How to design a business model

Imagine your ideal business

Building a business model is a creative act—it requires imagination. When you imagine your ideal business, what does it look like? How big do you want to grow, and what role do you ultimately want to play? As an entrepreneur, one of your most important jobs is to envision and document what your business will look like when it’s no longer dependent on you to run it. 

If you were building a house, your first step wouldn’t be a trip to the hardware store for lumber. You’d start by sketching out the house in its final form—creating a concrete image of the finished construction. And you’d work backward from there, plotting out the rooms and their dimensions, then the materials and so on. You’d have a very clear idea of what you were building before ever breaking ground. 

Take the same approach when designing your business model. Develop a clear picture of what you’re building toward and work backward from there to create a business model that will support it.

Think about what you don't want

If you’re struggling to dream up a clear vision of the business you do want, you may find it helpful to think about what you don’t want. What’s your biggest business frustration?

I had a client named Mary who owned a marketing firm. Mary was overwhelmed by the day-to-day work of her business, but when she tried envisioning the place she eventually wanted to wind up, she found herself stuck. The problems seemed bigger than she knew how to solve. So I asked Mary to describe her biggest business frustration. She was quick to answer: Her greatest frustration—she even called it a fear—was an empty bank account. 

Mary explained that when her business checking account dipped into the red, it always caught her completely off guard. She never wanted to experience that sense of panic again. Articulating what she didn’t want helped Mary reveal a key part of her ideal business—a finance system that planned her cash flow instead of reacting to it. She thought about the needs of her business and the parts of her cash flow she could and couldn’t control. As she uncovered the root causes of her biggest business frustration, she started to imagine how other parts of the business would need to function so that cash flow would never again be an unpleasant surprise.

So start your business model where your biggest business frustration lives, and you’ll uncover new opportunities to reshape all the parts of your business so it just works.

Start building your framework

A business model is a framework—and the bones of your framework are already in place. Every business has Seven Essential Systems, whether created by default or by your design. Your systems are likely undeveloped: You may be lacking a marketing system, or you don’t have an organization chart or know how to use a profit and loss statement. That’s okay. Your systems aren’t perfect (or you wouldn’t be reading this), but they’ve gotten you to where you are right now. You have customers, people are doing jobs, you know there’s money coming in. Now it’s time to take a look at how you’ve been doing things and the results you’re getting so you can make changes and improve.  

So as you work your way backward from the picture you’ve created of your ideal business, start building upon your framework by evaluating how each of your systems is serving your business—or how it’s not. Keep in mind that each system impacts the others. Your priority might be keeping money in the bank, but keeping money in the bank might mean you need to sell more. Selling more might mean you need to hire more people. Hiring more people might mean you need an organization chart. An organization chart might mean you need to think about how to group the kinds of work that need to get done. And so on. Everything is connected.

What a business model can do for you

Once you’ve evaluated your current systems, you’ll know what needs to be done to design a business model that works for you—one that doesn’t just exist on paper but lives in your business. It’ll reduce the pressure you feel as the owner to micromanage everything that's happening. Imagine being free to do the day-to-day work because you love it, not because you have to be the one to do it. Imagine seeing a path that you’re confident will move you closer to running a business that gives you the life you want.

And once you feel clear about your business model, don’t miss its value as a communication tool. A good business model explains what you want to accomplish to employees, relatives, investors, your bank or anyone else who’s putting their time or money into your business—they’ll have a clear view of your vision, where you’re taking it and what’s in it for them if they follow your lead. 

Where do you fit in?

At this point, you may have a hard time imagining what it would be like to separate yourself from the day-to-day functions of your business. If you want to achieve your goal of creating a business that can function without you, you need to think not only about what you want your company to ultimately look like, but also about what role you want to play.

Mary asked herself this question. Before she was a business owner, she was a marketer. So when she started her own firm, it made sense that she’d do the marketing work for her clients. What she learned along the way was that she also needed to pay attention to finance, sales, customer service, systems and managing people. Her business needed her leadership in all of those areas, and she needed to build her own personal leadership systems so she could become the leader her business demanded.  

By thinking carefully about her strengths and weaknesses, about what interested her and what didn’t, Mary was able to determine where she’d best fit in the organization and where she might need to delegate to other people in order for the business to grow. She imagined what it would be like to have a finance director who understood her vision, to have systems in place that told people not just what to do but how and why to do it that way. Mary’s business model needed the structure of systems and well-defined roles, but that was only half the design. It also needed people—the right people. The combination of people and systems is what would make it possible for Mary’s business to function whether or not the owner is in the building—and it will do the same for you.

So walk through each system to figure out where you fit in. What do you want to keep doing, and what would be better handled by someone else? What kind of roles will you need to hire for to ensure your business’s needs are met, and how can you build an organization chart that clearly outlines those roles and their responsibilities?

Creating the business model you need so you end up with a business that serves your life—instead of the other way around—takes time and patience. And while it won’t generate revenue today, your work will pay off in the long term. 

If you’d like support in building or improving your business model, get started with our free Systems Guide or reach out to us for help.