why your business
model is in trouble
(and what you can do about it)
Now there’s a powerful and
unique strategic tool for:
 Coming up with your




next big idea or opportunity
Identifying new or improved
revenue streams
Generating sustained
profits
Enhancing your competitive
advantage in the market
Inspiring an innovative and
creative team culture
NO RDINARY
businesses and franchises
Why your business model could be in trouble
(and what you can do about it)
You may have set your business up using a
tried and true business model—but the trouble
is, in today’s fast-changing business environment,
what’s tried and true one year may be tired
or irrelevant the next.
Not surprisingly, bad business models
are the No. 1 cause of the failure of
Australian businesses.*
Should you be concerned? Perhaps
‘vigilant’ and ‘prepared’ are more appropriate.
That‘s where we at No Ordinary Businesses and Franchises can help.
Recognising the need for a simple yet powerful framework for assessing the relevance of your current business model, and identifying
fresh new business models where required, we have not only developed our own exclusive No Ordinary Business Model Canvas, but also
three new services for those looking to start a new business or give
their current business a new lease of life.
Contents

One-page Executive Summary for busy people
2

3 ways to tell if your business model is in trouble
3

Why do some businesses grow so much faster than
their competitors?
6
Why your business plan is not your business model
(and why it matters)
10

A new framework for business model generation
12

Announcing the No Ordinary
Business Model Canvas, a flexible and practical tool developed
exclusively by us to meet the
needs of specific industries, plus
three new services designed for
each stage of the business model
development process 15

Don't have time to
read a 20-page
report? Turn over
for a one-page
Executive
Summary.
Executive Summary
What is a business model?

A business model describes how your company creates, delivers
and captures value

Because a business model is about a business’s core strategy, it is
quite different from a business plan, which describes how a
strategy will be executed

Most business owners don’t know the difference between a
business model and a business plan, and don’t realise that
preparing a business plan without first developing a robust
business model is effectively setting your business adrift

As a result, poor business models are the No. 1 cause of business
failure, in larger as well as small firms
How can I develop a more robust business model?

Much thinking has gone into this question over recent years, but
recently a group of strategists have consolidated the different
theories and proposed a standard Business Model Canvas

Because this Business Model Canvas is such a simple yet powerful
tool for systematically understanding, designing and implement
ing new business models, or analysing and revitalising old
ones—all on one page—it has been widely accepted by both
academics and business people, and is now used by thousands of
firms throughout the world

Although the Business Model Canvas is designed to be applied to
any business type, it can also be used as a platform for developing
specialised Canvases for the special needs of industries such as
franchising, services and e-commerce.

