MANAGEMENT | 9 MIN READ
How To Create The Perfect Business Model in 8 Steps
MANAGEMENT | 9 MIN READ
How To Create The Perfect Business Model in 8 Steps
Get your Business Model wrong…
And you’re %&$#[email protected]!
But if you get your Business Model right,
Things become WAY easier.
After working with hundreds of entrepreneurs and business owners over the past few years, I’ve realized:
Nearly everyone is making their business model…
- Too complex …
- Horrible for cash flow (which is kind of important; more on that later) …
- Creating a job for themselves (and not a real business) …
- And trying to combine multiple business models into one …
Long story short, they’re setting themselves up for failure right from the start.
My focus with this article (and what we do at 2X) is to help get your Business Model dialed in so you have the best odds of accomplishing your goals – freedom, profit, impact, growth.
This is why it’s the FIRST STEP we take when working with a new client.
Strategy sits at the core of our 2X Formula, and your business model is a huge part of this. So if there’s ONE thing we can get right when working with a new client, it’s making sure they create a simplified, focused, and VERY strategic business model!
Yet, I’m guessing YOUR business model is far from optimized.
How do I know this?
Well… We work with a lot of successful entrepreneurs at 2X.
These are not people who have just started out; these are 6 and 7-figure business owners, and although they’re already having some success…
100% of Them Had An Unoptimized Business Model!
That’s right! Even though these are already successful businesses, EVERY SINGLE ONE OF THEM needed a more simple, more focused, more strategic business model… and in today’s article I’d like to show you how we help them do this.
So if you feel like you’re doing everything “right”, but you’re not:
- Seeing the traction you would like …
- Experiencing the growth and numbers you planned for …
- Getting the most out of your team, or your own time management …
And you’re generally working harder and longer than ever, and beginning to think you’re stuck in ‘hustle mode’… there’s a very good chance it comes back to your business model.
I have 8 Business Model tips for you, which I’ve discovered after working with dozens of entrepreneurs and CEOs, so you can:
Scale and grow easier (and faster) …
Get A LOT more productivity out of your team …
Have more time to work “on” your business (instead of being stuck inside it) …
Finally remove yourself as the bottleneck …
So let’s dive into the first tip, although if you prefer to watch, here’s an accompanying training video…
1: Cash Flow… the lifeblood of your business.
When you’re coming up with your strategy, you NEED to take cash flow into account. No exception, no matter who you are — whether you run a 7-figure business or are just starting out.
It blows my mind how few entrepreneurs think about cash flow when creating their business model, and it’s an issue we run into again and again when working with clients at 2X.
They come to us with a really solid business, and they are great at what they do, but they're stuck on the six-figure hamster wheel because they don’t have a hold on their cash flow.
And this isn’t just about how much money you have in your account. This is important, sure, but what’s more important is that you have more money coming in than what’s going out. Not only that… the money coming in should come in quickly, whereas the money going out should leave over a period of time.
Take how we approach cash flow at 2X…
The majority of our clients pay in full, up front.
Whereas a good portion of our team gets paid later based on results.
This means we always have really healthy cash flow, because the majority of our expenses come on the back of great results, which allows us to reinvest into our team and business, so we can acquire more customers… who give us more money up front… and this whole epic cycle continues.
It really is a beautiful thing, but we were VERY intentional about this when building our business model.
And doing this is easy, but so few entrepreneurs do it.
Take one of our recent 2X clients: a great agency run by Thomas and Catherine, who produce amazing results for their clients.
They should have grown month-on-month, but didn’t. They’ve been flat for a while and struggled to get to the next level because they never had enough cash flow. This wasn’t surprising, because they:
- Charged a small fee up front…
- A few weeks later, charged a ⅓ of the project fee…
- And then, at the end of the project (often two months down the line) charged the rest…
This meant they didn’t get paid the majority of their fee until AFTER they did all the work.
Well… we helped them fix this straight away!
Once they did, they more than doubled their business (practically overnight), and did this while Catherine went on maternity leave (and the whole family went on a big vacation).
2: Make YOU Replaceable… don’t be your own bottleneck.
Last year I sat around a table of entrepreneurs, sharing stories, challenges and ideas.
Five of us were all around the same level, but two of the guys were way ahead in term of success and business size. It was a talented table, and everyone around it shared great ideas.
But I noticed something important when we all answered this question:
“What’s the number one thing that’s holding you back at the moment?”
We went around the table, and one person said cash flow and another said acquiring customers, and we all had our own excuses.
