Category Archives: Business

Some examples of business models

This is the second of a three-part series. Read Part I and Part III.

The following are some examples of business models that are used by various businesses. The list is by no means exhaustive and is designed to give you a feel for some of the models that exist (business models evolve constantly).

In many instances, the names can vary as they are not typically universally defined.

The Add-On model

In this instance, the core offering is priced competitively but there are numerous extras that drive the final price up so the consumer is not getting the deal they initially assumed. If you have recently tried to buy an airline ticket or car insurance, you will have spotted that the number of extras you are offered can almost reach double figures!

The advertising model became popular with the growth of radio and TV where the TV stations earned revenue indirectly from people looking to promote services to the audience they attracted, rather than via consumers paying radio and TV stations for the consumption of their TV programmes.

Some Internet businesses derive revenue predominantly as a result of being able to offer advertisers access to highly targeted consumer niches (often in the absence of revenue from selling their goods or services).  So if your website is about a narrowly defined topic, it is likely to attract a highly defined niche audience who could be offered complimentary products or services with a higher probability of success than blanket mass market advertising.

However, this business model is increasingly difficult to justify if it is your main revenue stream. For a start, the landscape is extremely competitive and advertisers are spoilt for choice. Building brand awareness and translating that into site visits is a very difficult and costly challenge. Successes such as Facebook are very much the exception to the norm.

If this model is being considered for your startup, it is worth noting that nowadays most savvy investors ignore ‘vanity metrics’ such as Page Impressions/Visitor numbers and want to understand whether the underlying business proposition is profitable. Examples such as YouTube illustrate how hard it can be to monetise free content even when you have significant visitor numbers. In short, this model is in decline for most businesses.

The Affiliate model

An affiliate is simply someone who helps sell a product in return for commission. However they may never actually take ownership of the product (or even handle it). They simply get rewarded for referring customers to a retailer when they make a sale.  Again this business model has been a huge success given the ease with which the Internet facilitates it.

The Auction model

The auction model is synonymous with eBay, these days, but of course auctions have existed for hundreds and hundreds of years.  The tulip market in Amsterdam is one of the more famous examples. There are numerous different types of auction, from English, to Dutch, Vickrey, Sealed Bid, etc., and they all share certain characteristics: the price of the good is not fixed; each individual assesses the value of the good independently; final value is determined via competitive bids. This business model has become very popular in recent years as the Internet has helped to broaden its appeal.

The Bait and Hook model

This is essentially the razor blade analogy listed above, where disproportionate amounts of the value are captured on components, refills and the like. Anyone who regularly buys ink cartridges for printers will recognise this model where customer lock in and switching costs result in monopolistic pricing on the component side. The mobile phone business also grew rapidly on the back of this model as handsets were often supplied free of charge when you signed up for a contract. Nowadays with SMART phones, such is the level of demand for some that consumers have to pay hundreds of pounds for the phone and in many instances minimum contracts are 18 months.

 

Small Business Performance

When I am asked about measuring small business performance, my first inclination is to quote Lewis Carroll. In Alice’s Adventures in Wonderland, Alice comes to a fork in the road and asks:

“Would you tell me, please, which way I ought to go from here?”

“That depends a good deal on where you want to get to,” said the Cat.

“I don’t much care where–” said Alice.

“Then it doesn’t matter which way you go,” said the Cat.

In other words, if you do not have a plan for where you want your business to get to, performance measurement does not matter much!

Management dashboard

Small businesses come in various guises and hence it is difficult to generalise when it comes to individual performance management. Metrics (also called Key Performance Indicators or KPI’s) can range from Software as a Service (SaaS) businesses focusing on Lifetime Value (LTV) and churn rates, to hotels measuring occupancy levels and average room yields. However the old adage holds, ‘What gets measured gets managed’, so it is important to have some metrics in place. A good starting point would be to try and understand what are the typical metrics that define success in your particular industry. After that, it’s a case of adding some additional metrics to the mix to ensure that all bases are covered. The following represent a list of some of the more common elements that can make up a “management dashboard” which combine to help you manage performance. Of course, some may argue that profitability should be the main bellwether as to the performance of a small business. While there is merit in this view, it is better to use a combination of metrics which all support the primary goal of trading profitably while growing year on year. This way you have early warning systems in place, as an assessment of profitability based on financial statements can take some time given the reporting time lag.

