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Business Model

Move Ideas from One Business to Another

Looking for the next big business idea? You might find it in an industry other than your own.

Dan Kennedy

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Women holding a lightbulb

To the best of my knowledge, the drive-up service window belonged to the banking industry before anybody else latched on to it. But it accounts for a whole lot of the fast-food industry’s sales. It is also used by dry cleaners, beverage stores, video rental stores and florists.

In Las Vegas, one casino has a drive-up betting window for sports bettors. There are probably others using it that I haven’t noticed and still more who could and should be using it. Somebody in the fast-food business “stole” this idea. My vision is of a McDonald’s executive sitting in his car in the bank drive-through line on Friday afternoon when it hits him: “Hey, I don’t think we can fit the milkshakes in the little tube, but outside of that, this could work for us!”

Something borrowed

Just about every great idea came from something already created or used. The enormously valuable Batman franchise – made into money via blockbuster movies, cartoons, comic books and merchandise – exists because a couple of guys borrowed pieces and parts from predecessor characters, notably The Shadow and Zorro. An entire genre of highly successful TV infomercials and direct-response commercials merely moved carnival, boardwalk, and country fair pitchmen and demonstrable products to television.

QVC is a Tupperware home party conducted on TV for a million people in their own living rooms – and Tupperware is even sold on the home shopping channel. Fractional jet ownership came from timeshare real estate. On and on and on. Somewhere, right now, outside your business and its industry and industry norms, in an apparently unrelated business, lies the moveable idea that could revolutionise your profits. Sometimes this can be about making the business something different, but not actually changing the business.

Scooter’s got its traction by focusing on delivery, not on pizza. Subway has made itself about weight loss and healthy eating rather than fast food. Apple remade itself, from “for nerds” to “for the cool kids.” And the money followed. A great business is always about something, by the way, not just a seller and provider of goods or services.This is a time for more practical creativity than ever. Just producing or providing good products or services at good prices is nowhere near enough to justify your existence and command and keep the interest of your customers in The New Economy.

How to be more “creative”

For business purposes, focus on “practical creativity.” Creative thinking guru and one-time leader in the development of Walt Disney World and Epcot, Mike Vance talks about it in terms of rearranging the old (tested and proven) in a new way, or “plus-ing” what already works. Walt Disney didn’t start Disneyland with a blank page; he started with already proven, profitable amusement parks and began subtracting things he disliked, adding things he thought could be done better, further plus-ing new ideas on top of the rearranged old ones. Alex Osborne, a dean of creativity and the father of brainstorming, filled his book with checklists to facilitate rearranging the old in new ways.

I talk about this in terms of bringing something from outside your field that is proven elsewhere, into your field. Or cutting and pasting from swipe files, whether stored in file cabinets or your subconscious. But you’ll never hear me talk in terms of starting with a blank slate. And catching me starting anything with a blank page is a rare event. For purely artistic expression, raw, out-of-the-ether creativity may be an essential ingredient.

But for commercial purposes, it is vastly overrated. Even if you look at the movie industry as a “creative” business, if you examine the biggest box-office successes of at least the past decade, you’ll find very, very, very few to be original, birthed from the blank slate. Many have been remakes of previously successful films. Some have featured well-established, successful, well-known characters from comic books, TV shows or sequels. Even a movie franchise like Star Wars is merely a classic western with a shiny new wrapping on it.

Five ways to find ideas

Here are five suggestions for where to get “beginnings” so you need not begin with the blank page:

1. Competitors.

Direct competitors occasionally have good ideas badly executed. You should keep a close eye on competitors, as well as leaders in your field outside your geographic market. You ought to keep a file on each of these, making sure you have their ads, mailings, etc. Visit their stores or showrooms, and call and play prospect at their offices.

