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Kayode Omosebi: Changes in the Market Place? This is a Good Time to Review Your Business Model

Kayode Omosebi

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dreamstime_l_44341081Business as usual is dead and it has been for quite a while. The rules of the game have changed. Change or die, and to do this you’re going to need some good direction.

The business world we operate in seems to be changing with every passing day; majorly due to series of events in our domestic economy. New dynamics are being added and new markets are opening up. Hence, you cannot afford to stick to the same model from which your business grew. Gone are the days when a growing business with any hopes of long-term survival could etch a strategy in stone and follow it into oblivion. Reviewing and adjusting your model as captured is the only way your business can adapt and keep the pace with the now dynamic marketplace. Savvy customers and a fragmented marketplace require businesses to move on, adapt or die. In a short while, your business will also face disruptive innovations that enter the marketplace and challenge your business model.

My Pastor once told a story about a small restaurant that had huge sales levels and was extremely profitable. Then, market dynamics changed and the owner of the restaurant had to go back to his drawing book to see how to stay profitable, it was then he realised that the cash cow in his restaurant was actually the bread he was making and not the food. Now, he runs a successful bakery as against his “fantastic” restaurant business. “Just as a fish doesn’t know it is wet, so companies often can’t see or feel the very opportunities where they are swimming” Pam Henderson

According to Jeff Boss, in today’s business environment, the gap between relevance and obsolescence has the potential to grow wider every day. If companies are to stay relevant then they must adapt to change, but they must do so before change beckons the call.

Your business model is a journey. Your company is a living and growing thing, and so is your business model. A perfect business model is an articulation of the entrepreneurial business plan for managing the risks and challenges involved in building or expanding the business. As such, it should acknowledge that growth and success are moving targets by anticipating as many future events or circumstances that will affect the business objectives. To do so you first have to answer the following questions:

  • Who are you and what are you trying to do?
  • What does your business stand for?
  • What problem does your business solve?
  • How are you going to get it done?
  • How do you reach your customers?
  • Who else is doing this business venture?
  • How do you obtain our initial customers?
  • Which are the easiest to reach?
  • What are the target customers’ decision-making processes?
  • What relationships do they currently have in place that will need to be terminated for them to do business with you?
  • Can you truly modify the way business is being done in your industry or is this more of a fad or a trend?
  • What is the end-value of your product to the customer?
  • Is there a significant threat to the value of your product going forward?
  • Are these targeted customer relationships profitable?
  • How do you make money?
  • What do you need to accomplish your goals?
  • When are you profitable?

Now you have the Business Model Canvas. The Business Model Canvas is the new language for describing, visualising and assessing business models. It is a necessity in developing a perfect and flexible business model.

So now it’s all written down. What’s next? You have to better understand the business model you already have. “Before dreaming about the future or marking plans, you need to articulate what you already have going for you – as entrepreneurs do.” Reid Hoffman

  • What connections can you draw from each of your answers? Draw out how your business looks to you based on the information you’ve just written down; write down key statements that tie important pieces of information together.
  • What appears unnecessary? As the marketplace changes, it’s inevitable that you’ll find parts of your business that just are not serving you. Write what you can remove from your model to simplify your business strategy.
  • What’s missing? Inevitably, there are holes in your business model. Is there an underserved customer or an opportunity to make a connection between a product and an activity? Write down all the opportunities you see in your model.

Lastly, you need to figure out if what you have is viable.

  • Ideally, how many of each could you produce in a week?
  • Ideally, what would your product spread be?
  • What is your ideal turnover based on what you can produce and how you would like to sell it? Multiply each item in your product spread by the number of sales you’d like to achieve

Now when you take into consideration the costs to run your business, is this a number you can live with? Does it feel scary, abundant or ridiculously low?

You can then draw conclusions from this number

  • If the number is very high – How can you make those numbers a reality? Can you reach more customers? Can you attract more appropriate clients? Can you better use the resources you have available to you? Can you move your product spread closer to what you’d like and further from what it is now?
  • If the number is very low – How can you adjust your product spread to create better revenue? Can you raise your prices? Can you create more products by outsourcing? Could you develop a more profit-friendly product or service to boost your bottom line?
  • If the number is scary and un-exciting – Can you incorporate one of those missed opportunities into your model? Can you create clearer value propositions & offers? Can you seek strategic partnerships to sweeten the deal?

What makes the business thrive is how the answers for the business model canvas are fiddled over time to ready customers for a bigger, more profitable offer. We all come out on top when our business model is built to deliver higher levels of value over time and in highly effective and profitable ways.