Because of this, we at No Ordinary
Business Consultants developed the
Business Model Canvas into a far more
flexible and practical tool for specific
industries such as franchising, retail
and e-commerce.
See page 15 to
preview our Business Model Canvas
for Franchisors
Why it’s wrong NOT to be concerned about
your business model
A business model describes how your company creates, delivers and
captures value.
Here’s an example of how it works. For
many years, I was a serial gym member.
I was sucked in by offers of three free
months’ membership if you joined
for a year, or low weekly automatic
payments that cleverly disguised
the exorbitant annual total. The
offers were usually made by willowy young women wearing t-shirts
and track pants two or three sizes too
small for them. I looked at them and then
looked at myself, and thought, “I have seriously got to get in
shape.” Invariably I joined on the spot, only to find when I went along
to the gym that it wasn’t open or if it was, there were three hundred
people waiting to use the rowing machine I wanted to use. My record
was six visits to the gym over the course of an annual membership.
When I finally did the maths and worked out that this was costing me
over $200 per visit, I gave up on gyms altogether and resigned myself
that my shape was always going to be out-of-shape. Until a new kind
of gym opened nearby that offered no contracts, genuinely low fees,
24/7 access and worldwide coverage. I was hooked. I may even go
there one day.
The fact that Anytime, Jetts and other chains of these new kinds of
gyms are popping up everywhere while the “traditional” gyms seem
to be fading away indicates that the new gyms’ business model is
shaking up the industry. That is, it’s a “disruptive” model which is
creating, delivering and capturing value in ways that no one had
thought of before.
With new and disruptive business models popping up as
frequently as new gyms, in industries you’d never expect them
to, it has become essential for all business owners to constantly ask themselves, “Is my business model in trouble?”
page3
3 ways to tell if your business model is in trouble
There are always early symptoms that
a business model is in trouble, but they
usually get ignored or dismissed.
Why? Because the people at the
top of most companies got there
because of their success with the
current business model, so why
question its endurance?
Our experience with this is supported by recently published findings
of Professor Rita Gunther McGrath of Columbia Business School, who
says that owners of struggling businesses initially go into denial
mode, followed by desperation as they try to squeeze the last drops
of profitability out of the existing model. The result is that change
only happens when it’s too late, and when the change is considerably
more painful than it needed to be.
There are three ways to tell if your business model is in trouble:
1. When any new improvements you make to your business model
make less and less difference to the business’s performance, and
you and your team have more and more trouble coming up with
new ways to improve your offering
2. When your customers start asking for more from what you have
been offering them and ask about alternatives
3. When your business’s performance
starts to falter, usually in ways that
are so gradual you’re probably putting them down to the sales cycle
or economic climate
Read about five
businesses which
turned their business models
around ... with
amazing
results
page4
5 businesses that have had to change their
business models to survive
Disruptive business models have been around
for a long time. Who would have thought that
the US railroad moguls of the 1800s, who
became immensely wealthy, would be
ruined by the burgeoning road transport
industry in the 1900s? And who would have
thought twenty years ago that the postal arm
of most of the world’s postal services would
be struggling today?
What the railroad moguls should have done, as any Marketing 101
student knows from the famous Marketing Myopia article which
seems to be required reading in every university in the first week of
the course, was to take a broader perspective on the market they
were in. The railroad moguls shouldn’t have assumed they were only
in the railroad industry rather than the transportation industry.
To their credit, many postal services such as NZ Post have now taken
a broad perspective, seeing themselves in the delivery and communications industry. They’ve not only diversified into the courier business (the delivery market rather than just the postal market) but also
leveraged their branch network into retail banking. Smart. In 2011,
they even took on an Innovation and Strategy GM. You can spot him
straight away in the executive team photos on their website because
he’s the only one wearing a t-shirt instead of a tie.
Even some of the world’s most prominent high-tech
businesses wouldn’t be where they are today if they
hadn’t flipped the whole business model they started
with, often several times, over very short periods.
page5
Believe it or not, Google started with no
business model at all. After trying out all
sorts of ideas, most of which were unprofitable, they hit on the simple idea of
allowing businesses to advertise to
people using their search engine. Hey
presto, Adwords was born, last year earning a staggering USD$42.5
billion in revenue, about one-quarter of New Zealand’s total GDP for
2012.
Apple was struggling in 1997 when, in
an act of desperation, they brought
Steve Jobs back. Jobs refocused the
company on doing what it does best,
creating beautiful consumer electronics and serving the graphics,
video editing and digital production
markets. The rest is history.
Technology companies aren’t the only ones which need to change
their business models to survive. Like department stores throughout
the world, New Zealand’s Farmers Trading Company has morphed
several times during the last thirty years to cope with completion
from shopping malls and power retail centres, taking an “if you can’t
beat ‘em, join ‘em” approach by going into the shopping malls and
power centres.
Franchising businesses have often been
slower to change because, unlike managed businesses, they first need to obtain the buy-in of franchisees.
McDonald’s was able to leverage their
strong relationship with franchisees to
make substantial and expensive
changes to their menus and store formats in the noughties. This was a return to form for McDonald’s
which, after all, was founded on three disruptive business models—
fast food, franchising and property leasing.
page6
Why do some businesses grow so much faster
than their competitors, even when there
doesn’t seem to be much difference between
them?
Seen in a ‘Businesses for Sale’ ad in a newspaper in Brisbane:
e
Could this be th
s?
perfect busines
nder
And is it any wo
ise
that the franch
ess
that this busin
e of
is part of is on
wing
the fastest gro
New
in Australia and
Zealand?





