Unless you’ve been living under a rock, you will have heard of Business Model Generation. At the very least you may have heard people mention a ‘Canvas’.
Ok, if you haven’t, here is a quick 101. Business Model Generation was the first book from Business Model Foundry, but now going under the brand Strategyzer for the book series.
Business models are fundamental to all businesses, but rarely are they so clear, concise and easily changeable.
Historically they would be pages and pages of information, strategies, forecasts and anything else that made them difficult to digest. Business Model Foundry disrupted the whole perception of this business model and made them accessible by everyone and understood at a glance.
They introduced the concept of a Business Model Canvas (which has now been copied to death).
A canvas is a segemented sheet of paper, letting you represent a business model as a one pager without the complicated document. It has reached such a level that this is now one of the assets that investors like to see for a startup seeking investment.
Representing a business model on a single sheet of paper has the huge advantage of allowing you to quickly put together multiple possible business models.
This means you aren’t limited and you can experiment with your models without having to actually try it (which would cost a lot of money).
It’s like a simulation, does everything flow correctly? Are there any huge gaping holes? The canvas will prise out these weaknesses and make them stick out like a sore thumb; this is a good thing!
Here is a typical blank canvas according to the book:-
An example on pages 166 and 167 of the Business Model Generation book is actually experimenting with the possible business models for selling a book (How apt. AKA eating your own dog food).
It shows 8 different canvases representing possible business models:
- Publisher (traditional style)
- Free for marketing purposes
- Co-created book
- Book & Online
- Sponsored book
- Customised book
Each of them is plotted out on its own sheet of paper on the canvas template.
This rapid prototyping of the model an experimentation will lead to models you haven’t even considered. One of these models could be the difference between your business being a success or a failure.
This got me thinking about contracting and consulting. You are a business, often a one-man-band outfit, sometimes with a few trusted collaborators.
Have you plotted out your business model? You’re a business, what is the model?
Before doing a canvas I would have probably said:-
Find companies looking for contractors via job boards, agencies and people I know. I talk with them and we setup a meeting (more commonly called an interview) to find out if we can work with each other. Then get an offer, put a contract for services in place and go in and start working on a day rate. If necessary, take on multiple clients at the same time. And even send in a substitute in to deliver the work under the same company brand.
Is it a valid business model? Well, yes, it works. But is it flawed?
It seems pretty lucrative to me and is certainly more suited to my lifestyle than permanent employment.
Let’s do the model on an actual business model canvas…
It seems to work, when you think about varies aspects of the business, you can trace it through the canvas quite easily. Everything seems to flow without too much bottlenecks.
But here is a test, take something away and see if it falls apart. If I take away the job boards, it still seems to work, there are still agents, there is still my own networking efforts and links can still be established with the various customer segments.
Repeat this with other areas of the canvas and it’s not long before I stumble upon the big one. You.
If I take me away, it seems like the whole model falls apart – there may or may not be a substitute, but actually can or will that substitute replace you in all your roles in the company? Probably not, they might be able to replace you on site with the customer, but they aren’t going to find you new leads, do your accounting or sort out your business insurances.
To make this a safer business model, that area needs improvment
How might this be improved?
Here are some potential options
1. Hire other people to take on other projects under your brand
2. Group together with like-minded and like-skillset one-man-banders
3. Win the work, outsource to a trusted, yet cheaper, 3rd party
All of these carry their own risks, but it seems they may actually be less risky that the 100% dependency on yourself.