It all starts with a plan

Creating a simple business plan is vital for all small businesses regardless of whether the business is looking to raise money or not. Planning is essentially about having the foresight to plot and manage your own future, in stark contrast to reacting to accounting data with its emphasis on past performance. While business plans have many purposes, they are not often associated with performance measurement, despite the fact they are a very useful tool with which to measure performance. By committing your thoughts to a business plan you can ensure that you (or your team) know what the priorities are, what activities need to be done, who needs to do them and by when. A business plan brings a lot of transparency to the business with accountability in the form of names, actions and dates.

Cash-flow management

Careful management of cash flow is a fundamental requirement for all businesses. The reason is quite simple–many businesses fail, not because they are unprofitable, but because they ultimately become insolvent (i.e., are unable to pay their debts as they fall due). If you are a “cash-only” business, you can bank the income immediately. However, if you sell on credit, you receive the cash in the future and hence may need to pay some of your own expenses before that income hits your account. This will put a further strain on the company’s solvency and hence a well structured business plan will help you manage funding requirements in advance.

Pro forma profit and loss

A profit and loss forecast is an integral element of any business plan alongside a pro forma sales forecast and cash flow forecast. These statements are forecast in advance (broken down by month) and represent a reference point for actual data as it emerges. By forcing you to forecast and to document all expected revenues and costs, the process helps you produce a report detailing the likely trading performance for the year ahead. If you are an established small business, this data is easier to arrive at as you can use past performance data as a reference point. While brand new businesses’ lack of trading history makes this process more difficult, it also makes it more valuable – you need some references to know whether your new business is on track. Once you commence trading and have actual real data, it is then easy to undertake some variance analysis (between the forecast data and the actual data) to assess whether or not you and your business are on track. With actual data it is possible to take remedial action before waiting for a full year of historic transactions to emerge, at which point it may be too late. For example, if sales in month one are significantly below the planned level you can make an early decision regarding what actions need to be taken as a matter of urgency (i.e. perhaps bringing costs into line, increasing marketing activities, pivoting the business, etc.)

Any message that you send electronically to lots

Spam is any message that you send electronically to lots of people who have not specifically requested mail from you — in other words, junk email. Like a telemarketing call during dinner, spam almost always annoys, and sometimes offends, those who receive it. While sending spam may result in a sale or two in the short run, it will almost surely damage your reputation, so it’s good advice to stay clear of it. There are many better ways to use email to keep in touch with current and potential customers. Here are a few of them:

  • Invite people to subscribe to an email newsletter instead of sending unsolicited emails. Have a sign-up form on your website and explain that you’ll send only timely, informative email to subscribers.
  • Include late-breaking, useful information in the email you send to subscribers. Because it can be delivered so quickly, email is a perfect vehicle for alerting people who are already part of your community to new and interesting developments. Even a modestly self-serving message will go over well if you package it with enough truly unique and valuable content. Just keep the hype to a minimum.
  • Make it easy to quit receiving email. Every message should include brief, friendly instructions for getting off your mailing list. Even people who keep subscribing will appreciate knowing that you’ve made it easy for them to say, “Enough already!” when the time comes.

Work Your Niche
Get to know the online habits of your prospective audience. What other sites are they likely to visit? Make a list and try to develop a relationship with each one. There are a variety of ways to do this. Your best options include offering to write articles (informative and not self-serving) for other sites, or posting messages with your Web address on their bulletin boards. Trade links and adverts with other sites in your field, and if you can afford it, buy classified adverts at related sites.

