How to Design a Business Model That Gives You Revenue and Freedom
Key takeaways
Learning how to design a business model starts with knowing what one is: how money moves through your business. It's different from your business plan and your business structure.
If your offers don't connect to each other, you'll work harder for every sale. Each product or service should lead naturally to the next.
Start with the profit you want in your pocket and work backwards to the number of clients, members or sales you'd need.
Build the model around work that lights you up, include some recurring revenue, and aim for a business that's predictable enough to be boring.
A couple of days after we ran a group workshop together, Sam sat through five one-on-one coaching sessions in a single day. The workshop had left her buzzing. The one-on-ones flattened her.
“I followed that a couple of days later with five one-on-one sessions in a day, to which I was absolutely exhausted. And I was just like, no, no, no, this is just not for me.” — Sam Morris
On paper, one-on-one work is where the money is. In practice, it wasn't the work Sam wanted to build a business around. That gap is what this post is about: how to design a business model that brings in the revenue you need without designing your life away in the process.
Most of us start with a skill or a product, not a model. We figure it out as we go. One line Kate came across while we were researching this episode sums up where that usually ends: if you don't design your model intentionally, your business will design itself, and it usually designs itself into something that consumes your life. We've both lived that.
We're Dr Kate De Jong, a PhD engineer turned business strategist, and Sam Morris, a Navy veteran who's spent 20 years in business working out what makes businesses tick and what makes them stall. Here's how we think about it.
What's the difference between a business model, a business plan and a business structure?
Three terms people swap around all the time, and they mean different things.
Your business structure is the legal setup you trade under: sole trader, company, partnership or trust. Your business plan is the document where you've written down your goals and strategy. Your business model is how revenue comes into your business and moves through it.
The business model is the part that decides your capacity to grow. A revenue stream is one offer, for one market, solving one problem. A business model is several revenue streams working together.
Alexander Osterwalder and Yves Pigneur put it this way in Business Model Generation (2010): a business model “describes the rationale of how an organization creates, delivers, and captures value.” Their Business Model Canvas maps it across nine building blocks on one page.
Why do scattered offers wear you out?
Lots of offers can look like a lot of opportunity. Usually it's a lot of separate businesses.
When your offers don't connect, every sale starts from scratch. You're marketing five things to five audiences, and nothing hands clients on to the next step.
Sam's example is a business coach with digital products on Instagram, a low-ticket course, VIP days, a membership and a high-ticket done-for-you social media package. She's good at all of it. None of it talks to each other.
“Everything in your business, every single product and offer should have a relationship with everything else that you're doing.” — Sam Morris
The done-for-you marketing piece is the clearest problem. Is she a marketing agency or a business coach? Her market can't tell, and running campaigns for clients while coaching splits her focus. As Kate says, just because you can do all the things doesn't mean you should.
How do you design a business model on purpose?
Pick the destination first, then work out what has to be true to get there.
You design a business model on purpose by deciding what you want the business to look like in a few years and working backwards from that. Businesses grow intentionally or accidentally, and the accidental ones tend to be chaotic and exhausting.
“So intentional design means asking what do I want this business to look like in three years? What kind of clients, what kind of revenue, what kind of lifestyle, and then work backwards from there, and that's your business model.” — Dr Kate De Jong
Sam's picture: accidental business owners are learner surfers. They catch a wave without knowing how, then get dumped off the back. Intentional business owners are on a stable boat that cruises along. Without a connected model, that first wave is a one-hit wonder. We've had it ourselves: a program that filled a room of 30, then fell flat the next time.
Part of the design is deciding how big you actually want to get. Scale is a choice, not an obligation. Kate loves being a solo operator with a small support team. Some of her clients want to build a company they can sell. Both are fine. The model just has to match your end game.
How do you reverse engineer your profit goal?
Start with what you want in your pocket, not what you want to turn over.
Pick a profit figure, then map how many clients, members or sales your model needs to get there. If the maths doesn't work at your current prices and capacity, the model needs to change.
“If your idea of earning, you know, clearing into your bank account a million dollars a year and you're running private coaching clients at $1,000 each, clearly that's not going to work.” — Sam Morris
That doesn't mean dropping the one-on-one clients you love. It means adding offers that support the profit goal around them.
When Sam has a new idea, she runs it past AI set up to disagree with her and tell her where she's wrong. Her questions: does it have the potential to be profitable, where does it fit in my business model, and what will it cost in time, energy and profit? Not revenue. Profit. If you want to set up AI to push back like that, our AI Setup Workbook walks you through it.
Kate reverse engineered her own goal and found coaching alone wouldn't get her there as a solo operator. Her model now includes public speaking and writing books, with speaking gigs off the back of them.
Should you build your business model around your zone of genius?
Being able to do something well isn't a good enough reason to build your business on it.
