How to Know What Business Model is Right for You

[00:00:00] Kathryn Thompson: After generating over a million dollars in sales and selling one of her businesses with a single email, your host Katherine Thompson, takes an unconventional approach to marketing and sales. So if you are ready to tap into a more powerful way to be seen her and a sought after entrepreneur in your industry without having to spend endless hours marketing your business and chasing clients, you are in the right place.

[00:00:26] Be The Sought After Entrepreneur podcast is here to help you ditch the cookie cutter, one size fits all approach to marketing, and use your unique energy to effortlessly attract the most aligned clients. When you do this, you can. Time marketing your business and more time doing your soul work and enjoying the richness of your life.

[00:00:46] Welcome to Be the Sought After Entrepreneur podcast, and here's your host, Katherine Thompson. Hey. Hey, super stoked that you're tuning into this week's episode. I cannot wait to dive in today's [00:01:00] topic because it is something that I have learned through a lot of trial and error, and I love sharing with you my learnings and the lessons that I've garnered from my own process in entrepreneurship because, It one helps you either avoid making the same missteps along the way, but more importantly, it gives you the information that I've learned so that you can then make an informed decision for you and your business.

[00:01:26] And I've been teasing that I was gonna be doing this episode for a few weeks now, so I'm really stoked to be doing it. And if you are in a season right now in your business where you've built this business and you're. Questioning whether or not the business model is for you is aligned for you, but you don't really know what your next best steps are, or you've built this business and now you are getting the itch to do something differently, and maybe it is a completely different business idea from the business you're currently running and you're wondering, [00:02:00] How do I make the leap?

[00:02:01] Where do I go from here? Is this gonna be the next best step for me? Then you're gonna wanna keep listening because I'm gonna be sharing with you how to assess whether or not the business model that you're wanting to pursue is aligned for you, or how to set up your business in a way that's in alignment for you energetically based on the business model that you've created.

[00:02:24] And I'm gonna use. My two stories, if you've been following me for a while, you know I created a brick and mortar business that was a brew on-premise wine making store that we ran locally where I live, and it was local because we weren't allowed to distribute the wine beyond our store. And there was a lot of legalities around how we could even make the wine on premise, for example.

[00:02:49] Our customers had to come in and actually physically purchase the wine, and they also had to sprinkle their yeast, meaning they had to be on premise to do the initial action [00:03:00] of making the wine, and then we took it from there. But part of the legalities around that is that they had to come back in six weeks later.

[00:03:08] To bottle their wine. They had to be a part of the bottling process in order for us to be doing business in a legal way. Therefore, we could not do it online. We couldn't sell it online. We couldn't, you know, distribute it to other provinces. It was a very local business model. In comparison to my online coaching and consulting business where I help entrepreneurs like you grow and scale your businesses with aligned marketing and sales strategies, and that is a very, very different business model because one, there is no product there that I'm delivering.

[00:03:44] It's a service that I deliver, and it's a global service. It reach. To other countries and I'm able to have customers from all over the world. So two very different business models and two very different learnings. [00:04:00] But one thing that I do want you to consider as I compare these two things is the thing that I ultimately crave is the autonomy and the freedom to do what I want, when I want, how I want it, and when I feel sort of restricted or boxed in, it's really hard for me.

[00:04:18] And so I want you to keep that in mind as I share these two stories, because it's gonna be pretty eye-opening. To the lessons that I've learned and hopefully give you some insight into whether or not the business models you've created are in alignment with you, or the ones you want to create are gonna be in alignment with you, or how to create them in a way to give you the thing that you ultimately desire and you want.

[00:04:44] And most entrepreneurs, again, it's that creative expression in combination with freedom. The freedom to do what you want, when you want, how you want it, and again, all the business models will vary in terms of what that looks like. Now, [00:05:00] when I'm talking about business model, I'm talking about sort of three key component things that make up the business model.

[00:05:07] So the first component is, who are your customers and what will you offer? For example, our winemaking business had a very. Group of customers that we were serving Avid wine drinkers who love to enjoy a bottle or two a week, maybe more depending on the customer. And they wanted to be able to do that at a fraction of what they paid at retail, and that's exactly what we promised.