2012 Adjusted Business Earnings—$308,453
Strong regular reliable cash flow and steady stream of new clien
tele with limited marketing
Top Brisbane location with secure long term lease, great street
appeal and very high visibility.
Low owner involvement with virtually no stock, working capital,
few staff, and limited customer interaction.
Proven business model with all systems and operations well
established.
Here’s how the ad ends:
Price: $1,100,000 PLUS
$3,000 STOCK
The perfect business comes
with a hefty price tag. We
don’t know if it sold for that
price. But we do know that it
was a Jetts Fitness franchise and that, according to Jetts, their average gym set up costs around $500,000. So as long as the owner got
more than $1 million, he or she doubled his or her money.
And he or she didn’t have to slave to build up the business like many
business people. Jetts reckon their franchisees only need to invest
around five to ten hours of their time per week if they employ just
one staff member working 38 hours per week.
page7
No wonder so many of their franchisees end up buying multiple
franchises. That’s a big part of the secret of the franchise’s phenomenal growth since it started in 2007, growth that has seen it establish
more than 150 franchises.
But Jetts was a little slow off the
mark in Australia. Founders
Brendon and Cristy Levenson
opened their first gym in 2007
and sold their first franchise in
2008, about the same time as
Anytime Fitness entered the
Australian market. The Jetts business model was much the same
as the disruptive business model that Anytime had pioneered in the
United States in 2002. No contracts, low weekly fees, 24/7 accessibility. But Anytime was already well established and, presumably, better
funded. To date, they have sold around one hundred more franchises
than Jetts in Australasia.
The Jetts business model was much the same as the
disruptive business model that Anytime had pioneered in the
United States in 2002.
Where Jetts got the jump on Anytime was in the New Zealand
market. Anytime’s master franchisee for Australasia focused on the
Australian market first, while Jetts jumped the ditch sooner. Jetts now
has 44 franchises in New Zealand to Anytime’s 11. But Anytime
recently sold the New Zealand-only master franchise, so the race is
on.
page8
Why copy cat businesses have local
advantages over the real thing
It may not be true in the Olympics or
sport, but in business, sometimes it's
better to be the second or third cab
off the rank. Especially with disruptive
new business models. And by spotting
new business models as they prove
themselves in the United States or
Europe, where they usually originate,
quick-acting New Zealand and Australian opportunists can make the
big time off the back of offshore success stories.
The classic local-boy-made-good story in New Zealand, of course, is
Sir Stephen Tindall of The Warehouse. I can remember wandering
into his first store in Takapuna and my first thought was: Who's going
to buy all this junk? But I answered my own question when I ended
by buying a broom for around half of what I would have paid at the
hardware store down the road. Thirty years later The Warehouse is a
national institution, proving that the disruptive new business model
pioneered by Sam Walton of Walmart in the United States more than
forty years ago works as well here as it does in the United States and
other parts of the world.
How well would Walmart now go if they set up
in competition to The Warehouse in New
Zealand, or KMart in Australia?
Are the Australian and New Zealand markets too small and remote
for them? Or is the fact that KMart and The Warehouse are so wellestablished a disincentive to them?
The fact is that Walmart hasn't generally been as successful offshore
as inside the United States, with the exception of the United Kingdom, South America and China. They actually pulled out of Germany
page9
and South Korea. And they’ve never set foot in Australia, something
The Warehouse should have taken note of before making its unsuccessful foray into Australia a few years back.
There seem to be two main reasons for
Walmart’s mixed reception: local resistance in some countries to one-business-model-fits-all concepts, and stiff
local competition, often from operators such as Aldi in Germany, with similar business models.
The trick to successful new business model adoption—which may be
viewed by some as piracy, but how do you patent or copyright a
business model?—seems to be to wait until the model is proven by
someone else overseas, then quickly adapt it to the local market and
expand rapidly to grab as much market share as possible before the
model’s originators expand as far as our fair shores.
Jetts Fitness is not the only early model adopter which has used
franchising to achieve rapid expansion—another is Zambrero, a
fast-growing fast-casual Mexican food franchise based, like Jetts, in
Australia. Zambrero’s store format, menu, commitment to fresh
organic ingredients and concern for the community is very like that
of Chipotle Mexican Grill, a fast-casual concept (albeit nonfranchised) in the United States whose growth has been described by
Forbes magazine as “the envy of the restaurant industry”.
Do you know your
business plan is not
the same as your
business model?
page10
Why your business plan is not your business
model (and why it matters)
Here’s where 99% of business
owners get confused. They’ve
been taught that the tool for
developing strategy in their
businesses is a business plan.
Not so. Without first developing a relevant business model, putting
together a business plan is like setting your business adrift. Without a
business model, no amount of written visions, missions, goals and
action plans will get your business to where you want it to go.
What’s the difference between a business
model and a business plan?
A business model describes how your company creates, delivers and
captures value. That’s the very essence of business. How well your
company does it spells the difference between success and failure—
and degrees of success. For that reason, a business model has to be
responsive to what you find in the real world outside your office by
