[00:00:00] Fiona Johnston
If you are more interested in being right than getting it right. You are gonna struggle to be a successful business owner. There is no amount of marketing that can outrun the wrong business model. There's no amount of productivity or automations that can outrun a broken business model. But what I think we need to think about most with our business model is what do we wanna spend our time doing?
Intro
If we want to be able to tip the scales towards the favor of marginalized people, we need to understand the secrets. To making money in small business, the more we talk about money and the secrets that usually stay at the golf club, the more likely we are to be able to make money. My mission is to get more money into the hands of good people, specifically good business people like you. This is Money Secrets, the place to learn about the money secrets of successful small business owners. Let's go. [00:01:00]
Acknowledgement of Country
This podcast episode was recorded on the lands of the Wie people of the KO nation, and I'd like to acknowledge them as the traditional owners and custodians of this land and water that I live, work, and play on. I'd like to pay respects to elders both past and present, and notes that sovereignty has never been seeded. This always was and always will be. Aboriginal and Torres Strait Islander land.
Fi
Hello. Hello. I hope you're all really good. Okay, so this session is about choosing your business model wisely. So let's first talk about the concept that there is no amount of marketing that you can do that will help if your business model is not right for you. So what marketing does is it brings people into your ecosystem so that you can sell to them.
Marketers would want it sound much more sexy and interesting than that, but essentially that is the purpose of [00:02:00] marketing will even become selling doesn't business model. Selling more of it isn't help. If we're having cashflow problems, we think that what we need to do is work on our marketing. If your marketing doesn't fit your business model, more marketing won't help.
And when we're talking in Good Money Club about our unique value propositions, and sometimes I'm talking about, you know, some of your unique value propositions sentences will be meat and potatoes like accountant or you know, theater producer or marketer. And then some of your unique value propositions will be.
More descriptive, more, you know, using adjectives, talking about your specializations and your secret sauce. But if you are not talking about those, like we've just had two [00:03:00] examples in the group. Lauren is doing so much more than what other theater producers do for their clients, and Abby is doing so much more for her LinkedIn retainer clients than they realized.
So these are the things that we need to explain in our marketing. So that we're gonna attract the right clients again. Another thing that business owners will often do is we'll focus on trying to bring in more revenue streams. And you'll see this on Instagram and LinkedIn talking about how you need to have multiple revenue streams for your business.
But I disagree wholeheartedly with this concept because when you're a small business, every single revenue stream that you bring in requires marketing and delivery. And customer relationships and customer service. And yes, having multiple revenue streams can be really helpful in certain circumstances, but when you are a small business owner, [00:04:00] bringing in more revenue streams from different clients isn't necessarily going to make you more money or make your business any easier to run.
What will help you to make more profit, to bring revenue in more easily? Because you are actually working with the right clients is to have the right business model. So the right business model helps you to work out how to price your products and services to match your ideal client's desires and your income goal.
So last week, some of you came to the training around the value proposition map. Which is where we look at what are the problems and desires that our clients have, and how do our products and services actually meet those? How do our products and services actually make our clients' lives and businesses better, right?
So when you have the right business model that helps to [00:05:00] define your ideal customer and it helps you to hone in on what's actually valuable for them. So for Lauren's clients, what's valuable might be that they don't have to worry about where the puppets are, that they know that Lauren is watching the shipping consignment, that's explaining where the puppets for the theater show are.
You know, but if we're not talking about that in our marketing and in the way that we position ourselves, we're gonna be bringing on clients that, that aren't looking for that full service and therefore aren't willing to pay for it. So when your marketing and your business model go together, well, it is like peaches and cream.
So when you think about your marketing and your business separately, it means your marketing isn't gonna be attracting the right kind of clients, and it's gonna mean that your delivery is really inefficient because you're trying to kind of make bespoke products and [00:06:00] services for these clients because they're not actually the right clients.
And so even though Good Money Club is a program about money, of course we're always talking about marketing too, because marketing is how we get the clients to come towards us to then become future clients. So when you think about your marketing and your business strategy or your business model, they're like sisters and they work really well.
Sisters who like each other, um, they work really well when you're actually putting them together rather than keeping them separate.
So again, there's no amount of productivity or automations that can outrun a broken business model. And I see so many business owners thinking that the solution to all of their problems is automations. But let's talk about why that might not be correct. So being faster at the wrong things is not gonna help you, [00:07:00] right?
And this is what I see so many of us doing. If your products and services aren't leveraging your unique value and they're not attracting the right clients, it just means that you are gonna get really fast at delivering things that nobody wants and nobody values. It's like the difference between being helpful and valuable.
