Chapter 8: Modeling for Success
The concept of business modeling has been around since the 1950’s, but has only received popular usage in the 1990’s. Modeling is basing the different aspects of your business off the concepts used by other businesses. This includes its products and services, strategies, infrastructure, organisation and operational procedures and policies. There are really just four key business modelling areas that are successful.
Using a Mentor
Prototyping and Testing
Why would you want to invent something? Why would you want to be a pioneer? Both are fraught with risk because you are going where no one has gone before. If you want a successful business, it is much more logical to duplicate what works for somebody else, and then be innovative. You can apply your own ideas to a proven concept that can be grown quickly with massive value. There is nothing wrong with borrowing ideas even from outside your industry if they work, and then making them better.
Cloning is simply taking what works somewhere else and copying it almost exactly. The danger is that you become a “me too.” For example, if you are in the business of providing product X, and you look at every other product X company and say, “Well, if that is what they do then I need only do the same thing.” That is not going work. It may get you started and attract some business, but it is not likely to launch your business into an exponential rate of growth. So, be careful about what you do with an idea. If you use an idea from another company, do not copy it exactly, put your own unique stamp on it and make it different. Make it better.
A similar idea is what they call “creative swiping”. We all do it in one way or another. Say that you read an article or a book or see something on TV that contains a good idea for your business. Then grab it as your own. I mean, there is a difference between creative swiping and plagiarism. Plagiarism is where you promote the idea or words that you swiped as your own; whereas, creative swiping is taking the idea and saying, “Hey, I learned this great idea the other day from Rich Schefren, but here is what I am going to do with it.” Give credit where it is due. I’m a great fan of creative swiping because I do not think it is wise to be completely original. I think it is much better to start with a proven idea and build upon it as opposed to being completely original. The risk ratio is far less.
Another area from which you can garner ideas is copywriting. They do not call it copywriting for nothing. Headlines of other ads can be particularly useful. As I said before, headlines are very important to your marketing because they are the first thing people read in your advertisements, perhaps the only thing. Well, if you think it is apropos to what you want to say, there is nothing wrong with stealing the idea behind somebody else’s headline. For instance: the idea behind the “Who Wants to be a Millionaire?” title for the TV show could well translate to a fashion store advertisement saying: “Who Wants to be a Fashion Queen?”
Leverage is another great tool for modelling. It means getting more with less. You can leverage many things: typically people; processes; technology; time; and capital.
So, how do you leverage people? As I have pointed out previously, if you estimate that your time is worth $400 or more per hour, and you can get your work done by somebody that is paid $20 per hour, you are leveraging people. Another example is if you have a worker who is paid $60 per hour in your business, and you systemise what they do so that a $40 per hour person can do that job. You can then organize it so that the $60 per hour person can do the job of a $90 per hour. This is leveraging people.
Can you leverage a process? Absolutely! Create systems to streamline tasks and use technology to automate various processes. If done properly this reduces the skilled workers needed, and greatly increases productivity per worker. The use of technology in general and automation in particular in business is a book in itself.
Time once lost can never be regained. It is your most precious resource and one of the easiest to squander needlessly. Leveraging time is all about getting maximum value from this perishable commodity. Business owners often do not allocate their time wisely. They spend time on a variety of activities many of which are needless or could be delegated. If you are spending time on unimportant tasks, you are not earning up to your potential. When you understand how to leverage, you will begin to earn more money for your time.
Leveraging your time is also about moving you and your company toward your goals. If you are spending your time effectively, you will be applying your time to meaningful activities that get you closer to your destination. If you are not, you have room for improvement.
Again, this is using money to make more money. Using money you don’t have or borrowing money is one way to go. You can use these funds to buy capital goods or real estate for your business. These assets hopefully appreciate enough or increase your business turnover enough so that the gain pays off the loan interest and perhaps also creates a cash profit. You can also use such loan money to buy out competitors or other businesses. The basic idea is to use loan money as leverage to increase the value of your business. This can be a great money making strategy in a stable or rising market.
