Business Model vs Revenue Model

I had a great interview today with the lovely Jessica Fearnley of The Seven Figure Consultant. I will certainly let you know when her episode is released, but what I want to briefly touch on now is the time we spent in the weeds about business models and revenue models.

The terms “business model” and “revenue model” are often used interchangeably. But there is an important difference, and that difference matters when making decisions about how to grow your business.

Your business model describes how you provide value to your clients. Examples are:

• 1-on-1 consulting services

• Training/Facilitation

• Group coaching

• Online courses

Your revenue model describes how you get paid for the value created for your clients. Let’s take the 1-on-1 business model. Options for the revenue model include (but aren’t limited to):

• Hourly billing

• Flat fee productized service

• Value-based pricing

Using the training business model as an example, the revenue model may be a flat day rate or a per head rate. And so on.

Why is this important? Much like making sure your legal foundation is firm before building IP products on top of it, you need to make sure your business model and revenue model are working before you try to grow your business.

Adding services or team members or SOPs won’t fix a poor fit business or revenue model. More likely, it will make it worse. You need to fix what’s broken before you start adding. As Jessica likes to say, “scaling chaos leads to more chaos.”

Let’s villainize hourly billing😈. If low profit margins are the problem, adding more services or experts won’t fix that. We need to revisit the revenue model.

Take a hard look at your business model and revenue model. Is it working? If yes, then we can (i) do more of it, or (ii) build on top of it. If it isn’t, let’s fix it.

There are other intriguing ways to create leverage using your expertise. Interested? Let's chat.