[00:05:29] And they wanted to be able to enjoy a good glass of wine. They weren't really picky about, you know, whether it was an expensive bottle from a specific region. They didn't care about that. They just knew that they loved to enjoy wine. And a good glass of wine, and they didn't care probably where it was come from or anything like that, and they wanted to be able to pay a fraction of what they paid at retail, which is exactly what we offered them.

[00:05:55] The second component is how will you deliver on that promise? How [00:06:00] will you deliver on the offer that you're putting out there? Are you doing a combination of a product, a service, a hybrid of the two? Where are you delivering that? Is that online? Is that in person? What does that look like? Again, for example, with our wine making business, we had a hybrid as I can.

[00:06:19] Consider it. It's a hybrid between a product and a service. It wasn't like the customer could come in and just buy a bottle of wine off the shelf. They had to come in and start the process of the wine, meaning they had to come in, sprinkle the yeast, and then they would wait six weeks to receive the bottles.

[00:06:35] They had to come back in to bottle the wine. That was part of the legislation where we live in order to be able to deliver this type. Product for them, but the service was, is that we brewed the wine on premise. They could have bought the supplies from us and gone home and brewed it, but we offered the service with that so that they didn't have to do that in their house.

[00:06:59] Brewing wine [00:07:00] can smell. It can be messy if you don't have the space for it in your house. So there was this convenience factor that we offered that they could just come in, sprinkle their wine, come back in six weeks and bottle up their 30 bottles of wine. It was easy. We did all the heavy lifting for them without them having to brew it in their house, find space for it, buy the supplies, do all the sterilization, like we had a dishwasher, that they were able to wash all of their bottles.

[00:07:23] We kept everything very sterile. You need a very sterile environ. To produce wine, good wine. And so we did all that for them. So it was a combination of a service as well as a product. Now that played a factor into obviously the, the space in which we had, how big it needed to be, how big it needed to be for us for future expansion, all of the things that we were thinking when we invested in this business, right.

[00:07:51] As. Where are we going? How are we gonna be able to grow this, and what size of space do we need? And it needed to be obviously, a physical location to be able [00:08:00] to do that because of the legislation wasn't something we could sell online. It wasn't something that we could ship across the world. In comparison to my online coaching and consulting business where I help entrepreneurs like you grow and scale your business, I am able to deliver that from the comfort of my home on my laptop.

[00:08:18] There's a lot less overhead, there's a lot less capital. Um, so that is a very different business model, and I'm gonna kind of give you the comparison throughout this episode so that you can see what and how I learned and why certain models didn't align with me or obviously didn't align with what I ultimately wanted.

[00:08:39] And then the. Component, which is an important component is, is like, how is the business then able to make money from delivering that offer in the way that they're delivering it and make money in return. For example, our brick and mortar winemaking business had a lot more overhead than, say, my online coaching and [00:09:00] consulting business with our brick and mortar.

[00:09:01] We had to pay for. Rent for the location. We had to pay for inventory to have on-premise to even sell. We had to pay for supplies and lots of other things. And so that cost alone was substantially higher than my online business, which means I had to sell a hell of a lot more wine in order to create a return or receive money back into the.

[00:09:26] In comparison to my online business model, which has a lower overhead, all I really need is a working computer and I can work from anywhere, so I'm not paying rent in order to sustain this business. In saying that, I want to give you the pros and cons cuz some of you might be like, oh, well I'm gonna just ditch my brick and mortar here and go online, or I'm gonna figure out how I can go online.

[00:09:51] There's pros and cons to every business model, right? So our brick and mortar had a lot more visibility upfront because [00:10:00] we were in a high traffic location and we paid for that. We were in a high traffic location with big signage. We got to run, you know, billboards on the street where we could promote what we were doing.

[00:10:12] There was a lot of benefit of having that visibility because it brought in a lot of foot traffic people that were just driving by going, custom Winery looks amazing. Let me check it out. And what ended up happening was, is when people would come in, they would receive this exceptional service that we prided ourselves on, and they would buy wine.

[00:10:33] It was rare that people would walk into the store and walk out without wine, if I'm gonna be honest. And then once they came in, they tried the product. Once they had it, it became this sort of like viral word of mouth that would happen. And before you know it, we had built this business. Basically on wor word of mouth and return customers.

