Your Business Model
There are numerous business models and business plans with a multitude of programs and courses that help to craft the process. In this article and podcast, we will be looking at a simple plan for establishing a business model in the Financial Services industry. I interviewed my husband Greg Johnson, who literally wrote his business model with simple sketches on paper. Greg is a former Registered Investment Advisor (RIA), and he shares how he started his successful business that he eventually sold. However, don’t be fooled by the plan’s simplicity. The principles shared are extremely valuable and apply to most any business. You may learn as much, or even more, from the principles stated here than any larger, expensive course or program.
Evaluating your business model and business plan should be done at the very least, yearly. There are basic principles you should define on how your product is going to get to market and what type of revenue you expect to generate. We will cover your plan, low-hanging fruit, diversifying your income and creating residual income.
Your Business Model: The Plan
A business plan can be as simple as a drawing on a napkin. The book The Back of the Napkin by Dan Roam states that a simple drawing on a napkin can be more powerful than a slick presentation. The important takeaway from this statement is that you at the very least need a plan, or an outline of where you want to be. If you have no destination in mind, you will probably end up in nowhere land.
It doesn’t matter where you are with your business, it is a good idea to go over your plan at least once a year. Creating and reviewing both long-term and short-term goals are extremely valuable, both personally and professionally. (get FREE goal worksheets) Those goals will and probably should shift slightly from year to year or even quarter to quarter upon careful evaluation.
Clients will change, your priorities will change, products will change and your business may even expand. Your workforce will change. A good plan and focus will help you distinguish the urgent from the vital. If you aren’t focused on a clear target, the urgent takes away from the vital, which is your bigger plan and marketing focus. Urgent tasks eat up your time. They can include cranky customers, endless paperwork that can be streamlined, etc… You get the idea.
Your Business Model: Low Hanging Fruit
Your low hanging fruit is easy to get to and pick, almost falling off the branches. It may not be the bulk of your income, but it is a base on which to grow. Low hanging fruit can consist of repeat clients, products that are already selling that are renewable, or additional services you can add on to existing products or services. Greg put the low hanging fruit in the vital category when starting his financial services business because it created a solid base of income. Part of his goal was to put food on the table and the low hanging fruit did just that.
For his business in the financial market, low hanging fruit consisted of insurance policies with renewals and specifically group health. What he did was put a prompt on his calendar to check in with the client every term or year. He also made sure they were happy with their current product and inquired about them needing anything else. Communication to check in, just like that yearly contact, is a warm call and usually creates a very easy sale. Good service usually translates to the horizontal development of other products and thus more income!
Low hanging fruit also consists of previous clients. I have a friend who had a habit of calling all her previous music clients at the first of every year. Her entertainment calendar has always been full since I’ve known her and I’m sure that’s part of the reason. I either send an email or hand-written card or note, if not a call every year. It’s amazing how that small act keeps my name front and center for future events. This principle applies to multiple areas of business and even to podcast interviews. Consistent communication builds trust and referrals.
It’s amazing how many businesses don’t capitalize on repeat business. Tree trimmers should have a seasonal database for clients, especially in areas with lots of trees and heavy winds like ours. However, I’m usually the one who calls them. Window washers, the same principle. Some of them have annual services, but if you’ve not signed up for it, a phone call or email prompt will usually create additional business. These are service businesses, but most any type of business can benefit from this type of communication.
Your Business Model: Additional Income Streams
Are there additional revenue sources you can define for a product or a service? We are constantly seeing upsells from most any business. As an example, next time you drive through to grab a burger, notice if you’re asked if, You want fries with that? And if you say Yes, you are then asked, Would that be large fries and a drink? If you’re not asked, that’s a missed opportunity on their part.
Amazon does this extremely well in identifying additional products that could accompany the one you have in your cart. And even if you don’t have the item in your cart, there will be a slew of items that are similar showing up on your screen.
The first step in identifying additional sources of income is to identify additional needs of clients. The temptation is to add on products or services just because you want to sell more or you like the product. Most people, including myself, don’t like to be sold to. But I may purchase a larger or different model of a product that will do more if I know it will help me. I also may want those large French fries if you catch me at the right moment! (See article: Diversify Your Income and get the FREE Purpose Tree Download)
Your Business Model: Residual Income
In my business, some of my residual income comes from selling sheet music and licensing songs. Sheet music is low-hanging fruit. It doesn’t generate a lot of revenue each month, but it is an area that can be expanded by gradually adding new products each season. Products are then marketed throughout the year. (See article: Intellectual Property)
There are many products that are seasonal if you start paying attention to what ads come your way. Depending on your age, you will get various notices about life and health insurance, auto insurance and even Medicare. Some of those products are low-hanging fruit for those who sell them, but they also create residual income with consistent renewals or repeat customers. Residual income flows in monthly, usually with very little work, or even none at all.
Some residual income is not predictable, but if you pay attention to current clients, you will get repeat business. Many cruises and tours send constant travel brochures as they know the likelihood is high for repeat bookings.
What you can do right now is to take out your napkin or piece of paper and spend about five minutes drawing or even re-drawing your business model. It may look very crude, but that doesn’t matter. Define the low-hanging fruit, additional income streams and residual income. This may be one of the best things you do for your business this year and it’s simple and free!
A business plan can be as simple as a drawing on a napkin.
Thought Leader, Keynote Speaker, Author
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