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THE BUSINESS MODEL WORKBOOK

The Business Model Workbook | The 12 Week Year™


TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

INDUSTRY DISCIPLINES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

TARGET MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

CLIENT PROFILE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

REFERRAL BASED PROSPECTING . . . . . . . . . . . . . . . . . . . 3

SALES PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

CLIENT SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

TEAM SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

KSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

EXECUTION DISCIPLINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

BUSINESS MODEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

LEVERAGING THE CONSTRAINT . . . . . . . . . . . . . . . . . . . . 8

ACTION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1 The Business Model Workbook | The 12 Week Year™


INTRODUCTIONThe tools in this workbook will help you assess your practice across a set of Success Disciplines, and have you thinking more like a CEO of your busi-ness. You will learn how each discipline impacts your revenue model, and which disciplines you can best leverage to improve. Ultimately, the workbook will surface the top opportunities that you can ad-dress strategically through your 12 Week Plan.

INDUSTRY DISCIPLINESIndustry Disciplines are the fundamental practices that make up a thriving practice in this industry. At different stages of your career, some disciplines may have more relevance for you than others. As you review your effectiveness in each discipline, identify opportunities to further leverage those that are strengths and to shore up those that are weaknesses.

To complete this section, rate your level of effectiveness in each Discipline by placing an “X” on the scale in the spot that reflects where you believe your business falls. Read the descriptors at the bot-tom of each scale to determine where to place your “X”. The left side of the scale represents poor performance in the discipline, and the right side represents strong performance in the discipline. Finally, for each of the Disciplines, identify any improvements that you think are needed in the space provided.

The Value Offer, Target Market, and Client Profile Disciplines are all closely related. It may help to work on assessing your performance in all three of these Disciplines together.

A Value Offer is in essence the reason that your prospects buy from you, and the reason that your clients refer you. An effective Value Offer, has to be something that can’t easily be duplicated by the competition. By focusing on your Value Offer you will be able to position yourself as offering some-thing the competition does not.

Think about the unique Value Offer of your business. What do you offer that your clients can’t easily find elsewhere? What do you do that other Producers don’t offer?

VALUE OFFER: How effective and compelling are your core deliverables?

Lack depth of expertise/knowledge in value offer

| | | | | | | | | |Strong value offer,

customer compelling, differentiated

What improvements are needed?



TARGET MARKETA Target Market is a way of leveraging your marketing efforts by focusing on a portion of the total market. A viable Target Market is one that is definable, has common characteristics, has common needs that can be met by your products and services, and has members who communicate with each other. In addition to these characteristics, in-profile prospects in the Target Market must exist in large enough numbers to support your business.

An example of a Target Market might be surgeons within 100 miles of your home office. The important thing to keep in mind is that the Target Market must have common needs and communicate with each other. The benefit of an effective Target Market is that they allow you to build standardized processes and brand name recognition.

CLIENT PROFILEA Client Profile describes your ideal prospect. An in-profile client typically has needs that match-up well with your Value Offer. Working with in-profile prospects in turn generally increases your average case size and conversion ratio. Taking the Target Market of surgeons within 100 miles as a starting point, a Client Profile might be defined by specific practice areas (such as neurosurgeons, plastic surgeons, and thoracic surgeons) working in hospitals or clinics in your geography. In some cases the Client Profile might extend outside of your Target Market – for example, you might have a Client Profile of prospects with a minimum of 1$ Million in investable assets.

By narrowing your focus to a Client Profile, you can align a Value Offer that will meet the needs of your Clients and that cannot be easily duplicated by others. You can develop deep expertise in the needs of your clients, and they are likely able to refer you to others in their profession or economic status. Further, marketing efforts can be highly concentrated and effectively targeted to the needs of your prospective clients.

How effectively do you focus on specific Target Markets?

No clear Target Markets or very general/vague

| | | | | | | | | |Focused effort in well-

defined Target Markets




How well defined is your Client Profile? Are you seeing enough prospects in Profile?

How effective is your referral process at consistently producing quality leads?

No clear Profile, will do business with almost anyone

Very few quality referrals

| | | | | | | | | |

| | | | | | | | | |

Specific Profile, set client acquisition goals

based on Profile

90% or better of busi-ness generated through

quality referrals



REFERRAL BASED PROSPECTINGActivity more than any other factor drives the revenue of a financial services practice. One of the most important challenges faced by an advisor is the development of a source of referrals that pro-vides a constant and sufficient flow of warm leads from which to schedule appointments. Addition-ally, referrals lead to increased conversion from initial meeting to a sale.



Rate your Sales process. How effective are you and your process at creating value and building trust?

How effective is your client service process at building and maintaining relationships and adding value for your clients?

Ineffective Sales Process

Client service is reactive & lacks systemization

| | | | | | | | | |

| | | | | | | | | |

Structured, consistent and proven process

Delivering consistant and impecable service that results in satisfied clients, referring others


What opportunities are available/improvements needed?

SALES PROCESSA selling system structures the interaction between a Financial Advisor and their prospects, provid-ing a reliable approach for success. In a sense it’s a blueprint for the Advisor’s interaction with their prospect. It is based on the principle that, when it comes to uncovering needs, designing solutions, and providing value, a process that you trust is critical.