[00:10:54] So we had this 700 email list that we would email to drive sales every month, [00:11:00] and that was how we built the business. And so that visibility was amazing because I didn't have to invest a ton of money in upfront paid advertising. Also, we had the benefit of local, um, free marketing and advertis. Anytime there's a new business, they'll feature you on the news or print something in the newspaper.

[00:11:18] And so we leveraged that and that really also supported us. We did invest in some paid ads upfront, but after the first year, we realized that majority of our sales were coming from existing customers that had bought from us before. And word of mouth. Now, that doesn't, that's not to say that we wouldn't have then built in some paid ads going forward to really scale it.

[00:11:43] We sold it at year four, and so beyond year four, I think eventually word of mouth and whatnot can trickle off, or you can hit sort of a plateau and in order to expand and scale, We would've likely looked at what that looked like for paid ads and and whatnot. So there was a [00:12:00] benefit there of the visibility, the instant visibility up front in comparison to an online business.

[00:12:06] And by that I mean. If you're running solely an online business, which I am with creatively owned, my reach and my visibility is non-existent, right? I don't have a brick and mortar, high traffic local spot that people are driving by. I don't have eyes on my business. I have to create that, which takes a lot of time and effort to create content for social media to email.

[00:12:31] To even build a list for that matter. So that visibility and reach is a lot different, which means I've invested paid ads, I've invested in reaching more people upfront in order to create a return on the value that I'm offering, and now I'm about. Two years in, and I'm starting to see that sort of really pay off when in reality with my brick and mortar, I saw the visibility factor of just being in a high [00:13:00] traffic location pay off instantaneously.

[00:13:02] When we opened our doors, we had tons of people come in and buy wine, and that was just the start, and then it just became a snowball effect from there. Whereas with the online business, I would say it. Slower momentum up front, which then requires a lot more com commitment and discipline to stick with it because it's easy For me, it was easy to compare and go, huh, my brick and mortar, this is how it looked, and this is what I liked about it.

[00:13:32] And I'm not maybe seeing that in the online world, but I love. The online model in that I get to work from anywhere, and that's what I didn't necessarily love about the brick and mortar cause I had to be in a retail location every day from nine to five or whatever our hours were. And the online business, I get to set my own schedule.

[00:13:51] You can see that there's pros and cons to each one. What far outweighed the cons for the brick and mortar was the fact that it was a physical location [00:14:00] and. That there was a lot of overhead. And so in order for us to see these really great returns, one, we had to sell a lot of wine, but we also had to work really hard to produce it.

[00:14:12] And yes, we had support and we had staff in there helping us. But still producing wine is, is labor in a lot of ways. And so, The more we sold, the more labor we had to produce. Whereas the online business, I have mastered my marketing communications, and so as a consultant, I'm just showing up and delivering what I have sort of within me, and that doesn't require a lot of labor and effort.

[00:14:37] However, there is a lot of energetic output when it comes to consulting, which is one of the biggest things I hear with a lot of coaches and consultants recently, is that I'm having to give all of this energetic output to consult on whatever it is, or if I'm a healer, right? There's a lot of energetic output that I'm giving to heal or to whatnot, and it takes a lot out of me.[00:15:00] 

[00:15:00] Which then brings me back to component number one, which is your customers. Right? With the Rick and Mortar, we were very solid on who our customers were. Avid wine drinkers who want to save money, drinking wine basically, right. Super easy. There wasn't a lot of like, Interaction. They would come in, they would sprinkle the wine or yeast, then they would come back and bottle it, and then they would leave and it, there was not a lot of interaction beyond that, let's just say.

[00:15:26] Whereas if you're running a coaching and consultant business, there's a lot more personal interaction between you and client, which makes choosing who you wanna work with. Really, really important because you're spending a lot more time in an energetic exchange with your clients or your customers when you're delivering a service of some sort.

[00:15:47] For example, if you're a healer, there's a lot of energetic exchange that goes between you and the customer. Where in comparison to my brick and mortar, I mean the customers would come in for like a few minutes, sprinkle the [00:16:00] yeast, and then they would come back six weeks later to bottle, and that would take anywhere between 15 to 30 minutes at the most.

