Business Models: What Will You Throw Away?
How long have you lived in your house? Did you just move in or have you spent many comfortable years under the same roof? If you’ve lived in the same place for a while you probably have noticed how your stuff seems to accumulate. That shelf full of knick-knacks fills up and there hasn’t been room in the garage for the car in some time. When we’re on the move, we often have to make choices about what to take and what to leave behind. Yes, we have some great memories with that trusty sofa, but there isn’t room in the moving van.
When it comes to our business model we have to be more like those frequent movers. There’s only so much space on the van, which means there’s no room for things that weigh you down. Some businesses have left behind so much that they completely changed from what they started out as. Cosmetics giant Avon started out selling books. Colgate started out in the soap and candle business. Hasbro, famous makers of Transformers and G.I. Joe toys, began as a school supply outfit. All of these companies fundamentally changed how they were and how they went about earning their profits.
In the previous article in our series on Business Models, we talked about leveraging your strengths. It would be great if everything you did was an unqualified success, but the reality is that things don’t always go according to plan. When examining your business model you can’t be afraid to change things up. Like that old couch, sometimes you have to move on.
You start by asking yourself what worked and what didn’t, and then go deeper. You find out not only what didn’t work, but why it didn’t work. Was your product not marketed properly? Did it not perform the way it was supposed to? Perhaps it’s something more fundamental, which is why you’re considering restructuring your business. Maybe the market wasn’t what you thought, and it turns out people don’t want yet another doodad, gizmo or thingamajig. Maybe the brick-and-mortar store you’ve been pouring your heart and soul into isn’t the way to go. Maybe it’s time to retire a product line or change up your roster of offerings. There can be all sorts of reasons, but change only happens when you take the time to systematically analyze the things that need to go. Can a product or service be saved? Maybe. But you won’t know until you run the numbers.
It doesn’t have to be all bad. Perhaps an ancillary product has unexpectedly been selling well. It might be time to market around that. It’s happened before. Wrigley may be known for chewing gum, but they started out selling soap and baking powder. Their chewing gum was offered only as a giveaway to boost sales. It wasn’t long before people wanted the gum more than the baking powder.
Do you have a product or service that’s ready to take center stage in your company? Don’t be afraid to find out. Above all, don’t be afraid to change things up. There’s an old saying that says when one door closes another one opens up. All you have to do is step through.