But then it got to the two most successful guys, and they both said without hesitation,
“ME! I’m the bottleneck.”
The biggest bottleneck (almost without exception, in any business) is the CEO.
The reason is, most businesses are built around the founder. They rely on them to come up with the ideas and scale and grow, and often to even get everything done. When you’re at the beginning this is fine…
But the most successful businesses are those that create a business model that does the opposite: uses the founder as leverage instead of as a bottleneck.
The entrepreneurs I know who are making the biggest strides and growing the fastest are those who have designed their business model so it can scale without them (not rely on them to do all the work).
You need to make sure you’re replaceable. You have to hire a team and create processes that allow you to work “on” the business, not in it.
And a good way to gauge this is to ask yourself:
For most, just thinking about that creates a lot of anxiety, so if your answer isn’t that it would survive and thrive without you, then you DO NOT have a business model designed for true, scalable growth.
3: Focus on ONE Audience… stop chasing three.
The saying goes that the “person who chases two rabbits catches neither.”
The same applies to business, but it’s crazy how many entrepreneurs I speak to that tell me about their different offers and products … and really, all they’re saying is that they have 3 different audiences who all want and need 3 different solutions.
This is crazy.
It’s easy to try and please everyone, but in the same way you can’t catch two rabbits at once, you cannot truly impact more than one audience at any one time.
So let me ask you… what would happen if:
- You focussed on one audience…
- You knew this audience on a deep level…
- You communicated to, and built messages specifically for them…
- You designed a specific solution that creates true transformation…
You would make a massive impact, right?
Of course you would, and your business would go through the roof!
This is how powerful it is when you design your business model around ONE audience, because when you build ONE offer they need, you create magic. This leads us to the next step…
4: Build ONE Core Offer… and be known for that.
Once you know who your ONE audience is, the next step is to build ONE core offer for them.
Sounds simple, and honestly… it is!
But the reality is that most entrepreneurs struggle with this because they worry about niching down and committing to the wrong audience or offer.
You have to fight this.
The business model your company needs should be SIMPLE. It should be specific to one type of person, and solves their problem in a specific way.
Because as soon as you offer more than one solution, you dilute your marketing and message, and you create a ‘paradox of choice’ where your audience doesn’t know what they should choose — so they do nothing because it’s easier than trying to figure out the “right” answer.
This doesn’t help them and it doesn’t help you, so figure out what your ONE offer is for your ONE audience, and build your entire business model around this.
We practice this at 2X, because we have ONE core offer for one type of business owner.
Our core offer that everyone knows us for is our 90-day hands-on coaching program. It’s the same price for everyone, and it offers the same guarantees to all members. This keeps things SIMPLE, and helps us drive better results by optimizing and mastering ONE offer.
(we’ll do 7-figures in our first year with high profit margins, largely in part to this laser-focus on one core offering)
Most entrepreneurs think that ‘new’ and ‘more’ will save them. Often times, it won’t. Double down and make something great and you’ll be much better off.
This simple approach guarantees you become known for what you do, which is what we focus on next…
5: Own a Phrase… become the “go to” expert.
Once you have your ONE audience, you want to remove all competition and become the only “go to” expert they need (or even think about).
The best way to do this is to…
… OWN A PHRASE!
Let me explain…
Your ONE audience needs to see you as the ONLY solution to their problem, and the best way to do this is to own a relevant phrase so you remain top of mind, all the time.
I saw how crucial this is first-hand with one my previous businesses: Epic Launch.
We intentionally built our business model around becoming the “go to” solution for self-published, non-fiction, business authors when launching their book.
So we began to own the phrase… “Book Launch”
Everything we did focussed on “Book Launch”:
- Marketing …
- T-Shirts we wore …
- Copy (both inside our marketing, and sales pages) …
- Program names …
- Talks / Events / Networking …
- Internal communications and team meetings …
Everything we did focussed around the phrase, “Book Launch”.
And before long, anybody who had a friend who mentioned their book launch, and they were a:
- Business Author.
… straight away they would say, “you need to speak to Austin at Epic Launch.”
We owned this phrase, and it lead to consistently qualified ‘hot’ leads every single week.
But this didn’t just happen. We consciously focussed on our ONE audience with ONE core offer, and made sure we became ‘top of mind’ by owning a relevant phrase so they saw us as the only solution.
These three elements: audience + offer + phrase = insane results, and a business model that works!
So once you know your audience and what your core offer is, think about the phrase you can own that will keep you top of mind with them.
- What phrase will help you attract the right people?