[00:16:06] And I didn't have to be like handholding them through the bottling process. It was quite automated and they could do it on their own so I could go off and do something else. So there wasn't a lot of like energy. Exchange that needed to happen between me and my customers and my brick and mortar, and when they were gone, they were sort of gone until they came back to get more wine.

[00:16:28] Whereas with my online coaching and consulting business, there's a lot more energetic exchange there, which. Means getting really, really specific of the people you wanna work with, cuz you're spending a lot more time with them. I didn't have to think about that with the brick and mortar, right? Because it was kind of like they were in and out and then they were sort of gone and that was cool.

[00:16:45] And I valued all my customers in my brick and mortar, but I didn't have to work. Think about, oh, you know, I really need the avid wine drinkers that I get on with and get, you know, could have a glass of wine with, I didn't really need to think about that because I wasn't spending a ton of time with them.[00:17:00] 

[00:17:00] Whereas with my online business, I'm spending a lot more time with my clients and in relation with my clients that I consciously know that I'm gonna be spending more time with them. Therefore, I need to get on with them in a way that doesn't energetically drain me. So being able to have the same sort of mindset and mentality and level of consciousness and just where we're going sort of in the world is.

[00:17:24] Do. Are we aligned in that capacity? And so that's just something to consider depending on the business model that you have, whether you're a coach or consultant or brick and mortar. And to really sort of look at how much time am I going to be in relation with these people, and does that play a factor in ultimately who I want to serve and why I want to serve them.

[00:17:44] And you've heard me now share the comparison between my online business and my brick and mortar, and I'm hoping that you're kind of thinking there's pros and cons to each, because there is, when I left my brick and mortar, I left for a reason. The business model. [00:18:00] Wasn't in alignment with ultimately what I desired, right?

[00:18:03] I had to go to a store every day, Monday through Sunday. Basically, I had this physical location. We weren't open every day of the week, but we were there working and producing and whatnot. So it took and consumed a lot of our time, but, I had to be at that store during retail hours, which was very sort of restricting to me where in comparison to my online business, I can work when I want, how I want around my timeframe.

[00:18:28] In saying that, I loved the brick and mortar because of the walk-in traffic. I got to deal with people in person, which I absolutely love. Whereas my online business, I don't have people walking through my store, and I'm not able to have those like in-person conversations on the daily, which is something that I ultimately have missed in my online business.

[00:18:50] Now I get to engage and have conversations with people around the world, which is phenomenal. I get to meet people that I would never would've been able to meet. I would never have [00:19:00] got. In a brick and mortar locally, right? It's local people, obviously, to my city where I live, whereas my online business allows me to reach people around the world, which is pretty phenomenal.

[00:19:10] So again, there's pros and cons to each one. It's just deciding on ultimately what you want. And when we think about the word freedom, freedom for me is. Is what really drives all of this. But freedom looks differently to everybody else, right? Freedom might be just owning your own business and not working for corporate, and therefore the brick and mortar model is like, yeah, I absolutely love this.

[00:19:32] Or freedom might be for you to create, um, be creative in what you're doing. And so maybe you're making art or maybe you're making candles, or maybe you're making jewelry and that's your expression and that's what you want to do, and it doesn't. How that sort of looks. Or maybe you just wanna help and serve people and you've got this gift within you and you're gonna go do that, and you're gonna do it in an online way, or maybe you're gonna do it in a combination.

[00:19:58] Maybe you have a local [00:20:00] spot where you're at and you're able to do massage or reiki or energy healing or whatever it is that you do. But also you're able to now deliver this in an online capacity, and maybe you're thinking you wanna bring it online. Maybe you're working locally right now and you're like, I really want to bring my business online.

[00:20:17] I just don't really know where to start or how to start, or if this is gonna be the thing for me. Because one of the biggest things that hangs people up often is the tech behind. They, you know, it's like, oh, I don't know even how to get a website up and running. I don't know how to even use Instagram or Facebook.

[00:20:34] It's foreign to me. Right. And that can deter people from reaching more people with the work that they do because of this, the technology behind it that they're not able to sort of, you know, Understand or learn or that sort of thing. And so I just wanna invite you, as you're expanding your business, as you're growing your business, as you're wanting to reach more people, or you're starting to question whether or not the model that you've created is right for you, is like, [00:21:00] just know that there's pros and cons to every model, and there's no right or wrong way to do it.