One web publisher doubled her traffic by spending two months (and a small amount of advertising money) working through all the sites in her niche in this way. Another got similar results by hiring and supervising a Net-savvy college student.

Don’t neglect offline ways to publicise your website. Send press releases and emails about interesting features on your site to print as well as online media in your niche. List your Web address wherever you also list yourself — business directories, professional associations, and chambers of commerce. Speak at trade shows or conventions.

 

Work the search engines
Lots of people will find — or not find — your site by using online search engines such as Google, where they type in the words they’re searching for. You need to do a little work to make sure your site will turn up when a potential reader conducts a search. Here are three good places to go for tips on making your site stand out to search engines.

  • SEARCH ENGINE WATCH
    http://www.searchenginewatch.com) is an online newsletter that offers comprehensive, practical tips about making a site that search engines can find. There are also some good links for Webmasters here.

Creating the most beloved and trusted career destinations

The Muse was founded to make work more human by helping people navigate their careers and helping companies attract and retain great employees. Doing meaningful work is important to Musers, and our mission matters: to make everyone’s job search and work experience more enjoyable, helpful, and human. Creating the most beloved and trusted career destinations for the biggest brands and our job seekers feels really good.

As a Sales Development Representative, you’ll have the opportunity to significantly impact the growth of our company and help redefine the way companies hire. You’ll also become an expert in our business and products as you prepare yourself for the next step in your sales career.

How you’ll make an impact:

  • You’ll successfully manage and qualify inbound leads
  • You’ll generate quality sales leads through outbound prospecting
  • You’ll set sales meetings for Account Executives, maintaining a consistent number of meetings set each month
  • You’ll provide feedback to Account Executives on new revenue opportunities
  • You’ll enter timely and accurate data into Salesforce
  • You’ll manage and maintain a healthy pipeline

Why we’ll love you

  • You have 0-1 years of sales experience, ideally within a new business, account management, or recruiting role
  • You love The Muse, our product, and our mission and have an extreme hunger to be successful
  • You’re committed to growing your sales career and mastering your craft
  • You embrace aggressive goals and work hard to achieve them
  • You know that consistency is key when it come to prospecting and setting meetings because you know it will lead to results
  • You’re not easily discouraged and always maintain a positive attitude
  • You’re good at building rapport and gaining trust whether it’s in person or over the phone
  • You’re genuinely interested in the people and companies you’re prospecting and always think about how you can help the customer
  • You’re naturally curious and will take the time to do research before setting a meeting
  • You hustle! All that preparedness doesn’t slow you down

Why you’ll love us

  • You’ll have the opportunity to help clients like Slack, Facebook, and Squarespace amplify and improve their employer brand, putting them in a position to be more competitive in today’s war for talent
  • You’ll work at a tech company founded by two badass women—Our founders believe transparency is important so they really try to share as much as they can about changes to The Muse strategy, board meetings, and when they are wrestling with big company-wide decisions.
  • The Muse actually has—and sticks to—a “no assholes” policy, so you can come to work everyday knowing you will always be surrounded by good people who genuinely care about you.
  • We invest in growing our people—personally and professionally
  • We offer unlimited vacation—and we mean it!

Make an business impact

The Muse was founded to make work more human by helping people navigate their careers and helping companies attract and retain great employees. Doing meaningful work is important to Musers, and our mission matters: to make everyone’s job search and work experience more enjoyable, helpful, and human. Creating the most beloved and trusted career destinations for the biggest brands and our job seekers feels really good.

As a Client Onboarding Coordinator, you’ll welcome and onboard new clients, seamlessly setting them up on The Muse before transitioning them to the Account Management team.

How you’ll make an impact

  • You’ll welcome new clients with a phone call to discover profile goals, set product expectations, and explain and coordinate video shoot logistics
  • You’ll manage 30-40 clients in various stages of the process—answering questions as they arise, all while representing the Muse brand and culture
  • You’ll collaborate with various teams to solve issues and create innovative client solutions
  • You’ll liaise between the production team and client to launch beautiful profiles our clients love!