2. Comparables.

This is a source of great raw material. A “comparable” is someone selling a totally different, completely uncompetitive product or service but either selling at your price point and/or to your customers and/or using the same media you use. If you ferret out successful “comparables” and carefully follow them, you’ll often find terrific shortcuts. Just for example, I’ve told a cosmetic dentist eager to attract affluent patients from all over the country to “play prospect” and answer the full-page ads run in airline magazines by cosmetic surgeons. These are not competitors, but they are comparable in many ways: the clientele, the geographic reach, pricing, the same marketing challenge. Set a goal to find, thoroughly research, and build a file on one new comparable a month. You’ll thank me.

3. News.

News events beget opportunities, based on the Collier principle of “entering the conversation already occurring in their minds.” Ad man Robert Collier advised connecting your business and messages about it to the kitchen table, cocktail party or water cooler conversation occurring at the present moment. These days, we’re blessed with an arsenal of instant communications media, making this easier and cheaper than ever to implement, yet few marketers do it. Today’s news can hand you tomorrow morning’s marketing message.

In early 2009, when job losses were skyrocketing and consumers were justifiably panicked about the possibility of losing theirs, Hyundai created a new kind of warranty that permitted a suddenly unemployed car buyer to get three months of his car loan forgiven, and if need be, to return the car and end the finance contract with no penalty or damage to his credit. The dealer I spoke to about this reported his busiest and best two weekends of business when these TV commercials broke. This was a great example of using news – in this case, bad news – profitably.

4. Old ads.

Go back 10, 20, 30 years, take big winners and recycle them. I use my swipe file of these “classics” more than I use current samples. Think about it: The direct-response advertisers from the 1930s, 40s, 50s, and even 60s had to get consumers to write out and mail in cheques or go to a store or showroom; there were no websites. For most of those decades, there were no toll-free 800 numbers, no credit card ordering by phone. No fax. No overnight courier service. What they did then to get response and sales with such limited resources can work a thousand-fold better married to the modern ease of our buying environment.

5. Top direct-response copywriters’ work.

If you’re going to plagiarise, plagiarise from the best. Look for direct-response ads full of copy, running repeatedly in national media, from newspapers to niche magazines. Often a good ad that has nothing whatsoever to do with your business can still provide a “platform” to work on (rather than a blank slate). This is why you should scan magazines far outside your personal interests on a frequent basis.

Who is Dan Kennedy? He is a multi-millionaire, serial entrepreneur now directly influencing over one-million business owners annually as advisor, consultant, coach, author and speaker.

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1 Comment

1 Comment

  1. The Database Diva

    Dec 28, 2012 at 20:20

    I often find headlines of articles in other industries (and hobbies) are inspiration for my own blog posts (headlines and topics). Thanks, Dan, for the expansion on this idea.

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Business Model

4 Types Of Business Models

There are four main types of business models, see which one suits your business concept.

Alison Job

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Different types of business models suit different types of businesses. A business model is the way that a company sells products to its customers. It describes how a business creates, delivers, and captures value.

What type of business model should you adopt?

A business model defines how the enterprise delivers value to customers, gets them to pay for that value, and converts those payments to profit.

Related: How to Get More Innovative About Your Business Model

There are four basic types of business model that any for-profit business will fall into:

1. Manufacturer

A manufacturer takes raw materials and creates a product, or assembles pre-made components into a product (E.g car manufacturers). A manufacturer may sell its products directly to its customers, or it can outsource sales to another company.


‘Quality’ to give SA manufacturers a globally competitive edge

Portia Molefe shared her thoughts about small enterprises and their growth into Africa after interviewing the finalists who stood in line to win the ‘Think Big’ prize of R 1 million to back into their business.


2. Distributor

A distributor is any business that purchases products directly from a manufacturer for resale either to retail outlets, or directly to the public. For example, a car dealership would purchase vehicles directly from the manufacturer and sell them to the general public.

Related: How would I set up a “distributorship” with a large company in South Africa?

