The first environmental forces block is related to the market forces of the customer segments in your Business Model Canvas. The purpose of the “Market Forces” block is to verify that your model is in line with the evolving needs of your chosen customer segment. When you are looking at market forces, you should start […]
Market Forces and the Business Model Canvas Read More »
When you have completed the 9 blocks of the Business Model Canvas, you may have a well thought out business model. However, will it stand up in the real world? In the real world, your business will compete for market share and fight for survival every day. For the most part, the 9 blocks that
Four Environmental Forces Affecting Your Business Model Canvas Design Read More »
Many clients I speak to are looking for a home run or flagship clients. Their logic is since it takes the effort to sign up a new customer, why not sign up a few large customers vs. many small customers? However, this is a misguided goal of building a healthy business. Ideally, you would like
Too Much of a Good Thing Read More »
When a business advances from stage 3 to stage 4, the business transformation is nearly complete. During stage 4, company decay can often begin to set in as the administration of the business is placed in the hands of a “guardian.” The primary motives of the business guardian are comfort and security. Unity towards a purpose
Stage 4: The Guardians of Business Read More »
For a business to advance from stage 2 to stage 3, the business undergoes a substantial shift from being on the offensive and growth-oriented to becoming more defensive and focused on process improvement through business segmentation. The business segmentation associated with stage 3 sets up the business for shared leadership and management by creating multiple
Stage 3: The Athletes and Performers of Business Read More »
For a business to advance from stage 1 to stage 2, the business requires that the role of the Oracle be supported or replaced by a business development person. I refer to this new leader as the “General.” In our McDonald’s example from a previous post, it was a guy by the name of Ray
Stage 2: The Generals of Business Read More »
Stage 1 encompasses the pre-start-up and early start-up period of a business. A company is started by a founder who is essentially the idea person behind the business. I refer to this person as the “oracle. In classical antiquity, an Oracle is a person who can see and predict the future. The Oracle of a
Stage 1: The Oracles of Business Read More »
People leave the lights and T.V. on in hotel rooms all the time. There are no economic consequences for leaving them on like there are in your house so why not? Hotels sometimes leave messages on a card in the bathroom or on the nightstand to appeal to a person’s desire to be more environmentally
What is Choice Architecture Read More »
The year was 1990. Microsoft just released its first successful version of the Windows Operating System. The TCP/IP protocol went global and the internet was now within reach of users with a personal computer in their home. Prodigy just went public and launched a marketing campaign with a war-chest worth nearly a billion dollars and
A Better Path to the Customer Read More »
The other day I was asked if a person’s idea would make a good business. Unfortunately, I had to tell them that it would not be a good idea for them to pursue. While the idea might have been a novel and been a successful venture in the right hands, they didn’t have access to
Your Best Chance to Succeed in Small Business Read More »
Customer relationships can be either; face-to-face (like buying a car), phone (like Zappos), automated system (like Dell), or self-service (like WalMart).
Customer Relationships and Your Business Model Read More »
When we refer to channels in the Business Model Canvas, we are speaking about marketing channels or distribution channels. Here are 5 you should address: 1, Awareness 2, Evaluate 3, Purchase 4, Deliver 5, Customer Support
Channels and Your Business Model Read More »
The second step in creating your Business Model Canvas is to identify your value proposition. What is a value proposition? Simply put, a value proposition is a collection of products and services a business offers to meet the needs of its customers that helps to differentiate it from its competitors. For example, several manufacturers offer
Value Propositions and Your Business Model Read More »
“For whom are you creating value?” Sometimes that answer may be a bit complicated.
Customer Segment and Your Business Model Read More »
The Business Model Canvas is a strategic management and lean start-up template that a business can use when developing new or documenting existing business models. Basically, it is a visual representation that describes the nine critical elements of a firm’s product or service offerings.
The Business Model Canvas Series Read More »
In thick markets, you have a lot of competition and limited differentiation while in thin markets you have limited or no completion based on product or service differentiation.
