This month we turned the blog over to our fabulous CEO Grace Sodzi to talk all things business model, what are they, why do you need one as a creative and how can you use yours to start making money?
What is a business model?
A business model is basically a birds eye view of your business. In a nutshell, it covers what it is you do, how you operate, and how you make money to cover the costs of that. There are a variety of different business models and by this I mean different ways to make money!
Here are a couple of types of business model
One model could be producing a product, and selling it for a fee higher than it cost to make in order to make a profit. Making a profit enables you to make more products in the future.
In non-profit organisations such as PAPER Arts, we make money simply to cover our costs and breakeven. Any profit we do make is reinvested back into the business for a social cause – for example, to run an extra programme or workshop. Commercial businesses can use profit to pay their staff or CEO more, whereas non-profits can only use it for social impact. *Sigh* no holiday in the maldives for me then.
Why do you make a business model as a creative business?
Having a business model tells you how to sell your work or product, but also how to make sure you don’t lose any money.
It covers all the different aspects you need to consider as a business which I find extremely useful because without that structure I would probably forget something important!
This gives you structure so you know how to talk about your business, who you need to talk to, who your customers are and how to reach them, along with how to grow your business. Once you’ve got your business model sorted, you’re good to go!
How is PAPER Arts making our business model?
For those of you who don’t know, we are currently going through a transition period and this year is all about the research and development of our new strategy and service. With this, it is my job to come up with a business model. We are running workshops with young creatives to advise our strategy and codesign our service (this could also be called market research), and my job is basically to figure out how we can make what they need a reality. In a business sense, that involves figuring out how much a service will cost, to know how much money we’ll need to bring in to make it viable, and then figuring out how to make that money.
Through that process I also map out what the service will look like when fully functioning, and how we get from where we are now (with it not existing) to running at 100%.
Creating a business model canvas
I use the Business Model Canvas for this as I find it the best way to explore ideas. You can check out this free resource which tells you all about what a business model canvas is and how you can make your own. I am a visual person and so being able to draw out a business model and move around post-its works best for me. I also like how the Business Model Canvas is ever-evolving – that’s something that’s important to note. A business model should never be seen as ‘finished’, it is always a work in progress. In the coming months I will start to build up ideas and add to it, remove from it and just have a play. The best business models stem from creativity, so have some fun with it and see what ideas you come up with!
You’ll see in this picture, an example of a previous canvas I was working on. It is incomplete as I hadn’t got to the second half, but it gives you a good idea. I fully recommend ‘Business Model Generation’ by Osterwalder as a great read – it’s a really accessible book with plenty of creative activities to get the ideas flowing.
Spread the word
I would say, start by building relationships with your key stakeholders and/or customers. You need to get your name out there and your product. Spread the word! Having a social media presence and website is really helpful as it is something you can signpost people to – even better, get a mailing list set up to stay in regular contact.
Think about what your customers need
It’s a great idea to map out your customer’s journey. Put yourself in their shoes and go through the steps they would take from first hearing about you, to buying your product or service. Once you have this, you can strategically work backwards and make each of these steps as easily accessible as possible.
The key to all of this is to plan! Set goals and targets for yourself so that you stay on track and don’t spend too long on one step. Some companies spend years on the market research stage – as a small creative business, you don’t need to.
How do you start to make money from your business model?
In terms of making money, put all the other steps into place and then it should happen! If you’ve identified a need, and targeted the customer whose need you’re fulfilling, you should start to generate sales fairly quickly. It’s the establishing the need and finding the customer that takes the most time but once you’ve done that, you’ve cracked it! Just remember that once you start making money, it’s important to maintain that relationship with your customer as much as possible so that they hopefully make future purchases. This is why when you buy online, you’ll often see tick boxes requesting you sign up to a mailing list to hear of future offers.
You may say, well Grace, that all sounds great! But where do I start? Well…
Where To Start To Take Over The World With The Most Genius Business Model
- Work out your costs (including the cost of your time because #you’reworthit)
- Identify potential revenue streams (the more the merrier)
- STI – Spread The Information about your business (get it out there, get people talking about you)
- Turn up on the doorstep of your customers (maybe not literally, but basically, meet them where they are)
- Know your numbers – know how many sales you need to breakeven and make a profit (it’ll make you feel powerful and sexy)
This process takes time – it is a marathon not a sprint – but will pay off long term, I promise. Is it scary and intimidating? Hell yeah! But we’re in this together – if you do yours, I’ll do mine, deal?