At the most basic level a business model is a map that describes how a company will operate, make money and ensure that the doors remain open. The business model is the skeleton upon which the details of operation are attached such as specific vendors, locations, customers, products, services, etc.
Take as an example backpack maker BOLDFACE. This company’s business model revolves around producing customized on-demand backpacks for consumers that wish to express themselves through their apparel and accessories. The business model identifies target customers, products offered, marketing strategies and everything else that describes how the business gets from Point A to Point B.
The BOLDFACE business model uses a Web site where consumers upload their images to create their customized backpacks. While BOLDFACE also offers its own designs, the BOLDFACE value proposition is the ability to “express yourself” through your customized backpack. This business model differs from other backpack makers that predetermine how their backpacks are going to look and use a more generic mass marketing approach rather than meeting the needs “on demand” through customization.
Entrepreneurs like Ryan Krane, president of the eponymous firm Ryan Krane Inc. and creator of the Krane Training Method, know that launching and operating a company is a challenge and that success requires continuous evaluation of the business model to improve tactics and try new approaches.
Slightly more than 10 years ago Krane began his fitness-training and rehabilitation business, offering personal sessions and one-on-one attention. Over the years Krane has adjusted his business model to take advantage of demographic changes.
The following are three tips for keeping a business model relevant and achieving entrepreneurial success:
1. Seek a growth component
When it comes to starting and growing a business, entrepreneurs should give themselves the best shot at success. The marketplace is packed with competitors. While new entrants with considerable innovation can have success in serving mature and stable segments, entrepreneurs must be cautious. They can get the greatest bang for their buck by targeting segments that are growing and where players are not yet established.
In reviewing physical health research and journals, Krane recognized business-development opportunities in the field of personal training and health and fitness advisory services. His hunch was bolstered by the following Bureau of Labor Statistics projection: “Employment of fitness trainers and instructors is projected to grow 13 percent from 2012 to 2022, about as fast as the average for all occupations.”
Likewise, BOLDFACE CEO Randy Fenton observed a consumer trend: the demand for customized and self-expressive apparel. According to Fenton, “technology has given us the ability to customize almost anything on-demand. We started with silk screening and have evolved into 3D printers. The appetite for customization is insatiable and consumers are willing to pay a premium for quality.”
2. Evolve the business
The Greek philosopher Heraclitus is widely credited with saying, “The only thing that is constant is change.” While some entrepreneurs may not be trained in the classics, this is one lesson that business owners ought to know. All industries are in a constant state of change and companies that do not evolve will eventually die.
When Krane began his fitness-training business, baby boomers were still years away from beginning their exodus into the world of retirement. As years passed, he recognized a need to address the aches and pains that come with aging.
Indeed as the Denver Post reported, “the benefits of exercise for any age are well documented, but recent studies indicate that it can have significant impact on reducing illness and chronic disease in those over the age of 50.” Krane saw business potential in this trend and took timely action by implementing programs focusing not only on traditional fitness and nutrition regimens but also on addressing some common ailments that arise with aging.
BOLDFACE started as a customized on-demand guitar bag company. According to Fenton, “We were originally all about the music scene. At $100 million, the gig bag market seemed like a great place to live. Then one day I realized that the $2 billion backpack market was dying for more creativity and self expression and less mass production. That’s when we made the decision to pivot to premium backpacks.”
3. Be innovative.
Innovation can keep an entrepreneur’s competition at bay. Several years ago, as Krane witnessed the surge in popularity of video and the power of YouTube, he began to explore the use of instructional videos as a form of marketing. (Indeed YouTube broke the billion-user mark in 2013, according to Advertising Age.) Krane created his own YouTube channel and began to create and distribute fitness advice online.
Krane’s reputation for producing fitness and nutrition content spread and he began receiving inquiries from potential clients around the world.
Pursuing yet another chance to innovate, Krane expanded his in-person fitness training business to include virtual training by using Skype. His client portfolio expanded to include clients from as far away as Indonesia. His innovative approach to fitness training scored him a recent interview with ABC’s Diane Sawyer.
Similarly, BOLDFACE‘s Fenton also saw the rising tide and took action. BOLDFACE was born out of his daughter’s inability to find a school backpack that she liked. Using his background in engineering and his experience as an inventor, Fenton saw a need for innovation and revolutionized backpacks with his customized and on-demand functionality.
In the real world, more than three areas of concern arise. But entrepreneurs who adequately focus on growth, evolution and innovation can keep their business models relevant at all times, giving them the greatest opportunity to achieve success.