Tag Archives: Business Owners

Business Model Innovation

What is business model innovation (BMI)?

BMI is about finding new ways to add value to a business in the face of rapidly changing circumstances – economic, social, environmental, technological and political, global, national and local. People have been devising innovative ways to do business for centuries. The explosion in the breadth, scope and power of communications and other technologies over the past decade, however, and in particular the emergence of the commercial Internet, has opened new business model possibilities which were previously unimaginable. This is so regardless of the nature of the core business.

BMI requires of business owners and managers not just a thorough understanding of the key players in their particular industry, but also a sophisticated appreciation of the likely impacts of emerging global, national and local trends and events. It is no longer enough to simply be aware of what the competition is doing. This is an outdated, reactive approach which completely misses the point that the global business environment is changing in ways, and at a pace, never before seen. It is businesses which properly understand this point which will be able to position themselves to take advantage of the most profitable opportunities these trends and events open up, and to avoid their most adverse consequences.

Why BMI is important

BMI is crucial not just for the sake of maintaining current profitability, but also because the valuation of an operating business is significantly affected by the level of future maintainable earnings. Because of this, any business owner with a future sale in mind must recognise that maintaining business model relevance in the face of rapidly changing circumstances is as crucial to future sale value as it is to current profitability.

BMI – the current view

In a recent edition of Fast Thinking magazine, the leader of Strategy and Change Consulting with IBM Global Business Services, Matt English, observed as follows:

… IBM’s Global CEO Study 2006, which surveyed over 750 CEOs worldwide, concluded that business model innovation is the key differentiator in an increasingly competitive and globalised market place. …

The study had examined three types of innovation which CEOs had identified as being crucial in driving growth in their organisations – products and services innovation, operational innovation and business model innovation. The study demonstrated that organisations with an emphasis on business model innovation generated a higher performance in profit margin. English went on:

… By understanding revenue, enterprise and industry model innovation, an organisation is able to make strategic changes to its business model to increase flexibility, reduce cost and open up new markets.

The message is clear that the business model is a key area for innovation in the way organisations shape their businesses and deploy their capabilities. The business model presents strong opportunity for growth, but also provides some challenges regarding collaboration, governance and people processes and technology. …

Langdon Morris, a Senior Practice Scholar at the Ackoff Center for the Advancement of Systems Approaches at the University of Pennsylvania, had this observation in his 2003 paper Business Model Warfare:

… As we examine industry after industry, we see that wherever there is an exemplar, a company that stands head and shoulders above the others, that company is almost always a business model innovator that is applying creativity in dimensions other than technology to become a market leader. … .

.. what’s happening continuously in the marketplace is competition between business models themselves. … What this means is the winners at business model warfare have generally applied innovation to create competitive advantages, building stronger relationships with customers by developing business models that fit closely with customer needs and preferences.

By: Greg J O'Connor

About the Author:

Greg O’Connor is Managing Director of Wingarra BMI – http://www.wingarrabmi.com – a specialist business consultancy which works with clients to road-test alternative business models, and to optimise those found to be most profitable. Its specialty is in identifying and mapping all variables likely to impact upon the financial performance of a new project or business or business unit, and in designing and constructing robust and customised technical/financial models which allow all combinations of these variables to be fully tested.

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Business Plan Guide – 7 Mistakes to Avoid When Writing a Business Plan

A business plan guide is a great place to start when you are getting ready to write your first business plan. Perhaps you have found a book about writing business plans, or are following a template, but chances are, these materials will only focus on the steps necessary to create your business plan and will fail to point out the critical mistakes that most new business owners make. So let’s ignore the step-by-step tutorial for a moment and focus on the real world mistakes you need to avoid.

1. Don’t Put it Off.

Yes, writing a business plan can be a monumental chore. It’s easy to procrastinate while you focus on the more exciting processes of your business. Many new business owners will wait until the day before their scheduled meeting with the bank — and then frantically try to write a plan overnight. You can imagine the results.