“What if” questions help us break free of constraints imposed by current models. They should provoke us and challenge our thinking. They should disturb us as intriguing, difficult-to-execute propositions.” Alexander Osterwalder

Photo Credit: Dreamstime

Kayode is an Economist and Investment Banker with experience in investment research, corporate finance and investment banking.  He has built a sound knowledge of Sub-Saharan Africa economies and financial markets, with keen focus on Nigeria. He is passionate about the MSME field and aims to plug the funding gap hindering growth in this field. Having seen the obstacles that MSMEs often face when seeking funding to grow, Kayode is focused to link promising sustainable and viable businesses with the investments they need to get off the ground. Thus, he offers advisory and financing services to MSMEs that contributes to the growth and development of the nation. [email protected] @KayTrinity

23 Comments

  1. Bex

    June 9, 2016 at 1:42 pm

    Thanks for the article. As I venture into the unknown and the exciting possibilities of starting my own business your article has come at a crucial time for me. I have a business model already but did not factor in some of the points you’ve made. I like the bit about success being a moving target hence the need for an entrepreneur to keep his business model flexible and nimble. Thanks once more. I have questions how can I reach you?

    • Kayode Omosebi

      Kayode Omosebi

      June 9, 2016 at 3:24 pm

      You’re welome Bex, You can get in touch on [email protected]

  2. Rex Ugbonaiya

    June 9, 2016 at 2:48 pm

    Great Article, I love this. Your pastor must be Pastor Poju Oyemade, I can recollect this story from a recent message

  3. Loveth

    June 9, 2016 at 2:53 pm

    Very Insightful and timely for me. Thank You BN

  4. Tokunbo Oni

    June 9, 2016 at 3:10 pm

    Wow. Thanks for these mind-blowing insights

  5. Damilare Sam

    June 9, 2016 at 3:11 pm

    Great Article Mr. Kayode

  6. Funto

    June 9, 2016 at 3:17 pm

    Exactly, a lot of businesses need to review their models, the dynamics ain’t same. I am not a business owner, but intend to start up soon, and I’ve taken a lot from this mater piece. Thank you Bella Naija and the writer.

  7. Annonymous

    June 9, 2016 at 3:26 pm

    Value-adding and timely piece. Cheers

  8. YHM

    June 9, 2016 at 3:29 pm

    Great, just what I needed to read right now. Back to the drawing board, thank you.

  9. Chinwe

    June 9, 2016 at 3:34 pm

    I took notes and will definitely apply them to my business. Thanks for sharing

  10. Paul O

    June 9, 2016 at 3:40 pm

    Very Apt, practical and timely. Thank You

  11. Tolu

    June 9, 2016 at 3:48 pm

    Hello fellow entrepreneurs,

    Please let put this into practice and not just read for the fun of it.

    It is very true and needed. I used to sell clothes, but now I cloth groom train, and this has kept me in business. I ventured into this when demand started to drop. Now I sell clothes only via my page on SME Market Hub, Jumia and Konga. But physically, all I do is wedding styling for the groom and his train, which starts from Intro to white wedding. Soon I will start travelling to Dubai to style them….Amen

    Failure to review business model killed Nokia, Kodak, Sony Ericson and many businesses.

  12. Bankole Tafa

    June 9, 2016 at 3:51 pm

    Nice one. Ooooshey BN

  13. Jamie

    June 9, 2016 at 4:11 pm

    Very true! Sustainability, Flexibility and Profitability should always go together. Love this write-up Kayode Omosebi

  14. Tayo Babalola

    June 9, 2016 at 4:18 pm

    Now I have a business strategy, not just a business running on a hope and a prayer. Thanks BN

  15. Jennifer

    June 9, 2016 at 4:20 pm

    This is clarity in action and I want this clarity. Great piece

  16. Kenny Ogbo

    June 9, 2016 at 4:26 pm

    Read it, understand it, believe it and apply it. It will work. Or else……

    Great write-up

  17. charlie wayne

    June 9, 2016 at 4:29 pm

    Fantastic article. This is the key to survival, growth and sustainable profit.

  18. Emeritus Emeka

    June 9, 2016 at 4:35 pm

    That’s the 411 oh, market dan change completely.
    You gat to change your parade.

  19. Atunbi

    June 9, 2016 at 4:40 pm

    hmmm, from Restaurant to Bakery. My mum also changed her school to a full crèche and nursery school, and it is much more profitable than when she ran a full school. I guess she reviewed her model without her knowing that’s what she did.

    Very insightful piece BN.

  20. Jeffrey

    June 9, 2016 at 4:46 pm

    Generating Surplus Regardless of your Occupation by Pastor Poju

  21. Bukkie Asha

    June 9, 2016 at 5:01 pm

    Lovely and timely

  22. Blessed

    June 11, 2016 at 2:13 pm

    Thanks a lot for this article Mr Kayode… Very timely. Excited to begin my journey as an entrepreneur. So help me God!… #positivemindset #successelements

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