Why we’ll love you

  • You have at least 6 months of client-facing experience and a passion for talking with, listening to, and supporting your clients–internship experience counts!
  • You have a strong desire to grow in a client-facing career
  • You’re friendly and awesome, and can be a welcoming first face of The Muse for all new clients
  • You can tell us the stories about how you turned an angry customer into one that loved you again
  • You love being organized, are detail-oriented, and rarely letting things fall through the cracks
  • You’re able to work both independently and with coworkers to prioritize and resolve issues for clients
  • You’re coachable – you’re receptive to feedback and apply it quickly
  • You’re willing to answer emails at occasionally urgent times to fix any issues that come up with clients
  • Bonus: You have experience working with Applicant Tracking Systems (or a strong desire to learn more about them!)

Why you’ll love us

  • You’ll have the opportunity to help onboard amazing clients like Slack, Facebook, and Squarespace while receiving hands on support and coaching from our Client Onboarding Team Lead
  • You’ll work at a tech company founded by two badass women—Our founders believe transparency is important so they really try to share as much as they can about changes to The Muse strategy, board meetings, and when they are wrestling with big company-wide decisions.
  • The Muse actually has—and sticks to—a “no assholes” policy, so you can come to work everyday knowing you will always be surrounded by good people who genuinely care about you.
  • We invest in growing our people—personally and professionally
  • We offer unlimited vacation—and we mean it!

When you Arrive Late to the Party

Relying on academic management literature for guidance can be a fickle business. For example, while “first-mover advantage” was once lauded as the optimum strategy for market entry, it was shortly displaced by its close cousin “second-mover advantage”. The thought went that the “second mover” could learn from the mistakes of the pioneering entrant who was likely to run out of money while trying to educate the market. Of course, some of these initial pioneering entrants did not run out of money and ended up dominating their space, thus striking a blow for advocates of being a “second mover”.

For “first movers” there are a number of poster boys, like Twitter, the micro-blogging platform, which has become so dominant that successful market entry by a direct competitor would be difficult to comprehend. The launch of the iPad created the tablet market, which did not exist prior to its launch but has since been flooded with entrants. For some cash-rich entrepreneurs, with the pockets, vision and patience of someone like Steve Jobs, the lack of a market is an opportunity rather than a problem. However, in the majority of cases, there may be no competition because there are structural reasons why a market does not exist (such as a lack of demand or a market size that is currently too small to serve profitably). In other words, the entrepreneur may simply have misread the opportunity!

For “second movers,” you can generally enter the market without the cost of the first mover. A subsequent entrant can study the incumbent when deciding how to design and position their offering. After all, imitation is the sincerest form of flattery. Competition also helps from a marketing perspective – trying to educate and attract a market on your own is a very costly exercise. However, in some cases the first mover is so dominant, subsequent entry would not be advised.

In other instances market entry is not always so easily defined. A recent example from the U.S. is the almost simultaneous market entry of Gowalla and FourSquare, both location-based social networking sites. These were soon followed by Rummble, and a host of others.

For entrepreneurs the lessons are clear – there are different things to be aware of when you start your business, in terms of market entry. If the market does not yet exist you need to ensure you have deep pockets as marketing is likely to be extremely costly. You also need to be confident that you are not ‘misreading the opportunity’.

A Good Business Plan

The following illustration shows a business plan as part of a process. You can think about the good or bad of a plan as the plan itself, measuring its value by its contents. There are some qualities in a plan that make it more likely to create results, and these are important. However, it is even better to see the plan as part of the whole process of results, because even a great plan is wasted if nobody follows it.

A business plan will be hard to implement unless it is simple, specific, realistic and complete. Even if it is all these things, a good plan will need someone to follow up and check on it. The plan depends on the human elements around it, particularly the process of commitment and involvement, and the tracking and follow-up that comes afterward.