Thick Market vs. Thin Market – What You Need To Know Read More »
There are four questions that every product or service company needs to ask before it embarks on a new business or product line. 1. Do customers recognize they have a problem?2. If there was a solution to their problem, would they buy it?3. Would they buy it from us?4. Can we build it? When I
Four Questions Before You Start Something New Read More »
A fellow mentor who is an expert in retail once shared with me that opening a shoe store is one of the riskiest businesses to start and operate because there are so many bad assumptions you can make. In a typical main street brick-and-mortar shoe store, you have to select and stock the proper proportions
How to Learn Demand: Zappos Story Read More »
Leap of faith assumptions needs to be identified and tested early on so that the company can make better decisions instead of incurring significant expenses by going down the wrong path. Unfortunately, our government does not subscribe to testing assumptions before spending billions of dollars of taxpayer money. For example, take the main assumption that
Sometimes managers get too comfortable with their jobs and build internal walls to control knowledge in the hopes of making them indispensable to the company. The result is the company begins to stagnate. To combat this thinking and spur innovation, Jorma Ollila, CEO of Nokia, implemented a job swap program. Nokia adopted an everyone-out-of-your-comfort-zone management
Never Get Too Comfortable Read More »
Business Management Is Often Not Focused On The Right Elements Of Success. Sometimes You Have To Suspend Your Belief Systems To Reevaluate Your Business
Is Your Business Focused on the Right Things? Read More »
New business owners often ask me how they can learn more about back-office functions and business costs. The answer I always give them is the same: trade associations. Trade associations exist to share best practices and industry-specific knowledge with their members. Because memberships in a trade association cost money, many startups defer joining them. In
Trade Associations Read More »
When I grew up in Massachusetts, I remember reading a story about Joe Kennedy. He would go up to owners of older drafty apartments in downtown Boston and make them a unique proposition. Many of the units were poorly insulated and cost a small fortune to heat in the winter. Joe would agree to insulate
Capturing Value in Nontraditional Ways Read More »
Fifty percent of Americans over 18 years of age drink coffee every day. That translates into 150 million daily coffee drinkers that consume 400 million cups per day. Not long ago, brewing a cup of coffee at home or at the office involved purchasing a coffee pot from one company and ground coffee from another
Keurig’s New Business and Economic Model Read More »
Many local ecosystems have initiatives and programs to foster innovation in their own community as a way to grow new technology or manufacturing companies. They do this in the hopes it will bring in new money as the primary employer grows to maturity. However, sometimes it is not the product that generates the revenue, but
New Product vs. New Economic Model Read More »
Primary & secondary employers are vital to local ecosystem, One brings new money in and the other keeps money local, However each is treated different,
Ecosystems: Primary vs. Secondary Employers – Why You Need to Know Read More »
Sometimes the best ideas come from just looking at another industry and applying their lessons to your business. For example, when Henry Ford visited a meat packing plant, he saw how a side of beef was placed on a trolley and as it traveled down a track, a line of butchers each performing a single
A Source of Innovation Read More »
Are You Looking Into the Wrong End of the Telescope? That’s What It’s Like When You Focus More on Protecting Your Idea Than Sharing It. Innovation Thrives on Collaboration, Yet Too Many Inventors Get Stuck Getting Patents to Protect Their Ideas vs. Bringing Their Vision Into the World. A Great Idea Isn’t Valuable if No One Ever Sees It.
Don’t Flip the Telescope: Focus on Execution, Not Protection Read More »
My wife would say that the greatest way a man can ever show a woman he loves her is to buy her a diamond. This drives me crazy because the entire narrative that diamonds represent romance is pure marketing hype that almost everyone has bought into. Did you know that the tradition of giving a
De Beers, A Story About Controlling Supply and Creating Demand Read More »
A few weeks ago we spoke about the negative effects that can result from not appreciating your employees when we discussed the story of Benedict Arnold. On the opposite side of that same coin, I would place Mary Kay Ash of Mary Kay Cosmetics. At the core of her business model was employee appreciation. She
Recognition on Steroids Read More »
In business, many of the most promising and productive individuals have fragile egos. As the owner of a company, you need to be able to recognize and reward behaviors from employees that move the business forward or risk creating a Benedict Arnold in your own ranks.
Recognition Or Doom – Failing To Recognize Outstanding Performance Is A Colossal Mistake Read More »
I own a solid orange polo shirt and often wear black suspenders. Being a DIY kind of person I often make trips to a local hardware store to buy materials or tools for one of my projects. On more than one occasion I have worn this combination to a local Home Depot store and been
What Color is Your Brand? Read More »
I was reading an article the week after Christmas that referenced “Boomerang Thursday”. I was aware of Black Friday and Cyber Monday, but not Boomerang Thursday. It turns out that this is the day that people return unwanted Christmas presents. Doing further research, I discovered several important business lessons related to Boomerang Thursday. First, the
Boomerang Thursday Read More »
The online retailer Zappos is known for its top-shelf customer service. One way Zappos excels at customer service is the amount of flexibility and discretion it gives its customer service representatives to make the customer happy. Hiring and training the right customer service representative makes all the difference between success and failure at Zappos. Zappos
What You Can Learn from Zappos Read More »
One of the goals of this blog is to help entrepreneurs think about common problems in totally new ways. To that end, I would like to introduce you to Takeru Kobayashi, who as a rookie in 2001 smashed the world hotdog eating record simply by rethinking the problem. Up to that time, the record for
Rethink The Problem Read More »
Every few years my wife and I return to Seattle, where we got married. One of my favorite places to spend a few hours is the Pike Place Market. On our most recent trip, I was reminded of a lesson in the importance of location. Parking off Alaska Way and taking the elevator to the
Location Location Location! Wait, Maybe Not… Read More »
Flipping through the channels the other night I stopped to watch a Jackie Chan movie on TV. As I watched one of the fight sequences I could not help but see many correlations between fighting and operating a small business. First, my attention was drawn to the speed of his movement, which I equate to
How to Create a Knockout Read More »
Every Business Wants to Grow, but the Real Challenge Isn’t Just Getting Bigger—It’s Growing the Right Way. Should You Focus On Selling More to Existing Customers or Reaching Entirely New Ones? The Answer Can Mean the Difference Between Sustainable Success and Hidden Risk.
