Increase Business Profitability with the 7-P Framework

The answer to the question, “How does a business make money?” lies in how cost-effective a business is able to grow its sales, so they earn higher profits with predictable cash flows.  The means and methods deployed by a business owner and their management team is the business model for making money.  The 7-P Framework has been shown to help business owners dial in the nuances tied to generating sales at a profit.  Those who don’t apply the principles of the 7-P Framework don’t realize these same benefits.

Users of the 7-P Framework apply it to position their management team with the insights they need to make hard decisions easier to make.  They employ the seven guiding principles found in the 7-P Framework in their business model to make more money because they know that the wrong decision costs them money.  They also know that the right decision poorly executed, costs them money.

On the surface, the individual elements of the 7-P Framework are relatively basic.  What makes this particular business framework significant to your business is how the 7-P Framework defines your business model for making money by consolidating the 5W’s + H with the 6 P’s of business, built from extensive study of the most common mistakes small business owners make.

Answering the questions contained in the 7-P Framework lays the foundation for your business profit model.  Failure to apply this decision framework to your business profit model robs you of the opportunity to gain the needed insights into the means and methods your business must act on to generate sales at a profit.

Below is the flow of thinking about the truths within your business by seven guiding principles you need to make more confident business model decisions, starting with the two most important groups of people in any business.  Small business owners who make more money use the 7-P’s to help them assess what’s working and what isn’t.  They use the framework to help them see their blind spots and identify ideas for making more money.

Your business profitability starts with your customers and is either expanded or lost by your employees.

The 7-P Framework begins with customers: the people who are buying from you based on a specific need or want, and your employees, the ones who deliver the product or service that meets your customer’s needs or satisfies their wants.

How much money your business makes comes down to whether your target customer chooses to buy or pass on your product or solution.  If they pass or choose not to buy from you, there is no exchange of value.  If your customer does buy, the question is, did the money they pay you result in a profit or loss for your business as shown below:

Defining “customers” as the first “P” in the 7-P Framework is foundational to the remaining six P’s.  Your customers represent the first organizing principle for making more money because they answer the critical who question.  That is, who will buy your products and services from you at a price that you can make a profit?

You must know what problem your target customer is trying to solve to get them to buy.

Once you know who the next most critical area of consideration for your business involves, what is it actually that your customers are buying from you—your what tells you why people choose to give you their money for your products and services.  Failure to know the what that exists in your product and services is a leading contributor to going out of business.

The next 3 P’s are the transaction enablers for people spending money with you.

The exchange of money transaction enablers is place, promotion, and packaging. These three P’s from the marketing mix is how you get your target customer to know you exist.  This is how you help them make an informed decision to buy or not to buy at the price you are charging.

 

There are two organizing principles associated with “place.”

The third P in the 7-P Framework involves when your customer will most likely need your help with the fourth P concerning where they will choose to transact their business.

Many businesses fail because they get the when and where for their business model wrong.  Owners with profitable business models know the when and where for what they offer their customers.

Now, let’s review the first four components of every business model:

1. You have to know who your customer is,
2. What problem they are trying to solve,
3. When they are most likely to need your help, and
4. Where they prefer to transact business.

The fifth organizing principle involves why, which is shorthand for “how do I create value for my customer?

To capitalize on the fifth organizing principle to making more money, you will need to know how your business’s leadership structure, company culture, and strategic style impact your ability to serve a customer need or satisfy their wants at a profit.

Ultimately, your employees need to clearly understand how they create value for your customers in the work they do.   Failure to answer the why question exposes your business to the most commonly stated reason for businesses to fail, and that is, running out of cash.

Your employees must understand the why of your business model for you to make not lose money.  Once you know these “business basics,” you can define why your customers should value what your business offers.  Use these insights to align your company culture and, ultimately, your employees’ actions in delivering value to your customers.

The sixth organizing principle involves how you will create interest in your customers to buy from you.

The sixth organizing principle involves helping your customers understand how they should value what you do by purchasing products and services from you at a price that earns your business a profit.  Knowing the best way to demonstrate value to your customers is how you shape how you promote and package your products and services.

The seventh organizing principle is grounded in pricing your products and services, so you earn a profit.

 To remain a viable business, you must earn a profit. The seventh organizing principle associated with profitability is partnered with­ “price.”  Establishing the correct price-point for your products and services, that “sweet spot,” is a learned art.  Charge too much, and people won’t buy from you.  Fail to charge enough, and you leave money on the table that could be in your bank account.

Below is the 7-P Framework for having a business model that makes more money.

The 7-P Framework is the most efficient way to discover the truths in your business model that will lead you to make the best decisions and take the most important actions.  Your future success depends on it.

The bookends of the 7-P Framework is the hard reality that you must have sales to stay in business, and the money coming in from those sales needs to produce a profit, or you will run out of cash to fund your business, even though you are generating sales.  Running out of cash to fund your business is a “law” of business, not a principle.

Are you ready to make more money?

If you aren’t making the money you wish you were making, click here to have a certified BusinessCPR™ Scientist at no charge identify how much your business model is costing you.

Within forty-eight hours of receipt of your P&L Statement by month, you will receive back by email your free identification of where your business model is draining profits and, ultimately, cash from your business.