A strong sales process can help to increase the value to your client, your average case size, and your conversion ratio. When your prospects have a professional and efficient experience that uncovers and delivers the products and services that they need based upon their circumstances, they are more likely to buy, and to refer others.

Rate your Sales process. How effective are you and your process at creating value and building trust?

CLIENT SERVICEClient service includes both proactive touches and timely responsiveness to client requests. How do you deliver client service in a way that increases client retention, add-on sales, and referrals?



How effective is your Technology at building and maintaining relationships, adding value, marketing, and leveraging your time?

What Technology?

| | | | | | | | | |Effectively utilize technology

to assist with client touches and value add


TECHNOLOGYEffective relationships are built on trust and the value that you create. Technology is vital to delivering value and creating trust. Key software solutions include client management (CMS), financial planning, contact management, portfolio management, and asset allocation. Key technologies include scanning, data security, and data back-up systems. Marketing technologies include your website and email and other communication applications with prospects and clients.

Are you appropriately staffed and leveraging your team in a way that allows you to focus in the areas of strength and on the critical activities that drive success?

No staff, staff ineffective, poor delegation

| | | | | | | | | |Working in strength &

delegating non-strength activities to staff

What opportunities are available/improvements needed?

TEAM SUPPORTTeams are only as effective as their leader enables them to be. If you lead a team, do you delegate effectively or do you struggle with letting go? Do you spend too much of your time engaged with activities that don’t drive revenue or key results?

An effectively trained staff, combined with consistent processes and quality controls, can free a leader up to act as the CEO of their business, and focus on driving key results and revenue.



EXECUTION DISCIPLINEWhat separates top performers from average ones, is an ability to execute. The best performers consistently get more of the important things done each day. Good strategy is important, but unless strategy is executed it is worthless.

Do you have a system that reinforces daily and weekly action on your top priorities?

Not consistently applying an execution system.

| | | | | | | | | |Fully applying a system

that drives daily action on top priorities


Do you consistently develop your Knowledge, Skills and Abilities? Do you hold appropriate industry designations?

Not actively pursuing new KSA’s

| | | | | | | | | |Developing KSA’s

and pursuing indus-try designations


KSAIt has been demonstrated that when you invest in your own development, your income will rise. Fur-ther, to become great at what you do, you must engage in getting better at your craft constantly. A program of deliberate practice and formal learning are the building blocks of practice value.



SAMPLE BUSINESS MODEL FOR LIFE INSURANCE SALES ADVISORSBelow is a simple model of the economic engine of a life insurance practice. The model captures the primary variables (Activity, Case Size, and Conversion Ratio) that drive your production. Increasing any of the variables increases your overall production. If you do not operate a life-based practice, modify the model to reflect your business.

To complete this model, follow these steps:

1. In the “Activity” box, list your average openers (with prospects or existing clients for whom you are proposing new business) per week.

2. In the “Case Size” box, list the average case size in First Year Commissions or Revenue.

3. Calculate your average conversion ratio by dividing your total # of closers (the openers for which business was submitted) by your total # of openers and enter the percentage in the “Conv. %” box.

4. Multiply “Activity” by “Case Size” by “Conv. %” to determine “Weekly FYC”. For example: If I have 2 openers per week with an average case size of $800 and my Conversion % is 40% my Weekly FYC is: 2 X $800 X .4 = $640 in Weekly FYC.

5. Multiply “Weekly FYC”by 12 (the number of working weeks in a 12 Week Year) to determine “12 week FYC”.

Definitions:

> Activity refers to the number of openers that you have each week

> Case Size refers to the average FYC commissions per case

> Conversion % refers to the percentage of openers that result in a sale

As you review the variables from your business, here are a few MDRT standards from a few years ago to keep in mind:

MODEL VARIABLES INDUSTRY LEVELS MDRT MEMBER VALUESAverage Openers Week: 2 7Average Case Size: $800 $600Average Conversion Ratio 40% 43%Annual FYC $32,000 $90,300

ACTIVITY CASE SIZE CONV. RATIO WEEKLY FYC

12 WEEK FYC

X X =

X 12 WEEKS =



As you can see, what differentiates the average MDRT member from the typical advisor is signifi-cantly higher weekly activity.

In 2009, a study conducted by a client of ours showed that those advisors having 2 or less weekly openers would fail. Advisors having 3 openers earned approximately $30,000 per year. Advisors with 4 openers weekly earned $40,000 to $60,000 annually. Those with 5 weekly openers earned $60,000 to $80,000, and those with 6 or more openers each week earned $100,000 or more per year.

LEVERAGING THE CONSTRAINTIdentify the primary constraint in your model:

The table below shows the potential impact of the various Industry Disciplines on the business variables. Impact rating is 1 = high, 2 = medium, 3 = low.

ACTIVITY CASE SIZE CONV %

VALUE OFFER 2 1 1TARGET MARKET 1 1 2CLIENT PROFILE 2 1 3REFERRAL-BASED PROSPECTING 1 3 2SALES PROCESS 3 2 1CLIENT SERVICE 1 3 3TEAM SUPPORT 1 3 2TECHNOLOGY 1 3 3KSA 3 1 2EXECUTION SYSTEM 1 1 1

ACTION PLAN:Using the review you completed of the Industry Disciplines and the impact chart above, determine the area(s) to focus on this 12 Weeks. When answering this question, consider what it will take to reduce the impact of your constraint by 10% this next 12 week year.

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