Take a wide view of your route to market to maximize your revenue
How To Model Your Business
It is easy to come at innovation from the wrong angle. You cannot just assume you can sell through your existing channels on your usual terms. You have to experiment. Otherwise your idea is likely to join the many others trundling along in the slow lane.
If you can think beyond the conventional, you can create differences that allow you to compete on more than price and you can put together a flexible team that allows you to scale up fast. The design of your business model becomes as important as the original idea itself. So what actions can you take?
- Before committing any resources, co-work and collaborate to test how any of your ideas might work in practice, as well as exploring what new technologies like 3D printing and the internet might mean to you.
- At an early stage, discuss the extra value you can create for potential customers: they will usually be happy to tell you what problems they would actually like solved.
- Think about who your customers could be. Are you happy to be a supplier within a chain? Or could you go direct to an end user?
- Before you commit to managing the operation yourself, decide whether you are willing to bet the company on a single idea or whether it would be more lucrative to license it to other users, then focus on developing the next round of applications.
- Consider whether you could manage a process or an experience as a whole by assembling other technologies or bringing in partners.
- Review the extent to which you can operate digitally in the cloud, bringing in skills as required.
Depending on which model you adopt, you could find yourself in a strong enough position to charge a premium or ask for payment upfront. It is more likely that you will have to structure your pricing.
To encourage the uptake of an idea, for instance, you could keep the initial price low, then make your return on service, upgrades or re-fills. It is a model followed by razors to aircraft. Alternatively, you might ask for a regular subscription or even offer to put in place the financing yourself for larger items.
For those who can innovate round their business model, the potential is high for shaking up industries and for putting their sales on a trajectory to high growth.
SMEforGrowth Editor 14.09.16