Using a Mentor
The third skill for modeling success is to use a mentor. A metaphor to illustrate this concept is “learning to fly under the wings of eagles.” How do you find the right mentor? How do you find somebody who is willing to help you out? Since I first entered the business work force, I have always tried to have a mentor. It is surprisingly easy. In so many cases, you merely have to ask. If you come across someone at a seminar or are acquainted with them slightly as a fellow business person, simply make your approach and say directly: “Well, I really enjoyed what you said at the seminar” or “I really admire the way you run your business. Is it possible that I could buy you lunch or buy you a coffee and just ask you a few questions?” There are not too many people who would actually say no to that. Most people who are good at something are only too happy to see their prowess appreciated. For the most part, they also like to pass those skills on to anyone interested enough to ask. Even people who are in exactly the same industry or are operating a similar business, even in a close suburb, will be pleased to help if asked. So ring, write, whatever you need to do, but asking is the first step. If you don’t ask, nothing will happen. It is the first rule of negotiation. Ask for what you want.
Now, what if you can not get a mentor? No problem. There are many people that you can use for coaching support. I find no difficulty in paying for good mentoring and coaching support. The way I see it I am leveraging my time. I leverage my time by spending some money now and getting the advice straight away. I do not have waste time figuring it out. That to me is a good exchange; I am exchanging my money for time.
Prototyping and Testing
Lastly on modeling for success is prototyping and testing. The idea is to always try to test new ideas or systems or products as quickly and cheaply as possible. An example that I recently had to deal with was a new website. They can be very expensive to build, and if you get it wrong, even more expensive to fix. So what I did was just to get the graphics done roughly on paper along with how the copy and buttons would work, and then show it to a number of customers to see if they thought it got the right message across and would be easy to navigate. Using this prototype allowed me to deal with many mistakes before they were fatally incorporated into the real thing.
Another excellent method of testing web ideas is Google Adwords. In Google Adwords, you can test two ideas at the same time through split testing. You can put up an ad on a keyword and, if somebody clicks it, you know that the customer is interested in what your ads says. If you use two different ads and you split test if one gets twice as many clicks as the other, you are then on your way to creating the best ad to get the customers clicking. The next thing is, if they click on your ad, they go to a website. If that website asks them a question and offers to give them something if they answer that question, it is like doing a survey. So, what is the point? Not only are you testing different headlines in your Google Adwords, but you are also getting a survey that tells you what customers are likely to want. You now not only have a list of what people want, but also an idea of what headline might attract them in the first place. That is very powerful and it is very cheap.
Appealing to Women
Another, even more cost effective survey is to pitch any new ideas for the business to your partner. If you haven’t got a partner, ask a female acquaintance, and pay attention to what she says. From my experience, you are likely to get a really accurate answer, but you may not like it. If so, don’t get upset, she is probably right. Studies show that in almost all buying decisions it is women who have the last word. I don’t care what type of business you have, somewhere down the line it is most likely a woman who will make the final buying decision.
I can almost hear you say, “Well, that is not true. I buy the car and I buy the house.” Be truthful. Did you make the decision without their influential input? Not likely. In any case, it’s right in the broad view, and it pays businessmen to take that fact into consideration. Design everything you do in your business to be attractive to women.
Now, you are thinking: what about a car mechanic or any other male-oriented industry? Perhaps, but what harm is there in making your premises attractive to women. Car mechanics certainly have to deal with as many women as men dropping off their cars for repair. In addition, any such service facility worth its salt will have a clean and tidy waiting room with as many women’s magazines in the rack as there are men’s. The point of all this is to convince you that you can’t go wrong designing your business with a female perspective in mind regardless of what business you’re in. Of course, that doesn’t mean that everything is in shades of pink. It just means clean and attractive enough to make a woman feel relaxed.
As an example of businesses adopting a female perspective, one of the areas that I have been heavily involved in is in customer service call centers. They have large staffs with a high percentage of women. It sounds strange now, but back in 1997 or ’98, I was laughed at when I suggested that all the bathrooms should be cleaned at least twice a day. I insisted that especially the women’s restrooms be spotless with hand creams and even fresh flowers. It certainly kept the women happy, and that goes a long way to keeping everybody happy. It also helped keep staff turnover at an industry low.
Take Action Exercises
Gather a sampling of all your marketing materials and give them to three females that you don’t know and that are not associated with your business. Ask them if they could make comments as to the way the documents look, do they make sense, are they easy to understand, etc. Be prepared to make changes when you read their responses, especially if they all agree.
What are three successful businesses that you admire? Why? What do they do that you do not? How could you incorporate just one of there methods into what you do?