Colin Sprake: President, Make YOUR Mark Training & Consulting Inc.
There are definite indicators that your company might need to change its business model. A few of them you may be quite surprised by, but I always highly recommend that you investigate all business models prior to starting a business to ensure your model has longevity, especially as your business matures.
Here are the key indicators that you should watch out for:
•You launched your business and now have provincial or federal regulators contacting you and stating that you are operating under a specific business model and you did not even know it. You may think you are licensing when under government legislation you are considered a franchise.
•You have been acquiring clients easily for many years and now with increasing debt loading and financial constraints you are forced to examine other options to ensure your business continues to grow and be profitable. This could mean going offshore, changing payment terms, outsourcing, etc.
•You may have hit a financial ceiling, and you need to raise more capital through a public offering.
•You and your competitors are all doing business in a similar way, yet you're continually competing against one another in the marketplace and not maintaining profitability. It may be time to consider models used in other industries to lead your industry to change.
Finally, you may be thinking of changing your model and the most important factor to take into account is client retention. Every time you go through a major change in your business you can upset the apple cart. It is vital to have a strategic approach to ensuring that any change in business model has a well-defined communication plan with existing and potential clients.
Wanda Halpert: President, Concord Business Plans
To be successful, entrepreneurs need to be flexible to adapt to an ever-evolving marketplace that is constantly being influenced and transformed.
Your business, large or small, must adapt to continue on the climb to the top. Examples of transformations to business models include Amazon.com, a company that forever altered the retail book market, and Facebook, which made connecting and influencing customers easier and more cost effective.
Understanding key performance measurements to evaluate your business model can help you to keep your company at the leading edge of sales and customer retention. Ten important things to consider are:
•Changing styles or trends in your product or service industry. Are you up to date?
•Differentiation factors. Define what makes your product or service unique.
•Evolving technology. Are you online? Are you on social media? Does it need updating? If you are a technology company, have you adapted to recent changes?
•Examining the competition. Who is positioned ahead of you? How did they get there? What can you learn and adopt from the industry leaders in your sector?
•Shifting target markets locally or globally. Look at emerging markets for expansion opportunities.
•Increased costs of doing business. Find ways to lower costs without lowering the quality.
•Online shopping. Can you sell products or at least market your business online?
•Human capital. How good are the talents of your workforce, and how do they treat people?
•Generating leads. How do you attract customers? How do you keep them? What are your sales funnels?
•Customer capital. Maintaining a positive reputation and good relationships over the long term is the best way to retain customers. Offer at least three ways you can accomplish this task.
Kathy McLaughlin: Principal, Kathy McLaughlin Management Consulting Inc.
Here are some of the best indicators that it's time to take a good look at how you're doing business.
•Customers have dropped. Even in market downturns, you need to view this as a serious sign to re-examine how you're doing business, with whom, at what price, where – and most importantly – why.
•Customers are asking for products or services you're not offering. Examples could be home delivery, online purchasing, related accessories or other brand names. It might be time to diversify or extend your services.
•Prices and margins are eroding. Maybe your competitors offer knock-off services or "perceived equivalents," and customers are not discerning enough to choose your premium-priced original. If you can't convince consumers that your product is worth the price, in the end you will have to reduce price, reduce costs or consider diversifying your product lines.
•You are having difficulty recruiting and retaining the right calibre of talent. Perhaps your employees are not enthusiastic about selling your services or products. These are signs that you need to re-examine your overall approach to qualifying, hiring and retaining employees that fit your business and customer needs.
The best companies avoid waiting for the signs, by engaging in an annual planning process. To do this kind of forward planning, here are some suggestions:
•Ask yourself the tough questions: Do you need to do more promotion? Change location? Add products or services? Cut prices? Attract a new type of consumer? Extend online presence? Change hiring practices?
•Ask your employees what needs to change.
•Ask your customers what new or different products and services they would like you to provide.
•Ask the customers who are not buying your services what they are buying and from whom and why.
•Look at what competitors are doing, not to copy, but to understand the levers for building market share.