Improve Your Business Value Equation – Coaching Success
Matt describes your business value equation, its components, and how you can improve your business value equation.
This is an important concept for understanding your business conceptually and keeping the big picture in mind.
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Here is Matt’s presentation on how to officially start a business.
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What is the Business Value Equation
Imagine 3 drinking straws that meet at the top. They’re fanned out so one goes left in the bottom, one down in the middle, and the third to the right.
Let’s look at these straws just as you would a graph, with things on the left having less and things on the right more.
The one on the left is the cost of running your business. The one in the middle is the price to the customer. The difference is profit. If the price is below the cost, then you’re losing money.
Importantly, however, the one on the right is the perceived value of your service or product by the customer. While it seems obvious, your customers must perceive that you’re they’re receiving more value than the cost they’re being charged.
Improve Your Business Value Equation
Remember that coaching is a luxury good. While we all know it can transform lives and greatly improve quality of life, it is not absolutely necessary like food. Because of this, you and your business must provide value to your customers (and work to increase that value).
There are 3 ways to provide value:
- Provide extreme value & high efficacy in support of client’s goals
- Building trust, showing excellence through the following: ability, integrity, benevolence
- Obsess over efficiency & dollars per hour without sacrificing service
Setting prices is challenging and important, and Matt will discuss that in a future episode. That being said, what you want to do is fans these straws out more by moving cost to the left and perceived value to the right.
Lower your costs (time & money) by improving efficiency.
Improve the value of your service – get better, add something to the service that does not cost much, get a better idea of what your customers want.
Hopefully this helped you learn how to improve your business value equation. Matt will go more in depth on each part of this in future podcasts.