The Top 3 Adjustments to Make to Your Business Model for 2024Sep 28, 2023
This year has forced business owners to re-evaluate the things that matter most in their business models — efficiency, sustainability, and creative paths to growth, to name a few. Whether your business has struggled or thrived in 2023’s upheavals and inflation, 2024 will be a pivotal year—either for recovery or for sustaining your newfound growth. As we move into 2024, here are our top adjustments you can make to your business model for a more stable and sustainable year of revenue.
Adjustment 1: Reassess Your Ideal Customer
As 2023 comes to a close, it’s important to take a good look at who your ideal customer is now. There are so many things that happened in the last few years that could have impacted your customer base—the pandemic, the uneven impact of the recession, changes in the global supply chain, and trade deals. Who your customer really is, how they come to you, and what they are looking for may not be the same as last year—and getting a handle on that is essential to the success of your business model.
Do You Know Exactly Who Your Ideal Customer Is?
You might have a good handle on who your customers are, but do you have a clear picture of who your ideal customers are? What are they like? What are they looking for? Why would they want to work with you?
In my conversations with business owners, I find there are two common challenges when it comes to defining their ideal customer or “target client”:
- A lack of clarity as to who their target client is
- A lack of commitment to connect with that target client
Understanding your ideal client goes beyond broad criteria like geography, industry, and consumer behavior. A clear picture of your perfect prospect takes into account the many factors that make up your relationship with them, like personality—do they pay on time? Do they recognize the value, quality, or expertise you provide?
I find that a good way to pinpoint these qualities is to ask yourself the question, “What 3 clients do we wish we could clone? Why?”
These questions don’t just reflect your ideal client—they reflect you. With this important information, you can get insight into the trajectory of your business, and what you might need to tweak to attract more of your target customers.
Ask yourself: which of your offers is the most profitable, and are those the offers your ideal customers take up? Which services can we expand without outpacing our ability to deliver quality? Once you understand how your ideal customer fits into the best parts of your business, you get a more complete picture of what to adjust in 2021.
Committing to Your Ideal Customer
Once you’ve painted a clearer picture of your ideal customer, you need to capitalize on their need and your strength. The solution looks different for every business, but the goal is the same: adjust your business to appeal to and serve your perfect client.
Everything from your messaging and marketing to your services and products should appeal to that customer. This means trimming off whatever waters down your value proposition and refocusing on what you want to be known for. In short, center your business around who it best serves.
Doubling-down may feel risky, especially if you’ve been positioning yourself to serve “anyone and everyone”. But you’ll never catch a fish with a dull hook—and likewise, your business will never grow with a fuzzy focus. By focusing on your new ideal client, you’ll be free to build your business with the kind of clients that will fuel your growth, not hinder it.
Adjustment 2: Add New Revenue Streams from Existing Accounts
The second adjustment to make in 2024 is finding ways to add revenue without adding unnecessary operational friction. In other words, ways to “work smarter, not harder”. Sometimes revenue isn’t a matter of trying harder. It’s a matter of innovating your business. Every business has a goal of more revenue, but it’s “the how” that makes the difference when it comes to success.
Revenue growth strategies that are based solely on new client acquisition generally require a great deal of energy from your team and strain on your marketing budget. That’s why I recommend adding revenue streams that capitalize on existing clients—specifically, those ideal ones you’ve already identified.
To capture it in a phrase, “The easy person to sell to is someone who has already decided to purchase from you.” Why? Because they’ve already overcome the biggest obstacle: building enough trust to spur that first purchase. Once that trust has been built, your rate of return is much higher. If you can find ways to add value for your existing clients, you can add revenue and expedite your sales process.
How to Identify New Revenue Streams
One of the pitfalls business owners fall into when adding a new revenue stream is thinking that they need to develop a totally different product or service. But, of course, you can’t be all things to all people—if you’re an HVAC business, cake baking just isn’t in the cards. The best way to avoid this mistake is to answer these two questions in tandem:
- What do my best customers need that we don’t currently supply or offer?
- How can we meet that need within our business’s current structure and resources?
If you can identify this sweet spot, you can find new revenue streams that will accelerate your revenue growth without putting unnecessary strain on your budget and strategy. There are two main sources of information that I suggest you tap into as you dig into these questions.
1. Inquire from Your Current Clients
If you want to deliver value to your clients, talk to your clients. After all, they are the only ones who know what problems they have. Getting feedback from them is the best way to get a handle on what needs they’re looking for a solution to. Most business owners know this, but few pursue this information in an impactful way (don’t be one of them!)
So how do you go about getting this intel? If you work with a smaller customer base, take your client out for a meal, and have a conversation about how they are. This gives you the opportunity to dig for more information through real-time dialogue. If you work with clients at scale, surveys are a simple tool that can help you get a better picture of what needs you are positioned to service. Tools like SurveyMonkey or Google Forms can get your survey up and running as soon as possible to get this valuable information into your hands.
But let’s dig deeper. What should those conversations or surveys ask? Whatever you do, don’t ask “What else do you think I could do for you?” because 1) you’ll come across as needy and 2) your customer probably doesn’t know. Your customer is used to engaging with your business for one particular need—so it will probably be hard for them to think outside the box.
