How Does Your Business Create Value?

It is surprising how many business owners and their teams are not clear on how their business makes money or what their “Value Proposition” is.

A business can only make money by adding value.  Your business adds value by selling a product or service or both.

The value you offer is how you can solve a customer’s problem or satisfy a customer’s needs. 

Let me give you an example before I go any further on how just by getting clear with one of my clients what his value proposition was, literally turned his business around from losing money and not being viable to being a highly profitable business within days!

This particular client specialised in developing systems for animal management, in other words helping farmer’s better control their livestock. His challenge was that he believed he was in the business of selling the hardware, he would spend time designing the systems and then he would try and sell the hardware for the system he had designed, the problem was that he was often competing directly with the companies that manufactured and supplied the hardware who could always beat him on price.

As soon as he realised that the value he created was the designing of the system and themanagement and analysis of the data, he changed his revenue model to that of a consultant not a retailer and that made all the difference.

How does your business add value and how can you better leverage off it?

Depending on how you add value will determine what type of revenue streams you can create, it may be sales, usage fees, subscription fees, renting, licensing, brokerage fees and even advertising.

Go spend some time thinking about what your business model is and how does your business currently add value and what can you do to better leverage of it?