How to Build a Profitable Business Model?


Do you ever feel like you are working hard and not getting the returns for all the effort you’re putting in? 

Well, perhaps there could be something wrong with your underlying business model. 

Many small business owners have never even considered their business model, and so they don’t know if it’s helping or hurting them. They don’t even know what’s really going on underneath their business, and sometimes business is a whole lot harder than it needs to be, because they never took the time to establish a good business model. 

So, how do you establish a profitable business model? Here are 3 steps… 


1) Get Clear on What You Are Building 

Firstly, you need to get clear on what you’re building. Be clear on the end in mind as this will shape the business model that you will need.  What exactly is the business are you building? What is your business’s final form?  What is the revenue? How much profit do you want to make? What size does your team need to be?  Geographically, how many people do you want to serve?  Each of these elements should be clear in your mind.  

Based on this what is your reason for building your business? Are you building it to sell? Are you building it to franchise or replicate in some way? Are you building it to open up different locations? Are you building it as more of a lifestyle business?  

See, once you are really clear on what you are building, you can work out the best model to get you there.  

2) Know What is Making You Money in Your Business Model 

The second thing that you need to know is what is making you money? Which of your products and services are actually making you money? This is important because some of your products and services are helping you win the game of business.  Some are causing you a lot of pain and hurt. This is something you need to discover. 

Not all products or services make you the same amount of profit.  Work out what has got a high gross profit margin for you.  Not just percentage wise, but also per hour of your time that you’re taking to deliver that product or service to your customers.  

Like a chemical manufacturer we worked with.  When they did this exercise they discovered a surprise. Their second best seller was actually costing the business $50 every time they sold it.  You see, they hadn’t properly allocated their costs and worked out their gross margins.  If they had grown this part of their business, they would have gone broke quicker. 

Or an electrician we worked with. He identified a goldmine in one specific type of job that he did. Not only was it quick and easy, but it brought in high profit margins. He realised if he did more of these types of jobs he would have a much more profitable business. So he did! 

So, take a good look at what you’re offering. Some products and services might be worth more than others…. and focus on these!   It’s like sorting out the gems from the gravel.  

3) Market What Makes You Money 

Now, if you’ve figured out there’s a part of your business that’s making you more money or is smoother to handle, put that front and centre in your marketing. Make it the star of the show on your website and social media! 

When you know what’s making money, you simply need to market more of that, so you get more of that type of work. This will lead to a quicker trajectory to winning your game of business. 

For example, we have a client who sells water filters.  He found they were not just easy to handle but also made good money. So, he thought, “Why not do more of these?” And so he put these front and centre in all the marketing he did. 


So, just to recap. 

  • Get clear on what you’re building. 
  • Know what’s making you money, 
  • Market what’s making you money, so that you win your game of business. 

This is about building a strong, robust and profitable business model. A good business model is about knowing what to sell more of so that you win the game of business. When you do this you are going to get super clear on where to focus. You are going to get clear on your direction. You are going to get confidence in what you are doing and how you are doing it, and business will become a whole lot easier. 

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THE PROFIT MULTIPLIER

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