Turning Your Vision Into Your Business Model

"Companies don’t succeed because of ideas: they succeed because of execution""

The fact is most businesses fail. The simple statistics are that 80% of all new businesses fail in the first 5 years and 80% of the remaining 20% fail in the next 5. At the end of 20 years only 2% are still in business, and few of these would be considered great businesses. Today we see many once great businesses in trouble because they failed to adapt to market changes. The key question is why? And the simple answer is most owners and managers don’t understand the business of business, and what it takes to succeed in good times and bad.  

When I was doing restructuring or reorganizing failing businesses and investments, I would repeatedly hear this sad story: “We had a great business idea. We wrote a business plan and raised capital. We started running the business and had success for awhile. Then something happened, we fell apart. Now it’s back to the drawing board.” What I want to talk about is what should be drawn on the board.

Every business has a business model whether it is written down or not. One thing that makes buying a franchise so appealing, and contributes to the survival/success rate being better than non franchise businesses, is the fact that everything is written down. All the franchisee has to do is run the business by the book. While this doesn’t guarantee success, it does help insure consistency of operation. If the market place changes, then the book can be modified. Most business owners that don’t have a written model tell me that when times are good, why bother; and when times are bad, they just don’t have the time or money. They tell me this while we are trying to salvage their their failing business or product.

A business model describes the rationale of how every part of a business functions and interacts with: every other part of the business; with stakeholders, including employees, vendors and investors; and most importantly with consumers.  In other words, a business model tells us how we are going to create a world class business that not only makes money, but stays viable in a constantly changing marketplace. That’s why parts of the business model are written in stone (such as the vision and company culture), and parts with erasable markers (markets and distribution). 

Now, to the drawing board to design our business organization that will give us our working model.

The Vision: 

To me, the most important thing we can do, and the first thing we should do, is to write the vision for the business and its product or service. This is a biblical principle found in Habakkuk 2:2-3: “And the Lord answered me: “Write the vision; make it plain on tablets, so he may run who reads it. For still the vision awaits its appointed time; it hastens to the end—it will not lie. If it seems slow, wait for it; it will surely come; it will not delay.” 

I have found that the lack of a clear and stated vision, or the abdication of the vision by the primary keeper(s) of the vision is the number “1” cause of business failure. The number “2” reason for failure is not having a plan or business model that can actually implement the vision.


Values and Operating Principles:

This creates the “corporate” culture. It tells everyone, every stakeholder in the enterprise, and everyone who comes in contact with the business, just how we conduct our business. 

A recent example is Hobby Lobby. The U.S. Supreme Court upheld its right to conduct its business according to its values and operating principles. Everyone knew or should have known the values and operating principles of the owners of Hobby Lobby. 

Objectives:
A clear list of our objectives, prioritized, so that the vision can be implemented. All objectives must be measurable and datable (start time, milestones along the way, and completion time) with a system in place to monitor progress and judge results.


Strategies:
 
A written strategic plan to implement the Objectives of the business and deal with real world situations for today and tomorrow.


Structure:

This includes not only the legal entity or entities necessary to conduct the business, but also how the business is organized internally. The four basic functions of every business are: Management, Operations, Marketing & Finance. Each one needs its own business plan and its own operational and system manuals.

In addition it must be determined upfront what type of internal organizational structure will best manage the business given its needs and culture.

This is much more than an organizational chart showing titles, responsibilities and chain-of-command. It describes every function that the business requires done, who will do it, and how their work is be evaluated. It determines whether the structure will be purely hierarchical, a lattice organizational structure with no traditional hierarchy or something in between. 





Product Development:

This is the natural thing that entrepreneurs and businesses do, they work on their product or service. This is their major focus, this is why most businesses fail. Without diminishing the importance of product development, we must understand it has little value if a sustainable business isn’t developed that can successfully deliver the product to the marketplace.


Build the business according to the pattern:

The Lord told Moses to build the tabernacle according to the pattern that he had been shown. I believe the Lord always shows the pattern for the businesses he has created to those that he’s given the vision.


There are seven basic components of a business model:

1. Reaching potential customers/clients. How are we reaching them now, should changes be made?

2. What is our unique selling proposition? Does everyone know it and can they sell it to customers/clients?

3. Pricing. Is the current pricing of our service or products right? Have we estimated our total costs, analyze the competitive landscape, and mapped out a long-term strategy.

4. Selling. We are going to be selling at every juncture. So we have to understand what it takes to close a deal and put together the necessary sales process. What is our current process? Have we tested our selling strategy?

5. Delivery/distribution. Define it and then research the options.

6. Customer Support. What is our current customer/client (doctor/patient) support plan? Is it working?

7. Are we achieving stakeholder satisfaction? The ultimate success or failure of our business depends on how much it helps others achieve their goals and objectives.
   

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