Successful implementation starts with a good plan. There are elements that will make a plan more likely to be successfully implemented. Some of the clues to implementation include:

  1. Is the plan simple? Is it easy to understand and to act on? Does it communicate its contents easily and practically?
  2. Is the plan specific? Are its objectives concrete and measurable? Does it include specific actions and activities, each with specific dates of completion, specific persons responsible and specific budgets?
  3. Is the plan realistic? Are the sales goals, expense budgets, and milestone dates realistic? Nothing stifles implementation like unrealistic goals.
  4. Is the plan complete? Does it include all the necessary elements? Requirements of a business plan vary, depending on the context. There is no guarantee, however, that the plan will work if it doesn’t cover the main bases.

Use of business plans
Too many people think of business plans as something you do to start a company, apply for a loan, or find investors. Yes, they are vital for those purposes, but there’s a lot more to it.

Writing a Business Plan

Writing a business plan can seem a daunting challenge. However, this skill is a vital requirement for any entrepreneur or business seeking to increase their chances of survival. Here is a list of my top ten tips for writing that winning plan:

1. Write from the audience’s perspective

The starting point for any business plan should be the perspective of the audience. What is the purpose of the plan? Is it to secure funding? Is it to communicate the future plans for the company? The writer should tailor the plan for different audiences, as they will each have very specific requirements. For example, a potential investor will seek clear explanations detailing the proposed return on their investment and time frames for getting their money back.

2. Research the market thoroughly

The recent Dragons’ Den series on BBC 2 reiterated the importance prospective investors place on knowledge of the market and the need for entrepreneurs to thoroughly research their market. The entrepreneur should undertake market research and ensure that the plan includes reference to the market size, its predicted growth path and how they will gain access to this market. A plan for an Internet café will consider the local population, Internet penetration rates, predictions about whether it is likely to grow or decline, etc., concluding with a review of the competitive environment.

3. Understand the competition

An integral component to understanding any business environment is understanding the competition, both its nature and the bases for competition within the industry. Is it a particularly competitive environment, or one that lacks competition? How are the incumbents competing—is there a price leader evident? Finally, including a thorough understanding of the bases on which you intend to compete is vital; can you compete effectively with the existing players?

4. Attention to detail

Make the plan concise, but include enough detail to ensure the reader has sufficient information to make informed decisions. Given that the plan’s writer usually has a significant role to play in the running of the business, the plan should reflect a sense of professionalism, with no spelling mistakes, realistic assumptions, credible projections and accurate content. The writer should also consider the format of the plan, e.g., if a business plan presentation is required, a back-up PowerPoint presentation should be created.

5. Focus on the opportunity

If you are seeking investment in your business, it is important to clearly describe the investment opportunity. Why would the investor be better off investing in your business rather than leaving money in a bank account, shares, or investing in another business? What is the Unique Selling Proposition (USP) for the business? Why will people part with their cash to buy from you?

How to make work more human by helping people

The Muse was founded to make work more human by helping people navigate their careers and helping companies attract and retain great employees. Doing meaningful work is important to Musers, and our mission matters: to make everyone’s job search and work experience more enjoyable, helpful, and human. Creating the most beloved and trusted career destinations for the biggest brands and our job seekers feels really good.

As an Enterprise Account Executive, you’ll have the opportunity to significantly impact the growth of our company and help redefine the way companies hire.

This is a remote opportunity in Chicago.

How you’ll make an impact:

  • You’ll become an expert in The Muse’s product and content solutions
  • You’ll drive the full sales cycle to attain new business, continuously seeking creative strategies to do so
  • You’ll regularly present to the executive level and work to understand and overcome objections
  • Generate, develop, and close new business with large Enterprise companies
  • You’ll consistently achieve and exceed monthly, quarterly, and annual sales goals
  • Help define and build our Enterprise function
  • Provide leadership on new revenue opportunities, best practices, strategy, and sales process

Why we’ll love you:

