Tag Archives: 80:20

Develop a Standalone Business Model

With my background in franchising, it’s quite natural for me to look at just about every business and wonder what the ‘model’ is behind it. What I mean by this is – what do the cogs look like; what do they do and what results do they generate. I have to look at businesses in a structural way, because that is why franchising is a successful growth or exit model: it’s about finding a winning formula, sticking to it and repeating it over and over.

A trap that most business owners fall into very early on is in trying to do everything themselves for one of two reasons: 1. fear of losing control or 2. not trusting that anyone else can do the job properly. The biggest learning for a business owner to latch on to is to build a business that does not depend on him/her.

Even if you have not franchised your business, you should be following the principles – starting with removing yourself from your business. This is your first step to creating a Standalone Business Model.

Do you want to be frazzled for most of your business life because you can’t walk away for a few weeks? No? Then ask yourself some of these questions which will help you to make a good start to identifying what you can automate in your business:

What are you doing right now that can be delegated?

Make a list of what you do today – everything, down to filing, reading emails, opening post, stamping something etc. Bear in mind processing of enquiries, sales meetings, staff management etc. This will lead you on to the next question…

How much of your business is outsourced right now?

You may already have done an exercise this year to see what you could streamline and where you could save on overheads and staff time. If you have – make a list of what these things were and also look at what you have experienced since actually outsourcing those things (benefits/payoffs). What else are you doing that could be outsourced?

What do you do every day that is repetitive behaviour?

The way to find out what works and what doesn’t is to look at which actions or activities bear which fruits. So, what are you doing that actually doesn’t contribute anything directly to your bottom line? How can you change this and create an action or activity that turns it around and does add to your bottom line?

You may also have certain activities that you HAVE to do, which DO bring in direct business and/or sales – and these need to be repeated and actioned more! This will form a part of working out what your winning formula is.

What are you doing in one area of your business that you can easily replicate elsewhere?

You have some areas in your business that are running really well and very smoothly. Ask yourself what you are doing right in those areas and find a way to replicate the process or structure that you are using there on another area.

If you can answer these questions in your business, you will be ahead of the game in formulating what business model you are working with and be in a better position to establish how to develop it to be less dependent on you…even if you have to put some things in place that will only create a Standalone Model in a year’s time.

Be smart. Review your model frequently to ensure business longevity and more importantly…your sanity.

The 80:20 Rule at Work

Many an enlightened business owner will preach the benefits of working to the 80:20 Rule. In essence the rule outlines that 80% of the results are caused by 20%of the actions themselves – or in plain Pound or Dollar terms: 80% of your revenue is derived from 20% of your clients.

This is a great rule to have, but very few people are applying it – especially people in the one-to-one professions of consulting, training, coaching etc.

With every new client I go through a very simple exercise of ‘time management’ and ask the simple questions of:

  • How is the majority of your day / week / month spent?
  • How much of that should you NOT be doing at this stage in your business life cycle?
  • How much of your time could be released for more income generating activity?

My key point here is: when we start up in business we jump on that old treadmill (much like the one we were on as employees) and do what it takes to get business in and food on the table. Unfortunately not enough of us take stock every year to see how we have moved on and whether our business model needs tweaking.

This is a vital step when you are looking to grow or indeed exit your business at some point. In a franchise scenario, a prospective franchisor goes through this activity pretty rigorously because a solid franchise business plan has carefully worked out its ‘Winning Formula’ and can very clearly identify the priority activities and how much they bring into the business. Any activity that is highlighted as administrative or supportive, the franchisor will look at providing a solution that covers these needs, so that the franchisee will be freed up to heighten his/her income generating potential.

My advice to ANY business owner is to pretend that you are creating a franchise model. Why? Because you have to do the following:

  1. Document your business (spend time looking at your current way of doing things)
  2. Streamline where you can (reduce costs and increase your propensity for profit)
  3. Remove YOU from the equation (the business must not need your daily input)
  4. Succinctly identify your target client market
  5. Review your pricing strategy

These are steps I highly recommend any business owner undertakes. You will add value to your business for one thing, and for another you will have taken the time to work out what is making you the best return and stop doing whatever is wasting your energy and time. That, to me will bring you closer to your 80:20 rule of working.