Shift #2 - Choosing The Right Business Model
"It's so hard. I wish someone had told me that growing a coaching business was going to be so hard."
That was the general sentiment of a post from a relatively new coach on Fb.
I had different reactions and thoughts when I read this. (And by the way, we can substitute "growing a coaching business" for any other kind of business based on expertise).
On the one hand, I thought she was courageous for speaking up. (Most people wouldn't admit something like that on social media for fear of being judged or not to lose face and to show up as successful professionals. This is specially true with professions like coaching sold like the "easy dream" of quitting your job and doing what you love).
On the other hand, my heart went out for her. (Most service professionals feel this way when confronted with the reality of business). I still remember the same shock when I started my first business fresh out of university.
I was also hopeful for her because I could see from what she was doing that some simple shifts would accelerate her growth, get her get clients faster and get well paid for her contribution to the world.
Choosing the wrong business model at the wrong time makes it harder and slower than it needs to be.
WARNING - Building a real business is not easy or instant... (but it can be simpler and faster).
One of the worst business models...
That was, of course, the first one I used in my first business. (It's from that experience that I could see the big difference a business model makes).
I had just graduated top of my class from university and I started a training and consulting business in languages an communication. My first business model was to charge by the hour.
I was grateful to have a full practice from scratch. (My dad had just passed and I was in charge of supporting my family).
I was also exhausted, anxious and afraid.
I had absolutely no time to work on my business and if one client or student fell off, I wouldn't know at what time I would go out and find another one.
I felt I couldn't afford to stop.
And then, by a happy accident I discovered a different business model.
A big corporation asked me to develop a training plan for their top executives. And then they happily proceeded to tell me that they changed their mind.
I was left with a high-value training (we use "value" here with the meaning of getting clients closer to the results they want) designed to take people to the next level in a foreign language in a week.
So what did I do with it?
I was so excited about the training and the possibility of helping achieving results fast that I started to offer it to some clients who wanted exactly that. And all those clients said "yes".
The revelation was what that did for my business...
Those happy clients who had invested in doing that work engaged fully with the training and - as a result - got great results. They referred even more people like them.
Training a handful of people to get high-value results brought more money in a handful of weeks than the busy hourly work could bring in a year.
All that created a virtuous cycle in my business: great clients who were getting great results, accelerated business growth and free time to work on my business and grow even more.
This business model - which I call the "high-value model" - has been my favorite ever since and I still choose it for my current business. It allows me to do my best work and create deep transformation for my clients. (More about this model later).
I don't know what would make a great business model for you but I'm going to share some distinctions that help people like us who have a business based on their expertise.
1. Not here - It looks like the easiest and we seem to think this is a place to go as a coach, trainer, consultant or service professional. Don't look in the direction of charging for your time - whether it is per hour, per month or per number of sessions.
There are several traps in the time model:
a) People don't value time. Time is also hard to sell. People compare your hourly rate with what they get paid personally per hour.
b) Your clients have to recommit session per session to doing the work. That commitment is hard because the focus is on time and process instead of on results.
c) That leads to the next problem... Many cancel before they get the results that are possible for them.
2) Three factors - If it is not based on time, what can we base our business model on?
There are three places where we have options and leverage:
Factor 1 - The scope of the difference your work makes. This is probably one of the biggest levers. We can choose how big of a difference we create with our work.
Factor 2 - The number of people we impact. Some businesses make a small difference but they are able to create that difference for a very large number of people.
I would suggest this is not a good starting point but it's a factor to take into account to scale businesses like ours.
Factor 3 - Scarcity. This is a very real lever in your business because there is only one of each of us, like there was only one Picasso and only one Leonardo.
Sometimes we get lost in the thought that the scarce resource is money. There is plenty of money but only one of you who can do what you do in your unique way.
3) It's not about the level of difficulty - As a culture, we value what we consider difficult.
Till there... no problem.
The confusion starts when we think that the difference we make with our business for people has to be difficult for us to make instead of realizing that our magic lives in what we are super good at and it is today easy for us to do.
4) Scaling and expanding - Not everybody wants an "empire" but for those of you who lean in that direction, there are two business models to consider: agency and certification.
The agency model consists of training people to do some of the work you do for you in your business. This is a great model because it frees up time for you to be the "business person" and work on your business. It also allows your business to grow and serve more people.
The certification model works well when you have your own proven process to help people get results and you want to teach others how to use your process.
And the online program model?
The Internet is a medium, like TV is media. It is not per se a business model.
Having said that it's great to use the Internet to deliver trainings and programs as a way to scale and expand.
It's not so great as a starting point because it requires a considerable investment in developing the skills necessary, a considerable budget to reach a large number of people and it is time demanding.
Here is where most people over estimate the Internet... They immediately think about sales automation, aka never-having-to-talk-to-another-human-again. Selling automatically online requires a big budget and expertise to reach lots of people with a very precise message. From all those people only a tiny fraction will buy.
The online program model can very well be used to scale and expand once you have the budget and time to do so. It's a horrible model to start from without the capacity to make that investment.
Here is where most people under utilize the Internet for business growth ... It is a great place to communicate one to many. It makes it possible to gather an audience and talk to all of them at the same time. (It's interesting to see how many possibilities open up from this perspective).
5) The high-value model - This is my very favorite. Both my businesses have been high-value boutique businesses and I have never felt personally the need to look further... while still knowing that I could do so any time I want to.
In a nutshell, it allows me to create my best work that adds the most value to my clients.
Let's define value, first. To add value for us in this conversation means to help people get closer to the results and outcomes they want.
High value is the core of this model so the springboard of my thinking is always the same: what does it mean to add high-value to my clients?
So we have talked about what to stop doing to create the space to grow as well as how to choose a business model that allows us to grow... Now we need to make sure that our best work is not invisible to the people who are looking for it. (Yes, we live at a paradoxical time: more and more people are looking for help in different areas of their lives and most of those very experts that can provide that help are invisible to them). That's why we need to look into the next shift to make sure we build the right positioning for our brands so that the value of our best work has a fair chance.