Don’t wait until you have more time. There will never be more time. You need to clear your calendar for a week and make your business plan a top priority. Or if that isn’t feasible, schedule a certain period of time each day to work specifically on planning. No doubt you have heard the old saying: “If you fail to plan, you are planning to fail”.

2. Don’t Confuse Profit With Cash Flow.

Unless you have an accounting background, you are very likely to define the success of your business in terms of profits. A simple definition of Profit would be Sales minus Expenses equals Profit. But in the business world, profits do not equate to cash. Your profit formula does not take into account the amount of cash you have tied up in production costs for products that have not yet sold, or the customers who still owe you money for sales that have already been made. Your business can look quite “profitable” while your bank account is over-drawn.

Make sure your business plan includes a table that addresses cash flow. Ideally, you should detail the monthly cash flow for the first two years of the business and annually thereafter.

3. Don’t Fall in Love With Your Idea.

Too many business plans blabber on for pages about the “newness” and “uniqueness” of the idea. But the truth is, investors want to invest in people, not ideas. It is only the people who can execute the systems necessary to bring the idea to life.

Instead of waxing poetically about your business idea, focus your energy, and your reader’s eyes, on the ways you plan to implement this great business idea.

4. Don’t Succumb to Fear and Dread.

If you have never written a business plan, the process may loom like Mount Everest. But, like most new challenges, writing a business plan isn’t as hard as you have imagined it to be. You aren’t writing a doctoral thesis or the next great novel. If you have invested in a business plan guide, use it. You can easily find helpful resources such as books, software programs and templates. Remember, you eat an elephant one bite at a time, so start chewing.

5. Don’t Over Sell.

Skip the vague and meaningless business phrases such as “best ever”, “highest quality” and “unsurpassed customer service”. You will lose your reader’s interest and respect if you engage in hyperbole that isn’t supported by measurable facts. Remember that the objective of a plan is its results, which require tracking and follow up. Focus your goals on specific dates, management responsibilities, budgets, and measurable milestones. Think fewer words and more numbers.

6. Don’t Engage in One-Size-Fits-All

Business plans can have many different purposes and they should be written to reflect the specific purpose at hand. You may be using your plan to start a business, or just run a business better. Your purpose may be simply to sell an idea for a new business to one particular business partner. Your plan may be intended to secure a small business loan, or it may be needed to secure millions of dollars of venture capital. Each of these purposes would require different information, presented in different ways to meet the needs of different readers. Keep a picture of your intended reader firmly in your mind and your business plan will stay focused as well.

7. Take Off the Rose Colored Glasses

Optimism is a wonderful resource. Without it, a business owner would find it difficult to summon the energy necessary to launch a new venture.  However, this is not the time to engage in unbridled projections. If your company’s growth chart is based on an “industry average” of 15% annual growth, you should certainly be prepared to prove that assumption. When in doubt, be less optimistic.

By using a good business plan guide, and avoiding these common mistakes, you can prepare a plan that almost guarantees your business success. Good luck!

By: Barb Dearing

About the Author:

Barb Dearing is a writer specializing in topics that relate to new business owners. She recommends a free 9-Step Business Plan Guide that can be found at: http://www.business-plan-guide.com

Kansieo.com

Become a Better Business Person

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Let me ask you this… What makes a successful business owner?

Well for me, a successful business owner is someone that earns well into six figures or more each year from their business, working around 3 to 4 days (or less) per week.

I call this ‘successful’ because if they can make a few hundred thousand a year from their business, and only work a few days per week they have to have a lot of great things in place…

Not just in their business but in their personal life.

It tells me that in their business they have fabulous systems and staff members that are willing and able to work even when the owner isn’t there.

And the business would have great information systems so that the business owner would know everything that’s going on (even though they’re not there) so they can still ‘control’ the business.