Yes. If the model depends on work that drains you, you'll push harder and enjoy it less, however well it pays. Gay Hendricks describes four zones in The Big Leap (2009): incompetence, competence, excellence and genius. The zone of genius is the work you're uniquely wired for, and it's what we try to design around.
Kate tested this when she went back to facilitating an all-day corporate strategy workshop, the kind she used to run for teams of 15 or 20. She knew she was good at it and that it paid well. The politics and hidden agendas in the room told her otherwise.
“I just suddenly went, yeah, no, I can do this work, but does it bring me joy? No, it does not.” — Dr Kate De Jong
Compare that with the night she flew home from giving an International Women's Day talk up north and was on cloud nine. That's the signal to do more of something. Kate's experience is that once public speaking became a formal part of her model, the opportunities started turning up. We wrote more about the gap between skill and energy in Good at It but Drained by It?
For both of us, small group work is where we come alive. That's a design parameter, not a nice-to-have.
Why should a good business be boring?
Boring here means predictable, and predictable is what gives you room to breathe.
A repeatable, predictable business takes the anxiety out of running it. You know where the money's coming from, which frees you to be creative without everything riding on the next experiment.
“We want business to be boring and life to be exciting. And I think too many people are looking for the excitement inside the business, and then they have nothing left, and life is boring.” — Sam Morris
Kate remembers the years before COVID when she didn't have that consistency. She was pinning her hopes on one client saying yes, and feeling the terror when they said no. Sam points out the other trap. Once we finally get the business working and it becomes boring, we tend to stuff it up so it's exciting again.
Michael Gerber made a similar case in The E-Myth Revisited: build a business that runs on documented systems rather than depending on you, and work on the business, not just in it.
Why does recurring revenue matter so much?
It's the steadiest income you can build, and buyers pay more for it.
Subscriptions, memberships and retainers give you a baseline that comes in every month. Kate's mastermind did that for her years ago. A business broker colleague of hers sees the same pattern when valuing businesses: the ones with recurring revenue are valued highest.
John Warrillow makes the same point in The Automatic Customer (2015). In one example from his analysis, buyers of home security businesses pay 75 cents for every dollar of one-off installation revenue and $2 for every dollar of monitoring revenue.
Sam adds that recurring revenue shouldn't only sit at the start of your funnel. It needs to be at the end too.
“You don't want people to be lost at the end of whatever pipeline you're pushing people through.” — Sam Morris
Is the product ladder the wrong way to think about your offers?
Sam changed her mind about this halfway through the episode.
A ladder has a start and a finish, so clients fall off the top. A loop or spiral keeps them moving through your offers, and gives you room to adjust those offers over time.
“It needs to be a loop or a product loop or a product spiral where people are just circling around and around through your offerings.” — Sam Morris
Matt Church's thought leadership methodology, set out in The Thought Leaders Practice (Church, Cook and Stein, 2016), gives you a way to build that loop without betting the farm. As Kate explains it, a cluster is one market, one problem and one method of delivery. Launch a new one every three to six months, assume half will fail, then build the processes around the one that sticks and work out how others can feed into it.
That frees you from the idea that you can only ever have one niche. You can serve different markets, as long as it all fits together and sits within your zone of genius. If you're working out what fits with who you are, our post on how to write business values is a good companion to this one.
Frequently Asked Questions
What is a business model in simple terms?
It's how money comes into your business and moves through it. It covers what you sell, who you sell to and how your offers connect. It's separate from your legal structure and your business plan.
How many revenue streams should a small business have?
There's no set number. What matters is that each stream connects to your main offer and leads clients somewhere. A few connected offers will usually beat lots of unrelated ones.
Do I need to scale to have a successful business model?
No. Scale is a choice. A lifestyle business built for freedom and flexibility is just as valid as one built to grow and sell, as long as the model is designed to get you the profit and life you want.
What can you do this week?
Three things to try before you add another offer.
List every offer you sell. Draw arrows showing how a client moves from one to the next. Anything with no arrows in or out is a candidate to cut or rework.
Write down your profit number. Then work out how many clients, members or sales your current model needs to hit it. Ask AI to pick holes in the maths.
Look back at your last month. Which days left you on cloud nine, and which left you flat? Ask whether your model is built around the first kind of work or the second.
“The business model is being very intentional about how do I set up a business that is not going to eat me alive if I turn my back on it.” — Dr Kate De Jong
Further Reading
Alexander Osterwalder and Yves Pigneur, Business Model Generation (Wiley, 2010)
Gay Hendricks, The Big Leap (2009)
John Warrillow, The Automatic Customer (Portfolio, 2015)
Matt Church, Peter Cook and Scott Stein, The Thought Leaders Practice (2016)
Michael E. Gerber, The E-Myth Revisited (an updated edition of The E-Myth, first published in 1985)
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