We don't wanna be helpful. Helpful is how we describe people who are volunteering or caring for friends and family. Valuable is what we wanna be because valuable is doing things that people wanna pay for. Again, being productive is really great, but spending eight hours a day working on something that doesn't actually make your business more profitable or easier to run or more fun is just prioritizing busy work for no reason.
I see so many founders trying to make more money by focusing on [00:08:00] productivity tools and automations without considering how this creates more value for your clients. So automating valueless activities is not going to help you. What is gonna help is when you have the right business model, because it is gonna supercharge your return on effort, which is one of my favorite things to think about.
What is the return on effort here in all aspects of your business, from your pricing to your team, to your operations? When you have your business model set up right, it'll have you working on the right activities, and once you have got this nailed, then you can automate the shit out of your business. You can turn on all the productivity and automations, and you can use AI, and you can use zaia or whatever it is that you are wanting to do.
But there's no point in putting effort into something like that if you don't actually know or you can't explain [00:09:00] how automating that is valuable for your client. So what we really need to think about with our business model choice, and just to be clear, there's not like categories of business model.
It's not like you are this, you are that. You are the other thing. Every business model is completely unique. Similarities to different business models. So each of you have completely unique business models because they'll be, you'll have different unique value propositions, you'll have different ideal clients, but the way that you deliver your work might be similar.
So just letting you know there isn't like A, B, C, and D and you tick a box, and that's the one that you're Business models are much more complex than that. What I think we need to think about most with our business models is what do we wanna spend our time doing? So as business owners, these are some of the things that we [00:10:00] spend time on.
I've tried to capture most of them, marketing and communications, sales and relationship building, delivering products and services, managing, recruiting or leading a team that could be contractors, manufacturing or sourcing products. Systems, technology and automation, learning and development, managing money, compliance, legals, insurance, admin.
These are kind of like the things that we spend our money and our time on as business owners. I want you thinking about which parts of your business do you actually like. Spending time on
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Fi
So let's look at a couple of different business model categories, if you wanna call it that. So let's start with a highly paid consultant and how they spend their time. Now, does anybody often see those posts that say, stop charging an hourly rate, stop charging. You know, exchanging time for money that's never gonna get you anywhere.
Bullshit. That's absolute bullshit. Exchanging time [00:12:00] for money is what business is and how you decide to capture that value and afford your income is totally up to you. What people don't say in those kind of posts is that it's all about the hourly rate. So if you kept your hourly rate the same for 20 years, of course you're not gonna be growing your business.
But if you increase your hourly rate over time, as I have done, and a lot of people in this room have done, you can choose to charge by the hour. There's nothing wrong with charging by the hour as long as the hourly rate you are charging. She recognizes the quality of work that you do. So a highly paid consultant, and I think this actually covers quite a few of you.
Um, you'll probably spend about half of your time delivering client work, and that's why I talk about your capacity being somewhere around 20 hours a week of client work. About half of your time will be spent on [00:13:00] that. You'll probably spend up to 20% on marketing. 30% of your time will be all the faf that nobody can even really calculate.
Just all the other things that you do. Learning, doing your insurance, I don't know. Um, paying bills, all of the things that come with running a business. So if you don't love spending a lot of time on marketing, this is the kind of business model that's gonna work for you. Because when you have clients that are paying you 2, 5, 10 KA month or whatever the numbers are, you don't actually need to be finding a lot of clients.
So this kind of business model works on having higher fees and less clients, right? And this is a great way of running a business, but it, this is the sort of thing that the coaches on the internet will tell you is not a good business because there's no way that they can monetize it for themselves. So if you [00:14:00] see coaches or consultants online talking about how running a business as a consultant or being paid by the hour or doing retainers isn't the right way of doing things, it's probably because they're trying to sell you some other way of doing business that they make money from.
So this is a great way of running a business. And the book Company one is a really great, um. Blueprint for, for how to do this and the focus when you are this kind of business model where you are a solo business owner, is that you are focusing on better, not bigger, so better hourly rates, better quality clients, better work, better quality of work, rather than focusing on growing your team or growing your client base.
This is what it looks like for an online business owner. So an online business owner is [00:15:00] somebody who makes a living from coaching, training, downloadables, that sort of thing. A lot of my business is like this. I've got a kind of a hybrid business model where this is kind of half my business. And the consulting, uh, business model I just showed you is kind of half my business.
By the way, I don't recommend having a hybrid business model because it, it's quite confusing. It's just kind of how I've ended up. But when you are in this kind of business model, you need to love marketing. If you don't love marketing, do not become an online course creator, because marketing will be what you spend most of your time doing, and 20% of your work will be actually delivering to your clients.