It’s like when the teacher asks, “Are there any questions?” and no one speaks up. Instead ask, “What’s a challenge right now? What do you wish you could have?” That will prompt your customer to give you a broader answer—something that they may never have thought to bring up with you. That will give you a clearer picture of what’s going on in your customer’s world and give you a platform to brainstorm on.
2. Dial in Your Team Members
Once you have this valuable information, bring it to your team. Talking through new revenue streams with your team is critical for two main reasons:
The first one is that within your team, you have a high number of client engagements and touchpoints that come through the normal course of servicing your clients. They hear and see things from your clients that you might not be aware of as a business owner. Use this resource to expand the number of data inputs you have access to when trying to pinpoint your customers’ needs, experiences, and expectations. They might also have fresh ideas on how to leverage these unspoken needs into new forms of revenue.
The second reason is that you need to have a realistic assessment of your team’s bandwidth (and willingness) when it comes to expanding service offerings. Quite a few business owners run into the same issue of getting excited about a new idea, only to run into resistance from their team when it comes to implementation. Work together with them to get their perspective so that you can rely on their buy-in when it comes time to put it all together.
Adjustment 3: Add A Recurring Revenue Stream to Your Offerings
The final adjustment to consider for a more reliable topline in 2024 is whether or not a recurring revenue option fits within your offerings. Adding a recurring revenue stream—an upfront commitment from your customer to buy X amount of what you sell on a regular basis for predictable payments (i.e. a subscription)—to your business can deliver two great benefits:
1. Recurring Revenue Lowers Sales Friction
First, adding a recurring revenue stream is a great way to expand your revenue because it helps remove friction from future transactions. It’s just like we discussed in the bit on adding revenue streams from existing clients—only it’s even less friction on your sales funnel because you don’t have to keep having the same sales conversation with them.
Most purchases receive the highest level of scrutiny when the initial decision is made. This requires more hand-holding by your sales team. If every transaction you pursue requires first-round scrutiny, it can spread your team thin as you attempt to grow. The beauty of a recurring revenue stream is that there’s a “set and forget” element to it (both for your team and your clients!)
Now, I’m by no means saying that you can slack on value delivery, but recurring offers will help lower the amount of constant scrutiny resisting a sale. It gives you more flexibility to continue adding revenue by way of long-term relationships rather than one-time transactions.
In a recurring revenue model, you get to enjoy a repetitive sales process that has already established brand trust and product value. All that’s left is continually improving your product or service while maintaining your already-established relationship. It reduces the strain put on your sales team while adding a steady stream of revenue to your top line.
2. Recurring Revenue Offers Unique Ways to Add Value
The second benefit is that a recurring service or offer allows you to add continuous value to your clients in a way that a one-time purchase may not. When you look at our economic world, people are willing to continuously pay for things they need (or might need) on an ongoing basis. Why is that? Here are just a few reasons:
- Convenience (or peace of mind)
- Avoiding the costs of ownership
- Mitigating risk
Do any of those sound valuable like your customer base? Think about what intangibles you can use to sweeten your offer in creating a recurring revenue stream for your business.
You see examples of this everywhere. You are probably currently a customer of a myriad of different kinds of recurring revenue business models.
Adding a recurring revenue stream is about finding the sweet spot where you can add additional value to your customer while maintaining your profitability. Let’s look at a few examples and see what’s being sold that makes a customer willing to continue paying for each service.
Let’s start with a simple product-based business model.
We’ll use HP as an example. They sell printers, a product that commonly has several years between replacements. The time gap means it’s not exactly a subscription-friendly product. But HP also sells ink--and as anyone who has run out of ink knows, it’s a real inconvenience to see that your cartridges are empty!
This is a perfect opportunity for a recurring revenue stream, and HP knows it. By adding a subscription model to their ink cartridge sales strategy, they not only add value to their customers by taking care of that inconvenience--they also effectively lock in their customers’ loyalty. They don’t let their customers run out of their product, meaning they’ll never have to think about choosing anyone else. They don’t give their competitors the opportunity to interject. Their customers only need to choose them once rather than every time they would normally need new ink.
How about a service-based business model?
You might have noticed that HVAC companies have begun adopting annual maintenance plans for their preventative maintenance in the spring and fall. These offers accomplish the same thing as HP’s ink cartridge subscription—they win the customer’s future business in one decision rather than having to continually repeat the competitive sales process.
Plus, the value proposition of these plans goes beyond the minor discounts on parts and labor they provide. They also get the peace of mind crossing responsibilities off their task list knowing it will be taken care of for them. They can move on to more pressing needs because they know this one is taken care of.
There are plenty of other examples out there that we could look into—like those recurring warranties you can buy for your appliances on the off chance they break or rental options of power tools that allow you to borrow them on a monthly basis instead of buying.
But what matters most is first identifying what your clients’ recurring needs are, and how you can build an offer that meets that. If you can offer them additional value to stick with your company, you’ll create a revenue stream that’s not as heavily dependent on new client acquisition, and that even builds customer loyalty.
Taking the Next Steps
If you believe that these steps will help you plan a clearer growth path for your business in 2024, don’t put them at the bottom of your to-do list. As a business owner, you know growth rarely happens by accident so make the time to invest in your business's future.