Successful Entrepreneurs Reconceptualize
Year-end planning is passé. It's time to completely rethink your business.
By: Chia-Li Chien | Published 12/17/2009
Joan (not her real name) was my second client when I started my business. She was looking for new customers for her lace design and manufacturing company in 1994. I suggested she create a website and capture information from those who requested samples from her. Putting the website in place brought her an expanded list of customers, including some very large companies, and the ability to branch out globally. .
Today every business has a website, so that's no longer a way to stand out. Instead, Joan has a new product line she wants to distribute. She is currently selling through a QVC-style channel in Asia. But she wasn't sure whether to deploy this product line the same way in the U.S.
I suggested she take a step back and look at the overall marketplace. We examined her business model and reconceptualized it in a single day. Her initial plan was to distribute one product line with one revenue source. That required heavy capital upfront for the raw materials and manufacturing, and a heavy commission for the TV network. The net profit wasn't promising.
The new business model aligns what Joan and her company are best at--designing and applying the designs to any type of clothing--and her passion--making all women beautiful and creating jobs for single moms. Combining those two concepts yielded not one or two but a total of seven revenue drivers. She's putting up the same amount of money under the new business model. But the new model allows her the flexibility to grow.
There are three ways an entrepreneur can innovate:
1. Innovate your product or service.
2. Innovate your process.
3. Reconceptualize your business model.
The third choice--reconceptualize--will ultimately create the wealth for you and your company. Your business model will help you rethink both product/service and process. Most important, create additional revenue sources or diversify your revenue sources. For example, if a store that sells shoes adds boots to its product line, that's diversifying. The retailer is still selling shoes. However, if it adds a shoe-cleaning service, that's an additional revenue source.
From phone to phone card to Skype. Innovate your product or service. International and out-of-state phone calls were expensive 20 years ago. Phone cards were popular for a while. But the internet is much more accessible, and Skype was born. It's cheaper and more convenient.
From brick-and-mortar retail storefront to internet retail storefront. Innovate your process. We used to go to Barnes and Noble to buy books. Today people are more likely to buy books from Amazon.com. In fact, Amazon.com sells practically anything you need.
From product to platform. Reconceptualize your business model. Instead of having just a T-shirt design and print shop, Threadless.com created a platform. That platform allows designers to submit their designs, and consumers vote on them. Threadless.com prints only what consumers say they like. There's no design team overhead, the company doesn't produce products that consumers won't purchase, and there's no rent for a storefront.
If you've been in business for a long time, it's crucial to think outside the box and reconceptualize your business model.
Joan did not think outside of the box when she rolled out her new product line in Asia. However, by taking time to reconceptualize that model for the U.S. market, she stays ahead of the economic curve and creates a tremendous amount of value inside her company.
It's the time of the year when entrepreneurs check their year-end results and plan for the next year. Before you start planning your sales and financial projections for 2010, consider reconceptualizing your business model.
Chia-Li Chien, CFP®, CRPC, PMP; helps women entrepreneurs to convert their business into meaningful personal wealth. She is the author of Show Me The Money and columnist for WomenEntrepreneur.com & Fox Business online. She is available for consulting, speaking engagements and workshops. She can be reached at www.chialichien.com or firstname.lastname@example.org.
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