People & Leadership
Can everyone in your business explain how it makes money?
Many owners know their business by instinct and never write it down. Their team knows only its own part, so people work hard on things that do not move the business, and hiring or pricing decisions rest on guesswork. This session is a plain, practical walk through the building blocks of a business model, in language owners and teams can both use. It looks at the model from the point of view of leading people: what each person needs to know to make good decisions.
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A team that does not understand the model cannot help improve it.
A business model is simply the answer to a few questions: who are your customers, what do you give them, how do you reach them, how do you earn, and what does it cost to do all of it? Owners often hold the answers in their heads and in habit, and rarely check whether they still hold.
Writing them down helps in at least three ways. It shows where money is actually made and lost. It gives the team a shared picture of what matters. And it makes it easier to decide, for example, whether to hire, to change a price, or to stop a product.
The business model, one question at a time
35 topics across 7 areas. Seven questions, to be answered in the owner's own words. 6 apply to almost any business; the rest only in a particular case.
Who Are Your CustomersBe specific, not 'everyone'.5
- The main types of customer you serve today
- What each type is trying to get done, or what problem they have
- Which types are most important to your income
- Which are difficult or unprofitable to serve
- Which type you would most like to have more of, and why
What You OfferFrom the customer's point of view.5
- The products or services you sell, in plain words
- Why a customer chooses you over the alternative
- What the customer would do if you were not there
- What is special, and what is simply expected
- What you offer that nobody values
How You Reach CustomersWhere they come from, and what that costs.5
- Referrals, walk-ins, online enquiries, agents, repeat orders
- Which routes bring the most customers, and which the best ones
- Roughly what it costs in money or time to win a customer
- What happens between a first enquiry and a first sale
- Who in the team is involved at each stage
How You EarnPrices, volume and the shape of the income.5
- How each product or service is priced
- Whether customers pay once, repeatedly or on contract
- How quickly you are paid, and how reliably
- Which sources of income are growing, steady or falling
- How dependent you are on a few large customers
What It CostsThe costs behind each sale.5
Your accountant can help you work out the figures. The purpose here is to understand the shape, not to produce accounts.
- Costs that rise with every sale, such as materials or commissions
- Costs that stay about the same, such as rent and salaries
- The people cost of delivering each product or service
- Where costs have crept up without attention
- What a typical sale leaves for the business after its own direct costs
What the Business Depends OnThe assumptions to test.5
- Key people, suppliers or partners you rely on
- Assumptions such as 'customers will always pay in thirty days'
- Which of them would hurt most if wrong
- A cheap, quick way to test one this month
- What you would change if it turned out to be false
Sharing It With the TeamIf it appliesA shared picture improves decisions.5
- Explaining the one-page model in a short team meeting
- Showing each person where their work fits
- Asking what the team sees that you have missed
- Linking priorities, hiring and pricing back to the model
- Revisiting it every six months, or when something changes
Hypothetical example, for discussion
- A small catering business counts its three offerings: office lunches, weddings and festival orders
- Office lunches are steady and pay promptly, but each order leaves little after costs
- Wedding orders earn more but are uneven and need extra staff
- The owner realises most of her time goes into the least rewarding offering
- She decides to test a modest price rise on office lunches, and to say no to some small orders
Try this week
- Write one sentence for each of the seven questions
- List your top five customers and what share of income each represents
- Choose one product or service and estimate what a typical sale leaves after direct costs
- Ask two team members to describe how the business makes money, and compare with yours
How the session runs
A practitioner or owner explains the seven questions with a hypothetical example, clearly labelled. Participants then answer the questions for their own business on a single page and identify one assumption to test. The session does not give financial or investment advice, and does not value a business. An accountant is the right person for accounts, tax and funding decisions.
What your students leave with
- A one-page description of their business: customers, offer, income and costs
- A clearer idea of which customers and products bring the most useful revenue
- A way to check whether each product or service is actually worth the effort
- A list of the assumptions their business depends on, and how to test one
- A short explanation of the model to share with the team
- A better basis for decisions on hiring, pricing and where to spend time
Scheduled sessions
Nothing scheduled yet
Sessions are arranged with a college once a date is agreed. Ask us and we will find the right person for it.
A student rather than a college? See what is coming up, or ask your placement team to host this.
If you can explain how the business makes money, you can start to improve it.
Tell us who your students are and what stage they are at. Sessions are free for participants.