Changing your Business Model-Part 2
Yesterday, we taught you how to identify your current business model and then brainstorm some ways that you can expand your business by adjusting and expanding how you can consider some new business models and expand your business. These can be some game changers and might take some time to implement.
Here are some ways to make immediate changes that could increase your cash flow now.
Easy ways to increase revenue now
Offer prepaid services
If you provide services, can you introduce fixed-rate service agreements rather than charging fees by the hour?
The fixed-rate business model aims for predictable cash flow in advance. Customers paying by direct debit (you take payments from their bank accounts automatically through your bank) eliminate invoicing costs and debt collection issues. Some examples include:
A set monthly fee for maintaining a part of the business. The firm gains a reliable revenue stream and is betting that if the machine (or business itself) is maintained well, it will not exceed the monthly fee.
An IT business offers a 24-hour help desk service for a set monthly fee, regardless of whether the service is used or not. The IT service is now in the insurance business.
It is also possible to oversubscribe your services. For instance:
Gyms sometimes oversubscribe their memberships. If all their members turned up at the same time, these gyms would not be able to cope, but the owners know this is highly unlikely.
Try to identify possibilities for charging fixed monthly service levels. Worst case scenario? You have to hire more help and your business expands!
Can you move more of your business online?
Can you earn additional revenue by taking your whole business online rather than just treating a website as another distribution channel? For example:
A retailer decided to give up her high-rent storefront altogether and focused on website selling. She used to hold a large inventory and wait for customers to purchase items, but her new business model doesn’t require inventory—a huge cost saving. She passes orders onto a wholesaler who takes care of shipping. In effect, she’s now a virtual retailer—no inventory, no location.
A training company built its reputation on running physical workshops for large corporations. The company has now moved all their training online, charging participants a license fee to access the training lessons. This enabled the company to lower its costs and reach a worldwide market.
The power of giving away free samples
The Internet has greatly expanded this model because its reach is so wide. Businesses now give away significant samples intending that a small percentage of customers will buy additional products. For example:
Software companies offer free ‘light version’ apps or programs in the hope that a small but significant percentage of customers will go on to pay for an upgrade. It’s a simple numbers game.
Google gives away many of its products such as Google Search, Maps, Translate, and News to attract people to its pay-per-use services. More visitors also enable Google to generate massive advertising revenues.
Think about how you can apply this model to your business. Your ‘give away’ could be some valuable information offered online through various websites that attract interest and leads to sales opportunities.
Want to chat?
If you want some guidance on future plans for your business, we are here to help.