[00:21:04] It's just whether or not it's the right model for you. And I hope from this episode, I've given you some insight into, Where my brain was at, but also how I've transitioned from the very physical, local world, offline world as I call it, to the online world, and that it wasn't necessarily the most seamless, smooth transition.

[00:21:26] And there were a lot of times throughout my online business that I was like, Ugh. Things seemed so much easier in my offline world, and mainly around the visibility and the traction piece, because we had. Basically advertising outside our store and we were in a high traffic location and had a lot of eyeballs.

[00:21:45] It just felt like the online business, there was a lot slower growth, let's just say, and a lot slower momentum. Which can be difficult when you've come from something different, and I'll just leave you with this as we wrap this episode up is, is that if you [00:22:00] are dancing between two worlds and you've done the brick and mortar, or you maybe you have an e-commerce and now you're doing the coachings, Stuff and you're going, well, e-commerce seems easier for this, and the brick and mortar seems easier for this and, and you're finding yourself in what I call this comparison trap.

[00:22:15] I would love for you to just step out of that, because like I said, every business model has its pros and cons and comparison between the two is a very dangerous dance to get into because the brick and mortar that I was in, right. Like I said, there was a, it was a lot different business model, which brings a.

[00:22:34] Of different maybe headaches or frustrations and a lot more joy and whatnot in different ways than maybe a totally different business model would. And it can create a lot of, you know, mindset stumbles or blocks because we're sitting there more in comparison going, well, I had this with my brick and mortar and I'm not seeing who my online business, therefore my online business must not be working.

[00:22:57] Um, and I'm sharing that slower growth and [00:23:00] slower momentum piece because, That's what I thought in the first year of business. I was like, I was far more successful in my brick and mortar right out of the gate than I was with the online business. Therefore, does this mean the online business is not for me?

[00:23:14] And I spent a lot of time struggling through that when in reality they're just two very different scenarios, two very different business models, and therefore producing two very different realities on how. Are going and what they look like. And at the end of the day, the online business world for me, allows me to have more of the freedom that I ultimately desire and crave.

[00:23:37] But that's not to say that the brick and mortar won't offer you that. So this is why I wanted to record this episode, is to share and give insight into sort of like my thinking, my thought process and sort of where there, there hasn't necessarily been that smooth transition, but also that there is no one size fits all model.

[00:23:56] For anybody that you get to choose the [00:24:00] model that best works for you, and that is on those three components that I shared, and you get to create what that looks like. Who your customers are, what you wanna offer, how you ultimately wanna deliver it, and how does that look in terms of return in money back into your business.

[00:24:16] Right? What does that look like? And hopefully between the two comparisons you were able to see that product-based inventory management, you know, all of that is a lot more of an expense that then requires a lot more sales in comparison to the online. In saying that, again, it just depends on. What you're wanting to do and how you want to achieve it doesn't mean that you can't sell and be equally as successful because you have bigger, more overhead than not, right?

[00:24:48] Just because you have more overhead doesn't mean that you're going to be less successful. You can have a lot of overhead in a company or a business and be. Super successful and have very low overhead [00:25:00] and still not be successful. So there is no right or wrong or method or whatnot, and I want to leave you with that, but I wanted to give you the insight and the information and my thinking and transition from one world to the other so that.

[00:25:13] You can then make better decisions for you and your business. And with that, I cannot wait for next week's episode where I'm going to be sharing with you how to move out of the friend zone. So if you're feeling friend zoned in your business where you're creating a lot of content on social media, You're emailing your customer list and they're opening it.

[00:25:32] You get a lot of people raving about what you do. Oh, I love your post. I love all the stuff that you do, and you can't figure out how to move out of the friend zone and, and actually sign clients or sell more of the products that you have. Then you're gonna want to tune into that episode cause I'm gonna be Dish why that's happening and how you can move out of it.

[00:25:50] Cheers. Thanks for listen. We'll see you right back here next time. You can also find us on social media at creatively owned and [00:26:00] online@creativelyowned.com. Until next time, keep showing up as your authentic self.