The Traditional Business Model: Delivering Value and Profiting

I see people overcomplicating their business all the time. At its heart, a business structure is pretty simple, so your business model should match to be clean, logical and straightforward too.

Simply put, a business model is your company’s plan for making a profit. Going further, Investopedia identifies your business model as, “The products or services the business plans to sell, its identified target market, and any anticipated expenses.”

Basically, it answers all the hows of your business operation.

As well as having a business model, you need to keep it flexible. As nice as it might be to set up a ‘perfect’ business and see profits roll in for 40 years on auto-pilot, it just doesn’t work that way. The market is changing, the way people handle and think about money is changing, and what and how people are buying is constantly evolving. As a business owner, you need to keep one eye on the horizon while you have a hand on the steering wheel.

Don’t believe me? Think about how many big, successful, household names have fallen off the grid because of change. Let’s start with Video Ezy and Blockbuster – giants with everything behind them, now extinct.

Taxi companies, once rulers of the private transport roost, are struggling to compete with rideshare rivals Uber (and the many that followed suit). Local stores and department chains are being eclipsed by online international giants like Amazon, AliExpress and others that offer buyers the convenience of shopping at home with delivery to your door.

If you don’t keep up with the changes, you’ll miss out on growing your audience, expanding your reach or even just seeing your current numbers continue.

If you don’t have the type of product that’s flexible enough to move online, go digital or automatic, it doesn’t leave your hands tied, you can still get creative in other ways like social media conversations, Facebook groups, Zoom calls, at home appointments, Google My Business, group meetings, savvy websites….you can always expand in some direction with a little effort.

When you meet your customers where they are in terms of their purchasing desires, you give them big benefits that keep them coming back, which flows on to massive benefits to you in terms of building your business, your brand, and creating the type of workplace that is nimble and ready for anything.

What Is A Traditional Business Model?

The traditional buy-and-sell setup is that thousand-year-old market style where customers go to a physical place to get what they want. While this is the traditional form, there have always been disruptions and challenges to the main – travelling caravans and wagons selling wares, peddlers and door-to-door sales have all been part of the ever-changing landscape. Nothing has moved the market quite as fast as the internet though. As technology advances, becomes more reliable, widespread and trustworthy, we are seeing bigger shifts away from tradition.

Who wants to get in their car, navigate traffic, and wander from store to store to compare prices when you can do it all from home in your PJs?

Yes, you can still buy music CDs now, and even vinyl records hold their place with an eager target market, but it’s not the mainstream music product, that award goes to streaming and digital downloads, to the point where most laptops don’t even have CD players anymore.

The dawn of e-commerce is not a surprising turn of events. As much as we’ve depended on traditional sales models for centuries, online business models make things so much easier and cheaper for everyone.

Not only have times changed, but they will also keep changing. The next evolution is currently in progress, which is easy to manage if you take on small adjustments bit by bit, but if you don’t keep up, it will take you by surprise.

What Business Model Do You Need In The Digital Age?

How you sell, what you sell, who you sell to and why is unique to you and your business. Your business model can be anything you want it to be. I’d rather see my clients flaunting their personality in their business than some boring cookie cutter stamp that is pretty much meaningless.

I like how Michael Lewis describes it as “a term of art”. I agree. Just as art can be interpreted, understood, and created through various lenses, so can a business model.

The reason the traditional business model is being left behind is convenience, for both buyers and sellers. As our cities get busier and stores push for more profits for their stakeholders, customers are making demands for convenience, especially when it comes with better prices.

What New Business Models Work?

Businesses that are following or shifting to digital business models are thriving. With the new normal now set in and people comfortable with purely online interactions like Zoom and eCommerce sites, I don’t think we’re reverting to the traditional methods anytime soon.

Even so, it takes time to understand and plan out a new business model that will work for your product or service and be the right fit for your customers.

You can always consult with professionals in business model development and eCommerce solutions.

Now, let’s move on.

Options you can consider include:

1. Outsourcing

I’m a fan of outsourcing. I’ve been doing it for years and it’s fast and efficient. If businesses are online, what’s to stop you from being more inclusive and having employees from other countries?

There are incredible benefits of outsourcing and with the right planning and structure you can save up to 82.5% when hiring staff. Through outsourcing, you’re not only saving massive amounts of money, but you’re also giving opportunities to people all around the world.

2. Subscription

YouTube, Spotify, and Netflix are examples of subscription businesses. This method ensures a steady income. You get paid a fixed amount monthly, regardless of how often your customer logs into your products. Subscriptions can also give you real-time feedback on what items are being used, how often and when, so you get a better read on your target audience’s desires as well as the hot and cold spots, allowing you to adjust your offer to stay with the highest demands.

3. Platform-based

Facebook, Uber, and Airbnb are examples of platform-based businesses where a third-party network facilitates your direct connections and builds a community. The platform gets incredible insight into these communities and passes the brand recognition onto your business by association.

4. Customer value-obsessed

The best businesses solve a problem, do things better and improve other people’s lives. In order to thrive and really love what you do, every business should be incorporating this into their business model.

While “the customer is always right” is false (and toxic for you and your staff), it goes without saying that listening to what they want and say is the key to your ongoing business success. Incorporating personalised options is a great way to keep customers happy and feeling like they matter.

5. Tech-based

Apple, Google, Microsoft, Amazon and Facebook are among the world’s most valuable companies. What do they all have in common? They’re all tech businesses. To say that technology is advancing rapidly is an understatement. Groundbreaking tech innovation is so commonplace we hardly notice it anymore.

Why Make the Shift to a Digital Business Model?

Having the ability to adjust your approach to meet whatever is on the horizon keeps your business nimble enough to change direction and keep pace with the front of the pack. What I love most about it is you also set your business up to scale and reach the next level without major stress and ongoing teething problems. Well-run systems also allow you to check in more easily to see how your business is going when you’re not hands-on with the daily operations.

The more you consider the gaps and simplify your business, the more control and freedom you have to spend time with your family and loved ones, go on a holiday or just live a life outside of work.

Leaving your business model on auto-pilot, even when the going is good, means those entrepreneurs out there that are making subtle changes and improvements are getting ahead of you. Knowing where to start can be as easy as getting an outside opinion to help challenge you to make changes that might be overwhelming on your own.