How Should You Grow Your Business—Horizontally or Vertically? Read More »
Customer acquisition costs often account for a large portion of your product or service costs. Smart entrepreneurs look for ways to get paid more than once by the customer to make the most of their customer acquisition costs. I used to sell a video series to educate investors only on DVD. Once the sale was
Get Paid More Than Once Read More »
There is a bit of an injustice in the way entrepreneurs are told about the business planning process. First, new entrepreneurs are told that to get money from a bank they need a business plan. While there is some truth to this, a major missing piece is that they will likely not get any funds
Increases in the cost of living affect low-income households much more than higher-income households. Therefore, the effects of our government’s monetary policies to control the cost of living are most visible at locations where low-income households shop, such as McDonald’s. If low-income households have less discretionary income to buy a burger, it is an indicator
McDonald’s Economic Bellwether Read More »
Often I encounter clients that want to produce a product or service on the low end of the price window in the hopes that lower costs will mean more business for them. However, being the low-cost provider is not the best place to be unless your value proposition is clearly operational excellence. This is because
Operational Excellence – Why Quality Pays Read More »
When you send a package through the US Postal Service (USPS), you can buy insurance in case they lose your package, or you can save the cost and not purchase the insurance. If you do not buy the insurance it does not mean that the USPS will treat your package any differently. However, with insurance,
Buying the Right to Sue Read More »
I recently read an article talking about the school voucher program and how it would force schools to be more competitive. While I think there is some merit to the school voucher program there is a much more important business lesson here. A school voucher program would mean that parents could send their children to
We all know that at the Battle of Waterloo Napoleon was defeated by the British. The British victory would have a dramatic effect on the financial world. News in the early 1800’s traveled slowly by today’s standards. Baron Rothschild headed up a large financial empire, and news of a French or British victory would have
Speed of Trending Information Can be Critical to Success Read More »
Henry Ford’s new assembly line process, while very efficient for its day, was just too much for many of his new workforce. While his workers were much less skilled than their craftsman predecessors, they did still require some level of training and a breaking-in process. If after only a few days on the line the
Longhorn Cattle were introduced to the Americas by the Spanish between the 16th and 18th centuries. The cattle industry back then was primarily a small-scale industry. Beef was not very popular, so cattle were raised primarily for the value of their hides. Because there was no refrigeration, any cattle used for beef had to be
What We Can Learn From The Texas Cattle Industry Read More »
Most decisions we make have both tangible components (ones that can be easily measured) and intangible components (ones that are very hard or impossible to measure). For example, let us consider the Federal Minimum Wage debate. On the tangible side, we can see that taking home more money for an hour worked should lead to
Tangible vs. Intangible Measures Read More »
It is important to periodically benchmark your business against others in your industry and/or in your local area. A free tool that is offered by the SBA called “Size Up” can help. Once you select your industry and location, you can enter data about your company and compare it with your peers to see how
Free SBA Tool to See How your Business Stacks Up Read More »
I think we would all agree that making a profit is the incentive to take risk through investments. Moreover, it takes investments to stimulate innovation. But innovation creates productivity gains, which in turn eat into profit. For example, a tractor that costs as much as the labor cost for 150 workers, but which can do
Who Really Benefits Most From Business Investments? Read More »
The sustainability of your business revenue is important to understand if you want to keep your business solvent.
Not All Business Revenue Is The Same Read More »
In the news, you often see that the US accuses China of being a currency manipulator by artificially keeping their currency low. If their currency were allowed to rise, goods produced in China would get more expensive in the US and we would buy less of them. Higher prices would mean that Americans would have
How to Leverage China’s Currency Manipulation to Your Advantage Read More »
A trade deficient or a trade surplus unto themselves are not necessarily bad things. A trade deficit simply means that you buy more from your trading partner than he buys from you. The opposite is true with a trade surplus. You have a trade deficit with Wal-Mart, but a trade surplus with your employer. If
Understanding the Trade Deficit for American Business Read More »
Labor is a major component cost of any product or service. The lower the labor costs, either the wider the margin or the cheaper the price of the product or service. Cheap labor can be had by either opening our borders to immigrants who are willing to work for less, or by outsourcing. I contend
Immigration vs. Offshoring? Read More »
Let’s explore an extreme scenario. If you could get all the labor you need to run your business for free how much of it should you buy? I would say “use all the free labor you could get” since with no labor costs your company and more importantly its owners can earn a higher return
Is Offshoring Work to India and China Really a Bad Thing? Read More »
3 types of Investment risk. Greater risk = great rewards. Range = Inventory, least risk/reward, thru production equipment, to innovation most risk/reward.
