail because part of their business model isn't scalable or repeatable enough to produce the outcomes they want to see.
Example (details have been changed to protect client anonymity): A startup hired me because they wanted to launch a highly disruptive software product that helped work teams stay in touch and manage projects. They knew they wanted to have a strong growth plan in place to help them take market share. Through studying the market and the competition, I decided that they needed to offer a free basic membership to allow people to try the product before buying it for their whole team. This is what the customers they were targeting expected from a software company. But the company's operating cost wouldn't allow them to offer the free membership; in fact, it required them to charge more than the competition for every membership package. This became a huge growth barrier for them and ultimately forced them to change their product and go after a much smaller market that was willing to pay more. The cost of delivering their service was misaligned with their target market, so they had a business model issue that was a growth barrier.
We have seen tons of businesses create great products but have business model issues that keep them from being able to grow. As you go through the StacDek Framework, you will map out your business model, and we will help you identify if there is a business model issue slowing the growth of your business.
Go ahead and answer the questions in the Principle Three Assessment.
There can be confusion about what a business model is since many people use the term, but they often mean different things. The most important thing to remember is that your business model outlines how your business works. The five big questions a business model answers are:
In the StacDek Framework, we look at the nine elements of any business that need to work together in unison to make a business model repeatable and scalable.
A repeatable business model is one that will continue to work the same way for a long time. Many businesses get started using unrepeatable business models. For instance, they landed their first big client through a connection they had but couldn't land more clients in the future. Or a business gets started and grows because they have access to new technology, but before long, its competitors will have access to the same technology. If an unrepeatable business model isn't turned into a repeatable business model, then it will either fail or barely hang on for years without growing.
A scalable business model is one that will work the same way when you have a thousand customers as it does when you have a hundred customers. For instance, if you sell handmade furniture from one manufacturer, your business is only as scalable as the amount of product the manufacturer can supply. If you have a thousand people wanting to buy your furniture but only five hundred pieces to sell, then your business model isn't scalable.
There are a lot of factors that determine whether a business model is repeatable and scalable. In our experience, most companies don't know for sure if their business model is repeatable and scalable. In large part because they never asked some very important questions.
Here are the seven parts of a business model that we focus on in the StacDek Framework.
If you have a great product that people really want, but you don't have the right price point, then you have a business model problem. Lots of businesses fail because part of their business model isn't scalable or repeatable enough to produce the outcomes they want to see.
Example (details have been changed to protect client anonymity): A startup hired me because they wanted to launch a highly disruptive software product that helped work teams stay in touch and manage projects. They knew they wanted to have a strong growth plan in place to help them take market share. Through studying the market and the competition, I decided that they needed to offer a free basic membership to allow people to try the product before buying it for their whole team. This is what the customers they were targeting expected from a software company. But the company's operating cost wouldn't allow them to offer the free membership; in fact, it required them to charge more than the competition for every membership package. This became a huge growth barrier for them and ultimately forced them to change their product and go after a much smaller market that was willing to pay more. The cost of delivering their service was misaligned with their target market, so they had a business model issue that was a growth barrier.
We have seen tons of businesses create great products but have business model issues that keep them from being able to grow. As you go through the StacDek Framework, you will map out your business model, and we will help you identify if there is a business model issue slowing the growth of your business.
Go ahead and answer the questions in the Principle Three Assessment.