Now, this is an exaggeration. Some online business owners will probably have a slightly different mix, but it's something like this where because you need volume clients, you need a [00:16:00] lot of clients coming into your ecosystem to make your business work. Therefore, you need to do a lot of marketing. Whereas when you are a consultant, um, or a freelancer or a service provider.
Your clients are bigger fees, so you need to attract less clients, which is why you spend less time on marketing. This is what it looks when you run an agency. So if you are somebody who is building a team of service providers to work underneath you, um, your time is gonna be.
Go into the work that they do because they love delivering the service, and then they grow an agency where they have all of these team members underneath them and they realize, actually, I don't really get to do the delivery of the [00:17:00] service anymore. So if that is where you are heading with your business, you need to think about that.
Like if delivering the actual service is what you absolutely love. Then trying to build an agency or a big team to deliver the services might not feel good for you anymore. So when you are an agency, you need to be working on marketing and business development and branding probably about half of your time, and you'll be spending the other half of your time managing your team.
Now, this works beautifully for people who want this kind of business. I meet a lot of people who want to grow a team and an agency, but they hate managing people. And it's like, babe, that's what your job is gonna be if you become an agency owner. And yes, it is possible to outsource some of the people management, but not all of it.
[00:18:00] So that's just something to consider is do you actually enjoy managing, mentoring and kind of supporting a team? If so. An agency is probably a great idea for you how an e-commerce business spends their time about the same as an agency, but it's just that it's slightly different skills and time, but about half of your time is probably gonna be spent on marketing or um, liaising with the people doing your marketing for you.
Because e-commerce businesses are all about volume. Because if your average sale is a hundred dollars, you need to sell a lot of hundred sales to get to your revenue goal. So therefore, marketing and advertising is gonna be a really big part of your job as an e-commerce business owner. And depending on the size of your business, you're probably gonna spend the other ti other half of your time.
Managing your team or delivering [00:19:00] the products. I don't mean literally getting into a car and delivering them to people's houses, although maybe that is what you do, but actually kind of moving the products kind of through the business. This would also include procurement and kind of buying or manufacturing stock if that's what you're doing.
But again, a lot of eCommerce business business owners get into it.
Producing the product. They love the marketing, but they don't love managing the team. So that's something to consider, that it's always gonna be part of your job. Even if you have other people helping you manage people, it's still gonna be a big part of your job as a product business owner.
So those are just some really broad based business model kind of categories. And I think all of you will have seen yourselves in one of those. [00:20:00] I wanna just end this session by talking about the fact that your business model is your secret weapon for profitability and impact. And this is the thing that almost no small business owners put any time into.
A lot of people think they understand what a business model is, but they're really just thinking about a revenue model. Because your ankle money club and you know that it goes a lot deeper than that. We know that a business model is much more than just how you make your revenue. It's also how you spend your time, what resources you need inside your business, what kind of partners and suppliers you need, you know, a relationship with what you need to do well, how you're going to take care of your clients, yada, yada, yada.
So these are the kind of things that are going to be made better. When you have the right business model, you're gonna be able to make and [00:21:00] manage your money better. You're gonna optimize your return on effort and investment. You're gonna be able to have the right people in and around your business.
You're gonna be better at improving the lives and businesses of your customers. You're gonna be able to create valuable products and services for people and businesses who really want them. That last sentence is one of those things that seems so obvious, but it gets missed so often. So yes, you could create some amazing thing, but if nobody wants to buy it, it doesn't count.
Thinking about how your products and services are valuable, IE people want to buy them. That is the key to actually spending your time on the right things is like you need to love your customers so much and you need to want to make their lives and their businesses so much [00:22:00] better. A lot of business owners.
Don't realize how much our ego needs to get out of the way for us to be successful. So when we go into business thinking that we've, we already know everything and we're not willing to listen to our customers and listen to coaches like me, we're, if you are more interested in being right. Then getting it right, you are gonna struggle to be a successful business owner.
And so this is where the business model kind of plays into this concept of like letting the ego get out of the way sometimes and focus on what do my customers want? How can I help them get it? How can I be sure that people actually want this thing that I've, you know, to sell?
Outro
Thank you so much for listening right up to the end. I hope you enjoyed this episode of [00:23:00] Money Secrets, where we talk about the money secrets of successful small business owners. If you enjoyed the episode, I'd love it if you subscribe to the podcast, but leave us a review or share this episode with one of your friends. I hope you learned something. I hope you got a new perspective and I really hope you enjoyed the listening experience.