Understanding the Investment Risk Continuum Read More »
As a hunter, I appreciate a buck with a large set of antlers. However, it is not the absolute size of his rack that makes him able to defend his does from his adversaries, but his relative size to the other bucks. As the saying goes, “You do not need to run faster than the
Absolute vs. Relative Values Read More »
Many people falsely believe that people are motivated by money. The truth is that people are motivated by their relative social or professional standing, aka “status”. To prove this point, consider the great lengths people are willing to go to become a famous movie star or a professional athlete. Money is simply a means to
People are Not Motivated by Money Read More »
The owner, or the person that invests in a new business, gets paid out of the business’ profits. An employee gets a guaranteed wage paid by the owner/investor. Therefore, the employee cares about getting a paycheck, while the owner cares about the ongoing success of the business and profits. We own a few income properties
Owner vs. Employee Mentality Read More »
Small businesses generally discount their negotiation position when dealing with a larger company. Basic economics would dictate that if you provide more value in an exchange you should be compensated. Consider the hotdog vendor in front of Home Depot. I postulate that Home Depot derives more value in that exchange than does the hotdog vendor.
Don’t Discount Your Position Read More »
Three-quarters of all firms in the United States are categorized as “non-employers”. Non-employers are business that provides work for only a single or part-time owner. While small businesses which employ many people are usually started in response to marketplace opportunities, non-employer business is often started as occupational decisions. They can be a way to deal
How to Leverage a Turning Tide Read More »
Sales opportunities exist in a declining market. When consumers cut back they look for savings. Try to repackage or reprice offerings to take advantage
How to Make Money in a Declining Market Read More »
Americans are fixated on how much they make. People use their salary as a report card of sorts to compare their success to others. The problem is that income is often a poor measurement of success since it is decoupled from a person’s standard of living. It is not how much money you make, but
Salary vs. Standard of Living Read More »
Everyone deserves a living wage, but the wages earned by an employee should be directly proportional to the value they provide to their employer. A pay raise should not be based on how long a person has worked for an employer or some government mandate. When my kids have come to me and asked “How
Do Your Employees Know Their Contribution? Read More »
Sales Volume is just one part of your Economic Model and works in concert with margins. Sales volume is simply the number of units you sell in a specific period of time, say in a month. You can be just as successful if you have a high-margin low-volume business as you could with a low-margin
Understanding Sales Volume Read More »
Margins are just one part of your Economic Model. Margins can be defined simply as the difference between your Direct Cost to deliver a service or a product (often called COGS or Cost of Goods Sold) and the price you charge the customer for that product or service. The basic coffee you buy at Starbucks
Understanding Margins Read More »
Revenue Drivers are just one part of your Economic Model. Revenue drivers are how many ways you have to separate your customer from his money. A few years ago, I went to the Dixie-Stampede while I was in the Great Smoky Mountains. The ticket price was a reasonable $45 per person, which is a sensible
Understanding Revenue Drivers Read More »
Most clients I see can clearly articulate their Business Model, but struggle when it comes to describing their Economic Model. Simply put: Amazon and Wal-Mart share a similar low-cost, wide-selection retail model. However, their Economic Model is quite different, since one business is a virtual store and the other a physical store. Within the Economic
Understanding Your Business vs. Economic Model Read More »
Every Business Model Needs to Leverage Something. That Special Leverage Could Be A Unique Skill, A Special Tool, Or Proprietary Process.
What is Your Special Leverage? Read More »
One nice thing about mathematics is that it is the same in every language and has only one solution to a problem. Wouldn’t it be nice if every problem had only one correct answer and, so long as you knew the rules, you could find that one true answer to every question? Successful entrepreneurs understand
The Path To Success Is Paved By Math Read More »
As an entrepreneur, you need to make sure your efforts are directed and focused on the right target to achieve your desired outcomes. For example, one of the goals of law enforcement is to reduce illegal drug usage. To that end, law enforcement agencies target drug dealers in the hope that these efforts will reduce
Are You Focused On The Right Target? Read More »
Are You Running Your Business Blindfolded? Without Measuring Results and Tracking Feedback, You’re Guessing Instead of Growing. Learn How Feedback Loops Can Help You Make Smarter, Data-Driven Decisions That Lead to Real Success.
Why Most Entrepreneurs Fail Without Feedback—And How to Fix It Read More »
