Inland Empire Business Loans: Strategy First, Money Second
My mission statement is simple: Make my clients happy by helping them increase sales and profits using uniquely crafted loans as the tool. I am a money guy but I have morphed into a growth strategist out of necessity. When I meet with my clients for the first time I don’t ask them, “What size of business loan are you seeking?” I ask them to share their business model with me. Many of my clients have well thought business models, many of them don’t. For those that don’t, I put on my business strategist hat first and help them fine tune their models. After that, then we start talking loan types, sizes and purposes.
Makes sense right? If you don’t have a compelling business model bankers will be reluctant to loan you money as you won’t be able to sustain a long term advantage over your competition. So now I have two names, The Loan Doctor and The Strategy Doctor.
In academic literature on business models, authors Alex Ostewalder and Yves Pigneur suggest there are nine key components of a business model that must be constantly addressed as changes in the external and internal environment occur. I use their nine components and my own experience as my guideposts when advising clients.
Their nine components are:
Value proposition: Solving client challenges or satisfying needs with a unique value.
Customer Segments: Value proposition is designed to meet the needs of a well-defined target market or customer segment.
Channels: What channel is the value proposition delivered through; communication, distribution or sales?
Customer Relationships: Close relationships must be established within each customer segment.
Revenue Streams: How many ways does the company make money? Streams result from good value propositions that are successfully delivered to customers via attractive pricing strategies
Key Resources: Does the company have the key assets required to offer and deliver their value proposition? (will they need financing to purchase these assets?)
Key Activities/Capabilities: Value propositions are developed through key activities and capabilities. Does the company have all of them?
Key Partnerships: What key resources and activities critical to delivering the value proposition need to be outsourced (if any or should be) to third party companies?
Cost Structure: What is the cost structure of the eight mentioned components necessary to deliver the value proposition? These costs must be met by pricing strategies sufficient to make a profit as revenue streams are materialized.