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Whether you’re just starting a training business or you’ve been a freelance trainer for a while, it’s helpful to spend some time thinking about your business model.
In its simplest terms, a business model is a rationale for how you plan to create, deliver and capture value – or, simpler still, how you plan to make money. By pinpointing how your business will or does run and what you do better than your rivals, it can help you to stay better focused on your goals and the profitability of your training services.
Creating a successful business model
A quick search on Google shows that there is an abundance of business models, from the simple to the complex. One particularly respected starting point for creating a successful business model is the ‘Business model canvas’ by Alex Osterwalder, which asks you to answer the following nine questions:
- Who is your customer?
- What is your value proposition? In other words, what makes your training services attractive to potential customers?
- What channels will you use to market and sell your services?
- What relationship will you offer your customers? For example, do you offer one-to-one mentoring, ongoing training, one-off training programmes, or a membership club?
- What is your revenue stream?
- What are your key resources?
- What are your key activities?
- Who are your key partners?
- What does your cost structure look like?
Answering these questions can help you pinpoint how your business can generate revenue and increase profitability. It may also uncover some topics that you need to think about in more depth.
Focus on value
For many potential customers, whether or not they will book your services will be less dependent on price and more dependent on your perceived value.
People have free access to information 24/7 via the internet, which fosters a DIY mentality making decision-makers less inclined to hire a trainer. Your business model and strategy, therefore, needs to show that hiring you has distinct benefits. For example, you can share best practice, bring niche expertise, a fresh perspective, and external influence that can’t be found in the faceless online realm.
A simple but repeatable business model
Some of the highest performing consultants (and businesses in all industries) follow a simple and repeatable business model where there may not be many variations to their offering but they do what they do extremely well. This business model focuses on differentiation.
In other words, high performing consultants often look for that one thing that sets them apart from their competitors and then seek to build on this. They rarely choose to reinvent their brand but instead focus on what makes them truly distinctive and how that is relevant to every aspect of what they do. Most importantly perhaps, they get specific about how this differentiation is relevant to their core customers.
Each time they add a new product or service to their offering, they repeat the same business model by identifying how their core, fundamental differentiation adds value.
I found an excellent article on the Harvard Business Review website about this very topic. Companies highlighted in the article that use a simple differentiation business model include:
- Tetra Pak, a company that is known for extending the shelf life of products, eliminating the need for refrigeration, and efficient stacking design. Its differentiating principle is that all products must save more money than they cost to make.
- Nike differentiates on the power of its brand, its relationship with top athletes, and performance-focused design.
- Apple differentiates on simple design, deep technical capability coupled with easy-to-use software, and iTunes integration.
- Vanguard is one of highest performing companies in the Harvard Business Review article and differentiates based on a belief in the value of index funds and the commitment to cut out third parties and give customers direct contact with the business.
- Olam is another company that was able to repeat its business model through differentiation. The company initially established itself by working with local farmers in Nigeria, managing the supply chain from the farm where the product was grown right through to the customer. Over the years, Olam repeated this approach by working with small farmers in other countries with other products. It was these nurtured relationships with local farmers – achieved by managers living in the rural farming areas – that set the business apart from its competitors.
So, what is it that sets you apart from other trainers?
Perhaps you have niche expertise, hands-on experience, an established reputation, or you collect measurable data for your clients. How can you communicate this differentiation consistently across all of your marketing?
It’s might be helpful to identify what values are non-negotiable for you as this can be built into your business model and may prove to be the one thing that differentiates you from your competitors.
Many businesses wrongly believe that they need to diversify or broaden their offering to be successful but, in my experience, some of the highest performing businesses keep focused on a simple and practical business model, and create growth through differentiation rather than implementing new ideas all the time.
Ask your clients
If you’re struggling to identify what differentiates you from other trainers, you could ask your clients for feedback. What do they think sets you apart? How do they feel you add value? What are their takeaways from the training you have delivered?
You may find that some common themes emerge.
Why not spend some time thinking about what you do particularly well? What would you like to be known for? What aspect of being a trainer makes your heart sing? Once you’ve identified this, think about how you can that build that into your business model. If you build your training business around what you love, it will be far easier to keep focused.