They’d have excellent marketing and sales systems that day in day out draw in ‘ideal’ customers that willingly buy from the business, at full price.

Plus because of the level of service and quality in the business the customers are loyal and enthusiastically refer other people to the business.

The business owner would also have a high level of trust in their staff to run the business which shows me a couple of things.

Number 1, they’d have excellent staff recruitment and training programs to build their staff into competent team members.

And Number 2 They’d have a high level emotional maturity to allow this to happen.

In their personal life, I’d consider these business owners successful because they would have enough free time during the week to spend on their own doing exercise or their favourite hobbies.

This recharges their ‘batteries’ and keeps them fresh. Thus they always seem to be ‘on-the-ball’.

Plus, they spend good quality time with their partner at home and their family.

And that’s crucial.

Just ask anyone whose business has caused a marriage break up, and/or illness through stress.

You see, growing a business that overtakes your life is very, very easy. Most business owners achieve this within the first couple of weeks of starting!

Growing a business that also enhances your lifestyle is a lot more difficult.

But it is possible.

And that’s what I do with the business owners I work with.

We create profitable business growth that enhance their lifestyles

For me it’s about Business and Life Harmony.

So what’s the underlying secret to achieving it?

Commit to becoming a better business person.

Every successful business owner will tell you this…

It’s not one single thing that will make the difference to your business growth.

It’s a lot of things.

You see most business owners are waiting for the ‘one big’ order or the ‘one great year’ or the ‘one great staff member’ that will make all the difference.

The successful business owners know differently.

The successful business owners know that to have an extraordinary business they must be an extraordinary business person.

They know that if they want to grow to $2 Million… they have to learn how to become a $2 Million business owner. And this requires improving their business skills.

There are many skills to learn.

You’ve got to know how to make the product or deliver the service.

You’ve got to know how to market your business

How to sell, how to find suppliers, how to negotiate, how to hire people, how to train people, how to read and understand financial statements the list goes on and on.

Yet it can be, and is simple… when you learn how to do it simply.

And that’s my role with you.

You see as a business coach my skill is making your business growth predictable, controllable and a hell of a lot easier.

All of my clients will tell you that.

So back to you.

If you want to grow your business you may realize that you need to learn some new information and skills.

And that’s what Super successful business owners have done before you.

They realize that to really grow their business they MUST become a better business person.

Most ‘unsuccessful’ business owners believe that the way to grow their business is by making a better product, or providing a better service.

They feel that if they have the ‘best’ product the market will come to them.

Well the product or service is only one part of your business. It’s not enough.

Super successful business owners initially build their business on a good product or service. Then when it comes time to grow… they focus on areas that will grow their business.

Super successful business owners focus on areas that most unsuccessful business owner’s neglect or are too busy to focus on.

Areas like…

– Creating Vision, Mission and Values Statements

– Marketing

– Sales

– Customer Care

– Operations

– People

– Team building

– Financial statement

– Financial analysis

– Taxation

– Law

– Technology

– Key Performance Indicators

– Business/life balance

-And building their wealth through

All of these areas sound separate yet they are extremely interconnected and dependant on each other. And as we travel through each session you’ll hear how each topic is linked to, and how much each topic relies on the other topics for its success.

That’s what makes a great business person using all the areas.

It may seem like a long list. If it does or doesn’t don’t worry. It’s a list that I’m absolutely passionate about helping you with.

Because that’s the first step to growing your business.

Become a better business person by working on your business, rather than just working in it.

It’s what I do with clients that I work with one-on-one over a couple of years in my Business Coaching Program.

Copyright © 2006 by Casey Gollan. All Rights Reserved

By: Casey Gollan

About the Author:

Business Coach, Mentor And Growth Specialist
Casey Gollan, Business Coach, Mentor And Growth Specialist. Grows $1 Million p.a. Small Businesses Into $2 to $5 Million p.a. Businesses Over a 2 to 3 Year Period.

Kansieo.com