- What phrase is both memorable and relevant to you?
- What phrase creates a positive association between your core audience and core offer?
- And how can you become the go-to for this phrase?
Figure this out, and you will dominate your niche!
6: Define Your Core Marketing Channels… and OWN them.
This is one of the biggest mistakes we see entrepreneurs make when it comes to their business model…
… They go all in, into one platform.
I love the focus and you should dial in one core lead source at a time…
… but putting all your faith into (and relying solely on) ONE marketing channel…?
A disaster waiting to happen!
A buddy of mine experienced this a couple of years ago…
He owned an ecommerce business that was on fire, growing quickly month-on-month.
But then his fast growth fell to zero as soon as his Facebook advertising costs doubled with some changes outside his control.
This, along with lower conversions and higher competition forced him to make some major investments in other forms of marketing.
All this stemmed from an over reliance on a single channel, and I’ve seen countless others do the same with Google, one JV partner, etc.
But what happens if an advertising source changes their algorithm?
What happens if a company goes away altogether?
You’ll wish you had multiple sources of leads …
(just like multiple sources of income is one of the keys to personal wealth).
Please, do not back yourself into a corner like this.
A successful business model does not rely on a single platform, form of marketing, partner or client. Invest in 2-3 marketing channels that drive consistent leads, and for each one you need:
- A great strategy — so you get the best results for the least effort…
- A system / process — so you can repeat and consistently scale with ease…
- An owner — someone on your team who takes charge and owns this channel…
- KPIs & tracking — so you know the numbers, and can keep your team accountable…
But you can only make this happen if you work “on” the business and are not stuck inside it, which is why everything we do at 2X focuses on removing “YOU” as a bottleneck, so you can make the right decisions every single day.
7: Get Your Numbers Dialed in… from the very beginning.
As CEO, your decision making determines everything. But you can only make right decisions if you understand the numbers and dial them in.
And here’s the honest truth…
The first time you do this, it may sting.
Honestly, most entrepreneurs don’t understand their numbers, and in the beginning when you're hustle and grinding, you can get away with it.
But as you evolve from hustling entrepreneur into successful CEO… you need to know your numbers!
You need this dose of reality, and you need to objectively base your decisions on the:
- Financial numbers…
- Core KPIs and measurables…
- Key data points…
This is why NUMBERS play a fundamental role in the work we do at 2X…
When we work with a new client, we start with their vision and goals and what they plan to accomplish, but then dive into their numbers and figure out if what they’re doing will help them achieve this.
And I’m afraid to say, most of the time the numbers don’t add up.
So do the math!
Does it add up to your goals?
If not, you need to change your strategy and business model, and you need to dial in your numbers so everything aligns.
Knowing your numbers is one of the most important things you will ever do as a CEO, although nothing we’ve talked about so far matters unless you do this final thing …
8: Align ALL This with Your Vision!
Building the perfect business model means nothing unless it aligns with your vision.
This is why the first thing we do with a new client is dive into what they TRULY want…
- Want a million bucks…? Great.
- Want more time with your family…? Fine.
- Want to travel the world and work from a laptop…? Sure.
Whatever your vision is… build the business model that will make this happen!
Use the other seven tips we talk about in this article, sure… but none of that matters unless you:
- Have a specific vision (that gives you purpose).
- Align your business model to this vision.
This is why this final tip is the most important of all, because unless you get this right, everything else will fall apart as you grow and scale your business.
Which is why VISION is central to our entire 2X Formula.
If you align your business model with your vision, you WILL build something amazing.
We’ve seen how powerful this process is at 2X.
We work with talented people each day who have a great business, but struggle to scale to the next level (and are burning out because all they know is to hustle and grind).
Yet within 90 days we help them 2X their business, and:
- Increase their revenue and profits like Ryan and Erik, who went from $6.5 million before they joined 2X, to more than $35 million while in the 2X program…
- Remove their key bottlenecks holding them back like Alex did, who learned how to leverage his time and team properly while working with us, and tripled his business in just 42 days…
- Optimize their team and improve their operations like Willem…
- Save them time so they can work “on” the business (instead of “in” it) like Thomas and Cathrine, who scaled their business while Cathrine was on maternity leave, giving them the work/life balance they desired…
We do this by guiding them through the 2X Formula, offering them 1-1 coaching and mentorship. You’ve seen part of this process in today’s article, but it only scratches the surface.
So if you want to see the entire 2X Formula in action, we’ve recorded an in-depth training that goes through it step-by-step.
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