March 5, 2013
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The number one reason your small business is not generating the revenue it could be is that your business model is not set up to generate more.
People who earn more realize an essential fact:
It’s easier to earn the second $50,000 than it is to earn the first $50,000. Or the second $100k, or the second cool million.
In other words, once you’ve earned $50,000, there’s no reason you shouldn’t be earning 6-figures. The difference is that earning 6-figures generally requires leveraging your earnings. It means no longer trading time for money. It means understanding what parts of your business can be duplicated over and over again with almost zero effort.
It means finding a tipping point again, and again, and again.
Proven Principles to Earning More: Relational vs. Transactional Models
You don’t have to give up family time to earn more. You don’t need to resort to shady promotional tactics or annoying affiliate campaigns. Instead, your business needs to embrace a better business model that is based on value and results instead of time and energy.
However, if you find yourself putting too much work into earning too little, there is a good chance your business is based on a relationship model.
Now, don’t get me wrong! Relationships are great. The human element is the most important element of any business. But here’s what starts to go wrong when you base your business on a relationship model:
Relationship transactions happen most often in project-based or one-to-one client scenarios. The easy way to develop a relationship is with time, exchange, and getting-to-know-ya. You put your whole heart and soul into the process. Those relationships turn towards a transaction when you have something that fills a need for the other person.
It is a feel good way to do business. But it’s a slow process.
Each customer represents hours of time, loads of money (e.g. don’t think your social media use and Skype coffee dates are not costing you), and the emotional stress waiting for those relationships to convert.
On the other hand, sales in transactional models come fast and furious. They utilize scale to generate revenue and are built on acute needs and impulse purchases.
However, the difficulty with the transactional model is that it’s hard to achieve customer loyalty. It is even harder still to truly delight your customers. Once a solution is purchased, there is often no word from the customer to find out if it is working or not.
This type of business could leave you scratching your head, wanting more.
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