  • You have 5+ years of sales experience and a track record of exceeding quota
  • You have experience negotiating and closing complex sales cycles and six/seven figure multinational partnerships
  • You’re an expert at managing Enterprise accounts and have experience using a consultative approach and developing trusted relationships with C-level executives
  • You have an extreme hunger to be successful in your role as a seller and are committed to mastering your craft
  • You embrace aggressive goals and work hard to achieve them
  • You know that consistency is key when it come to prospecting and setting meetings because you know it will lead to results
  • You’re resilient when it comes to rejection; You’re not easily discouraged and always maintain a positive attitude
  • You’re naturally curious and will go the extra mile to prepare for client meetings and talk to as many people as you can to gain as much information as possible
  • You hustle! All that preparedness doesn’t slow you down

Why you’ll love us:

  • You’ll have the opportunity to help clients like Slack, Facebook, and Squarespace amplify and improve their employer brand, putting them in a position to be more competitive in today’s war for talent
  • You’ll work at a tech company founded by two badass women—Our founders believe transparency is important so they really try to share as much as they can about changes to The Muse strategy, board meetings, and when they are wrestling with big company-wide decisions.
  • The Muse actually has—and sticks to—a “no assholes” policy, so you can come to work everyday knowing you will always be surrounded by good people who genuinely care about you.
  • We invest in growing our people—personally and professionally
  • We offer unlimited vacation—and we mean it!

At The Muse, we believe that great ideas come from anywhere. We support a collaborative environment and value open participation from individuals with different ideas, experiences, and perspectives. We believe having a diverse team makes The Muse a more interesting and innovative place to work, and we strive every day to make The Muse a welcoming and inclusive place for all.

Jump into online publishing

If you’ve decided to jump into online publishing — putting out an online newsletter, magazine or other content that will interest your business’s customers — you may think that designing your website is your biggest challenge. But that’s the easy part. Much trickier is gathering an audience that will sustain the publication. Here are some tips on building a loyal audience for your site.

Start where you are
The Internet is a surprisingly personal place. A thousand people, each with unique personal interests, can spend the same 60 minutes online together and never come close to crossing paths. It follows that the key to Web publishing success is forging a lasting personal connection with people based on your own skills, interests and contacts. In other words, the best place to start is with the connections you already have online. Then use those connections to build a community of like-minded people and keep expanding from there.

Your own interests and expertise are your strengths as a publisher. Study the information that is already available in your niche, looking for gaps you can fill. Then, fill the gaps with valuable information nobody else provides. An example is www.businessbricks.co.uk a small business advice website in the U.K.

Your goal should be to create unique, valuable information that meets the needs of your targeted audience. On the Internet, there are many ways to provide that information that aren’t available to print publishers — for example, you can offer searchable, interactive databases and encyclopedias.

Work Your Niche
Get to know the online habits of your prospective audience. What other sites are they likely to visit? Make a list and try to develop a relationship with each one. There are a variety of ways to do this. Your best options include offering to write articles (informative and not self-serving) for other sites, or posting messages with your Web address on their bulletin boards. Trade links and adverts with other sites in your field, and if you can afford it, buy classified adverts at related sites.

One web publisher doubled her traffic by spending two months (and a small amount of advertising money) working through all the sites in her niche in this way. Another got similar results by hiring and supervising a Net-savvy college student.

Don’t neglect offline ways to publicise your website. Send press releases and emails about interesting features on your site to print as well as online media in your niche. List your Web address wherever you also list yourself — business directories, professional associations, and chambers of commerce. Speak at trade shows or conventions.

Work the search engines
Lots of people will find — or not find — your site by using online search engines such as Google, where they type in the words they’re searching for. You need to do a little work to make sure your site will turn up when a potential reader conducts a search. Here are three good places to go for tips on making your site stand out to search engines.

  • SEARCH ENGINE WATCH
    http://www.searchenginewatch.com) is an online newsletter that offers comprehensive, practical tips about making a site that search engines can find. There are also some good links for Webmasters here.