As a business broker, I frequently discuss valuation with interested small business sellers. The discussion often starts like this:
"Tell me about your products(services)?
We have an established reputation for being the best source for what we do in the area.
How is your pricing?
We are competitively priced,not too high and not too low."
Do you see the problem? If a premium Value is really being given the customer, why doesn't that result in a premium Revenue Stream?
This isn't just a problem with a business organization. As individual employees, professionals, or contractors are we providing a real premium value or only enough for a competitive revenue stream?
The Personal Business Model canvas developed in Business Model YOU not only helps individuals reinvent themselves, it serves as a map for developing the premium aspects of their value. Competitive pricing is the natural result of a focus on primarily the Value Proposition and the Customer Segments. To be worth a premium, further separate YOU from the competition (Professional Branding) by considering your other 7 canvas areas.
"Tell me about your products(services)?
We have an established reputation for being the best source for what we do in the area.
How is your pricing?
We are competitively priced,not too high and not too low."
Do you see the problem? If a premium Value is really being given the customer, why doesn't that result in a premium Revenue Stream?
This isn't just a problem with a business organization. As individual employees, professionals, or contractors are we providing a real premium value or only enough for a competitive revenue stream?
The Personal Business Model canvas developed in Business Model YOU not only helps individuals reinvent themselves, it serves as a map for developing the premium aspects of their value. Competitive pricing is the natural result of a focus on primarily the Value Proposition and the Customer Segments. To be worth a premium, further separate YOU from the competition (Professional Branding) by considering your other 7 canvas areas.
1 - Key Partners
No one works in total isolation. When people look to you as the "point man" for those you work with, they see greater value in everything you do. You get to there by clearly defining that team on the canvas, and then finding ways to promote your partners (even is that doesn't immediately help you). Being able to promote a Key Partner's value increases your own.
2 - Key Activities
We tend to focus on developing those activities which meet our goals; however, people will pay a premium if what you give them helps meets THEIR goals. Would the nature of your Key Activities change if you knew your customer's goals and how to achieve them?
3 - Key Resources
This is the cornerstone of the Personal Business model. Have you identified personal resources you own that are not being used in your model? Finding ways to offer these to your customers increases your value to them, even if it isn't directly related to a main Value Proposition. Do you know about a cheap and easy way to keep up with necessary records? I bet there are potential customers who would love to know how you do it (and love YOU for sharing that).
4 - Cost Structure
Competitive pricing is a result of supply and demand. Non-competitive pricing can happen when either value is high or costs are low. Technology and/or organization often drives down costs and there seems to be no end to the possibilities of using them to reduce costs. When reducing costs leads to additional sales, the premium is in the volume rather than the price.
5 - Customer Relationships
Your relationships are more than just between you and the people who pay you. There is a community that encompasses what is done. Participating in that community is what increases the value of your personal stock in the minds of others in it. Community activity may not result in a direct sale; however, it is very hard for it to not result in increasing your premium value to others.
6 - Channels
We are in an information age and that is changing everything in business. There is a need in every community for participants to band together and share how that effects them and what to do about it. There is always a place to increase value through helping to teach new skills to those seeking them. The fact you teach in any capacity increases your credibility an exposure.
7 - Revenue Streams
Most of us believe a Sale ends when the Revenues are finally collected. Once we realize the single most important source of new business is referrals, it becomes clear that a sale isn't really over until the customer stops making referrals. With this in mind, consider what happens after funds are collected and value is delivered? What could compliment the value transaction 7, 30, 60, 90, or even 180 days later? Anyone who delivers value from this perspective deserves a premium.
The Personal Business Model is a source for continual improvement as well as reinvention. I look forward to more future conversations like:
"How is your pricing?
People understand how valuable we really are to them."
No one works in total isolation. When people look to you as the "point man" for those you work with, they see greater value in everything you do. You get to there by clearly defining that team on the canvas, and then finding ways to promote your partners (even is that doesn't immediately help you). Being able to promote a Key Partner's value increases your own.
2 - Key Activities
We tend to focus on developing those activities which meet our goals; however, people will pay a premium if what you give them helps meets THEIR goals. Would the nature of your Key Activities change if you knew your customer's goals and how to achieve them?
3 - Key Resources
This is the cornerstone of the Personal Business model. Have you identified personal resources you own that are not being used in your model? Finding ways to offer these to your customers increases your value to them, even if it isn't directly related to a main Value Proposition. Do you know about a cheap and easy way to keep up with necessary records? I bet there are potential customers who would love to know how you do it (and love YOU for sharing that).
4 - Cost Structure
Competitive pricing is a result of supply and demand. Non-competitive pricing can happen when either value is high or costs are low. Technology and/or organization often drives down costs and there seems to be no end to the possibilities of using them to reduce costs. When reducing costs leads to additional sales, the premium is in the volume rather than the price.
5 - Customer Relationships
Your relationships are more than just between you and the people who pay you. There is a community that encompasses what is done. Participating in that community is what increases the value of your personal stock in the minds of others in it. Community activity may not result in a direct sale; however, it is very hard for it to not result in increasing your premium value to others.
6 - Channels
We are in an information age and that is changing everything in business. There is a need in every community for participants to band together and share how that effects them and what to do about it. There is always a place to increase value through helping to teach new skills to those seeking them. The fact you teach in any capacity increases your credibility an exposure.
7 - Revenue Streams
Most of us believe a Sale ends when the Revenues are finally collected. Once we realize the single most important source of new business is referrals, it becomes clear that a sale isn't really over until the customer stops making referrals. With this in mind, consider what happens after funds are collected and value is delivered? What could compliment the value transaction 7, 30, 60, 90, or even 180 days later? Anyone who delivers value from this perspective deserves a premium.
The Personal Business Model is a source for continual improvement as well as reinvention. I look forward to more future conversations like:
"How is your pricing?
People understand how valuable we really are to them."
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