Episode #12 - How to Choose the Right Business Model for You
You don't have to be good at business to make money in business — and Dale proves it with examples of global giants like Ford, Telstra, Facebook and HP who still make billions despite major failures. An encouraging episode reminding new business owners that getting started matters more than getting it perfect.
Hello and welcome to the Sequoia Project podcast. We're on episode 12 now. And today we're going to be talking about business models, some that we like and how you guys can implement them in your business.
Dale: A business model is basically the strategic plan for how you're going to take your business ideas through the market. It might be something like a subscription model, kind of like Netflix, which is different to an invoice and payment model. And then you have hourly rate models for service businesses and things like that.
Coby: What we did initially was the business to customer model. So we directly sold straight to the customers when we initially started photography. And then moved to a lot more of a B2B, which is like business to business model when we're doing a lot more of the advertising side. But solely focused back to that business to customer aspect of it, because it's just — when you're working directly alongside someone else's businesses, I felt there's so much more on the line.
Dale: The biggest difference that might help people if they're listening, if they're in services, because a lot of my businesses are in services, is if you just want to do something different — I call it pay per solution rather than pay per hour. The customer goes, I need something done. I don't know how to do it. If it was done, I value the solution to this at this much money. And that's how I do my service driven business model, which is I value the solution rather than the hours that go into the solution. Because if you're billing by hour, you're going to actually get paid more for being terrible — it takes longer. But as you get better and faster, you actually give yourself a pay decrease. You actually take a pay cut for being better at your job. So that's why we noticed that and we switched to Pay Per Solution.
Dale: A subscription model is awesome. And the prerequisite for a subscription is that you need to have a recurring problem. That's it. So if you're hearing this and you're going, subscription, I want to do a subscription model — if you don't have a recurring problem or the problem doesn't recur after you solve it, it's going to be very hard to do a subscription model. For example, something like information — everyone wants information all the time. So it's kind of like, hey, I have this set problem, I can go and ask this question, and then in a week's time, I'll have another problem. So I can ask another question.
Dale: Deep Cuts from the Mentoring Archives — this is where we take a conversation between Coby and I and we've been talking for over two years now and there's tons of these where it's a normal conversation, but there are a lot of lessons in it. The initial message was — if I sell a wedding package, can I buy a laptop that will allow me to work and edit on the go? I asked, how much time do you spend working on the go at the moment? He said he spent time in Bendigo for personal reasons. I said so here's what I'm hearing — you spend time in Bendigo for personal reasons, you have very little in-person meetings and you have no idea how much it will increase your efficiency if we get this new laptop. This is not business dollars. This is you wanting to spend business funds on something you want. The final point he hit home was — it will allow me to draw frogs for the business. And that was actually the best point that he had. And it was still terrible.