3. Retailer

A retailer purchases product from a distributor or wholesaler, and then sells those products to the public. A retailer usually has a physical location, but may also be an online retailer such as Amazon or Kalahari.


3 Ways Retailers Should Accommodate the Mobile-obsessed Customer

The new smartphone-centric status quo isn’t such a bad thing for retailers, especially those willing to adapt their strategy. Find out how retailers can accommodate the mobile-obsessed customer.


4. Franchise

A franchise can be a manufacturer, distributor or retailer, depending on what type of franchise you purchase. Here the franchisee adopts the business model of that franchise.

Under these four types of business, there are various other ways of structuring your business model.

  • A company that integrates a physical and an online presence. An example would be a retailer who allows customers to order products online, but lets them pick up their order at their nearest store.
  • A company that deals with customers directly via the internet without engaging an intermediary.
  • Direct selling to consumers making use of product demonstrations in the person’s home, for example. There are several cosmetic and jewellery companies that use this model in SA.
  • The Freemium business model works by offering a basic Web service or product, for free, while charging a premium for advanced or special features.
  • Online auctions, which are held over the internet.

Related: Owning A Franchise – Good Idea Or Bad Idea?

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Business Model

How To Pick The Business Model That Works For You

So, you’ve picked your lane.  You’ve decided what you want to do and why you want to do it.  You’ve picked something you’re good at.  You’re convinced the world needs and values it.  You now need to decide how to make money.  That’s where business model design comes in. 

Anthony Miller

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There are plenty of business model options for the same idea.  For example, let’s say your idea is to offer historic tours of Cape Town.  You could either do it yourself or hire professional guides to do it.  Or you could use mobile technology to provide DIY walking tours.  You could charge per tour or you could charge a membership fee.  There are so many options.  How do you pick the model that works for you?

The Lean Canvas is a great tool for entrepreneurs who are faced with this question. Adapted from The Business Model Canvas, it provides a simple, one page framework for brainstorming possible business models, prioritising where to start, and tracking ongoing learning.  It walks the entrepreneur through the business model process logically and ensures the key elements of a successful business are considered.

Related: Business Model Design – Picking The Business Model That Works For You

My co-founders and I have used the Canvas extensively at Simply – for designing our business model, and for communicating it to partners and investors. The only thing you know with certainty when you start a business is that it’s not going to turn out as you expect it to.  The Canvas evolves as you go – it was, and continues to be, a very useful guide in our journey.

Recognising an opportunity for disruption

We figured there was an opportunity to do something disruptive in the SA life insurance space.  It was clear to us that lots of people were either not covered or getting a rough deal.  Guided by the Canvas, we defined our first Customer Segment as adult South Africans, aged between 25 and 45 and earning between R5k and R30k monthly.

We then identified the 3 big Problems – specific to that segment – that needed solving:

  1. Most of the people in our segment have some form of funeral cover, but very few have life or disability cover.
  2. The cover they do have is often expensive relative to the benefits provided (i.e. a very small % of the premium goes towards the risk costs).
  3. There is no simple, intuitive way to buy good value life, disability and funeral cover online.

Developing a value proposition

Next came the Value Proposition.  We believed we could use technology, digital marketing and human-centred product design to deliver simple, online life, disability and funeral insurance at a great price.  We felt we could be for life insurance in South Africa what Takealot has been for retail.

We thought the world was moving far faster than incumbents realised; that millennials were ready to buy life insurance online; that we could build for the digital world and be in the right place at the right time.

And the rest flowed from there.  I don’t have the time or the space to walk you through the other elements of the Canvas here, but you can probably fill in the blanks.  Suffice to say, the process was invaluable and enabled us to build our business around a clearly considered business model.  It’s early days, but the signs are good – we’re making a positive impact, having fun and keeping our investors happy.

