“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”
~ Bill Gates

I don’t know why, but “business model” is not something I see talked about all that often when it comes to building a sustainable online business, but it’s absolutely key to your business and personal success.

If you’re sitting here wondering what exactly I mean by business model, don’t worry I’ve got you.

The term business model is one of those business concepts that many business owners will have some idea of what it means, but if pressed couldn’t quite articulate or describe all of the key elements. Like many other business terms, the definition will change depending on who you talk to or which google search result you look at.

One technical definition is this:

“A business model is a company’s core strategy for profitably doing business. Models generally include information like products or services the business plans to sell, target markets, and any anticipated expenses. The two levers of a business model are pricing and costs.”

For micro businesses like ours, a more simple and therefore useful definition is:

How you make money in your business.

The second seems simple enough, but when you look at this more closely — what exactly are we talking about when we ask: How do you make money on your business? Are we talking about the offerings you have? The way you market those offerings? Or how people find your offerings? The specific combination of offerings you have and/or their relative price points?

For me, business model is a combination of all of these things and the combination we end up with determines the kind of business we have. And, if we’re not intentional about the business model we create, we’re in danger of building a business at odds with the kind of life we want to live.

Where most people fall down is that they don’t think about the overall business model they are creating and instead dive headfirst into creating products and services. If we are not intentionally creating products and services with our overall business model in mind, then we tend to create for one of the following three reasons:

1. It’s something you feel like creating.
2. It’s something you think you should create based on what other people are creating
3. You feel the need to be launching something new in order to make more money.

Let’s take each of these in turn.

1. When we create what we feel like creating, we fail to take into account what our audience actually wants or needs. Then when it comes to launching, we may have a beautifully crafted product or service, made with love and all the best intentions, but nobody buys because it isn’t what they asked for, want or need. The solution? Don’t create anything that you haven’t already tested or researched with your audience.

2. I’ve talked about it before but many years ago, I made my first big business model mistake when I became seduced by the idea of a low cost membership program. This was a classic case of choosing to create something based on what others were creating. It felt like a no-brainer to me to charge people a low monthly rate for regular content and classes and in no time be making thousands of euros a month.

With just 200 people paying €25 a month, I would be bringing in €5000, or so my thought process went.

It didn’t work out like that. My audience was so tiny that whilst I had a good initial take-up, because of the low monthly rate I was hardly making anything. Whilst 200 people paying 25€ didn’t seem like a crazy goal, when we dive deeper and consider average conversion rates, I would have had to have an email list of nearly 7000 people, 3% of those signing up, to get 200 people into my membership. For the record, (average conversion rates are between 1–5%) and that’s not even taking into account that around 50% of my list don’t even open my emails so that would mean 14,000.

Now I don’t know about you but I’m some way off 14,000 subscribers. And, the marketing tactics I would need to employ to grow my list to those kinds of numbers are not the kind of marketing tactics I’m prepared to spend my time on.

So, what happened in the end was that I found myself on a treadmill of creating new resources and classes every month so that I didn’t lose the few people I had, with little time to do the marketing required to get new people in or to grow my list. It was exhausting and I finally found the courage to close the doors on that offering at the end of 2019.

I’ve been a lot more mindful since then about what products and services I create.

3. Another common reason for creating a new product or service seems to come from a belief that we need to be launching something new in order to generate income.

This can be an issue particularly at this time of year when we’re busy making plans for the year ahead. It’s not uncommon for me to look over a client’s goals for the year and express concern about how much they are trying to achieve, in particular, how many new things they are planning to create, launch and sell.

“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”
~ Bill Gates

Whilst this quote can seem disheartening at first glance, when the truth of it is embraced, we can actually take heart in what’s possible over the course of a decade or even the next 5 years. If we take me for example, I walked away from my career in program management nearly 10 years ago in 2012. People thought I was crazy to walk away from something I had spent over a decade building and the stability of a well-paid job.

If you had asked me each year since how I was doing, you would have had vastly different answers, some years were great, some years were terrible (emotionally and financially) and yet as I stand, with a decade of effort behind me, I’m excited to acknowledge that my business is thriving and I’m now making double what I was making in the well-paid management position people told me I was crazy to leave.

The key to my success?

One of the keys to my success is the simplicity of my business model. I make 99% of my income from just two things. 1:1 Coaching and the Conscious Business Mastermind. The former, I don’t market at all and yet I have a full practice and a waitlist and the latter I market and launch just once a year.

This is by design. Being in sales/launch mode is not something I particularly enjoy. Creating valuable free content on the other hand is my happy place. This is why I have purposely built a business model that does not require me to be constantly hustling for new business and that allows me space to serve my audience with meaningful content.

This is not only easier on me but also on my audience. When we’re constantly in launch mode, we exhaust our audience, haemorrhage subscribers and generally spend a lot of energy for little return. People are also much more inclined to get confused when you have a vast array of services versus just 1–3 signature offerings. In my opinion, less is definitely more when it comes to business model.

So how do we avoid making these business model mistakes? Before creating something new, ask yourself these questions.

1. Is this something my audience have told me they want me to create?
2. If not, have I done adequate research or testing to know that this would be successful if I created and launched it?
3. Have I thought through what it will require from me to create, deliver and market this — when I consider this, does it fit in with the kind of life I want to live.
4. If 3% of my mailing list bought my new product or service would it be economically viable?
5. How willing or able am I to have this thing start small and spend a few years growing the numbers?

Have you started working on your business plan? Has what I’ve shared today been useful? Let me know by commenting and letting me know.