Creating a Lean Canvas

So, how should you go about sketching your own Lean Canvas?  The team at www.leanstack.com suggest the following approach:

  1. Sketch a canvas in one sitting. While a business plan can take weeks or months to write, your initial canvas should be sketched quickly.
  2. It’s okay to leave sections blank. Rather than trying to research or debate the “right” answers, put something down quickly or leave it blank and come back to it later.
  3. Think in the present. Business plans try too hard to predict the future which is impossible. Instead, write your canvas with a ‘getting things done’ attitude.
  4. Use a customer-centric approach.  You may need to sketch one Canvas per customer segment.  Start with the Customer Segment and go in sequence.

The Canvas has brought clarity and a common language to our business model design process.  It’s enabled us to agree upon and communicate our business model effectively – both internally and externally.  It’s also allowed us to tune and adjust our model as our story has unfolded – an inevitability for entrepreneurs.  I highly recommend the Lean Canvas as a tool for designing your business model.  Give it a try – I think you’ll like it.

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Business Model

Want To Change Your Business Model? Answer These 3 Questions

Here are a few pointers on figuring out the best way to grow your business and keep it sustainable for years to come.

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To grow sustainably, is it better to take on projects that are frequent and reliable, or sparse but lucrative?

Q: I own a film and production company, and I shot 100 videos last year – 70 weddings and 30 corporate, totaling $330,000 in revenue. The corporate videos are more profitable, but weddings are always happening. I don’t want to turn off a constant source of revenue, but should I spend more time pursuing corporate events to grow my business? – Trevor R.

Welcome, Trevor, to the entrepreneur’s struggle! You build a great product or service, make good money and the next thing you know, you feel like you have to change your model. It’s the age-old question of scale: What’s the best way for your business to grow, and does that mean making less revenue now in order to have more sustainable growth for years to come?

Related: 4 Types Of Business Models

With the bulk of your time being spent on wedding videos, you probably feel stuck in the slow lane, watching better profits pass you by. But remember that scale is not just about margins.

Numbers can be deceiving, and you control what you charge for your services. While your corporate videos are more profitable right now, going all-in might not be the long-term answer.

To figure out the best route for your business, start with a clear vision of your ideal final destination. How much money – and profit – do you want to make per year? It might sound like a frivolous question (who doesn’t always want to make more?), but it will allow you to reverse-engineer your business model and help determine a practical answer.

Let’s say you want $1 million in gross revenue per year. At this time, it sounds like you charge about $5,500 per corporate video and about $2,400 per wedding video. That means you’d need to sell either 182 corporate videos or 417 wedding videos. (That’s a lot of videos!) Use those numbers to guide your vision. Next, consider scale, which depends on a number of growth factors.

First, creating value: Make sure you’re charging the appropriate amount for your services in order to reach your goals.

Second, anticipating growth: Where is the greatest opportunity, not just at the moment, but in the future?

And third, limiting expenses: How can you keep costs down so spending doesn’t outpace revenue?

Related: 3 Types Of Ecommerce Business Models

Answering honestly will help you create several business models. For you, Trevor, those models are (a) weddings and corporate, (b) weddings only or (c) corporate only. As a case study, let’s consider “weddings only.”

Last year, you worked 70 nuptials. Before you consider hitting pause on that side of your business, revisit those growth factors to figure out if you can make it more profitable.

  • Should you charge more for each video?
  • How many clients did you turn down last year?
  • Could you have taken them on if you had extra help?

Weigh the costs, and consider adding another videographer to the staff. If that seems financially impossible, look for ways to at least maintain your current output while trimming production costs.

For a small business, profitability is a mad science of focus, projections, and getting out of your own way. What makes the most money on a per-item basis is not necessarily what will make you the most profit in the long run.

Related: How to Make Your Business Model Go the Distance

Consider Amazon: It created scale by focusing on smaller margins. It’s a helpful reminder that there are different ways to succeed.

Understand what you can charge, how you should save and who is most likely to buy from you in the future. By simplifying the complicated challenge, you can jump on the fast track to growth.

This article was originally posted here on Entrepreneur.com.

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