talking to customers. It’s dynamic, and it requires you to be agile and
continually challenging your assumptions.
On the other side of the coin, a business
plan is about execution, taking action.
It’s about agreeing and aligning the
business’s visions, goals and action
plans. There’s nothing wrong with
that, but the trouble is that business
owners tend to treat a business plan,
once written, as the culmination of
everything they know and believe.
page11
How do you develop the ideal business
model?
Step One:
Ask the tough questions. These questions are known as ‘the strategic
five’ and as you can see, they go to the very heart of the business:
1. What business or businesses should you be in?
2. How do you add value to your businesses?
3. Who are the target customers for your businesses?
4. What are your value propositions to those target
customers?
5. What capabilities are essential to adding value to your
businesses and differentiating their value propositions?
Step Two:
Put processes in place in your business which cause you to challenge
the existing assumptions in your business model.
Step Three:
Put together a team with a wide range of skills and backgrounds
from key areas within your business—IT, marketing, finance and
operations—and people from outside your business who can
provide a fresh perspective. The job of this team is to develop hypotheses about the areas where your firm should experiment.
Step Four:
Start experimenting—developing and trying out prototypes on a
small scale to see what works and what doesn’t before committing
the business to larger scale and longer term innovation.
Step Five:
Go back to Step One— business model evolution is a continuing
process.
page12
Now there’s a new tool for assessing,
designing and applying business models
“Disruptive new business models are emblematic of our
generation. Yet they remain poorly understood, even as they
transform competitive landscapes across industries.
Business Model Generation, A. Osterwalder and Y. Pigneurat
It’s all very well to understand
the importance of business
models to modern commerce,
and to understand the difference between a business model
and a business plan. But what
use is all that without the tools
necessary for designing, documenting, reinventing and
implementing business models?
Over the years, a range of tools have been devised, but it wasn’t until
the publication of a new book, Business Model Generation—itself
developed from a completely new business model—that a single
business model generation tool began to receive wide acceptance.
The Business Model Canvas proposed by the authors, strategists
Alexander Osterwalder and Yves Pigneurat, is a surprisingly simple
but powerful tool for systematically understanding, designing and
implementing new business models—or analysing and revitalising
old ones. All on one page.
Although the Business Model Canvas
is designed to be applied to any
business type, it can also be used as
a platform for developing specialised
Canvases for the special needs of
industries such as franchising.
And that’s exactly what we’ve done.
Why we've developed
the No Ordinary
Business Model
Canvas for specifi
industries such as
franchising
page13
Example: Why franchising is different
Franchising was a disruptive new business model in the 1950s and
although it is still one of the most successful business models of all
time, today it is having to adapt to meet the challenge of new disruptive business models, particularly e-commerce and other online
models. Many franchise businesses have already demonstrated that
rather than posing a threat, the new models can complement and
strengthen their existing business models.
But others are struggling. For example, one third of the franchisors
surveyed in the 2013 New Zealand Franchising Confidence Index
Report they were experiencing “business model related issues”,
making that their second greatest challenge for 2013.
Franchisors are unique because they have two customers—their
franchisees, who are also their channel to market, and their franchisees’ customers, the end users of the businesses‘ products and
services. One of their greatest challenges is how to create value for
both their franchisees and their end users, and still have something
in the business for themselves.
The other challenges for franchisors lie in the underlying characteristics common to all world-class franchises. One: the need for strategic
health, bridging the gap between the franchisor and the end users so
that franchisors understand the franchisees’ customers as well as the
franchisees do. And two: strong organisational culture, adding
vibrancy and enthusiasm to franchisor-franchisee relationships.
Because these challenges are unique to franchising, we identified a need amongst our franchise clients and the wider
franchise market for a Business Model Canvas that met the
special needs of franchisors.
We came up not only with an exclusive Business Model Canvas for
Franchisors that we believe is the first of its kind in the world, but also
a range of specialist Business Model assessment and generation
services to meet the needs of franchise organisations everywhere.
page14
Announcing the first Business Model
Canvas for the Franchising Industry
The No Ordinary Business Model Canvas for Franchisors
How it's different from other BMCs:
1. Acknowledges the uniqueness and complexity of franchising
2. Reflects the unique needs and challenges of franchisors, including the
fact that franchisors have TWO customers—their franchisees, and their
franchisees' customers
3. Builds on the underlying characteristics of all best-practice franchises strategic health and strong organisational culture
How can the TWO levels of relationships with Key Partners and
Suppliers - national or regional
(franchisor) and local (franchisees)
- be best managed?
How can franchisors bridge the
gap between themselves and
their franchisees' customers?
Key Activities
Key
Partners
Value
Proposition
Key Resources
Customers
Franchise &
Other Channels
Revenue
Costs
How do franchise channel
costs compare with other
channel costs? What
economies of scale and group
buying power can the be
utilised to bring costs down?
Customer
Relationships
Because franchisors have TWO
customers, not just one, each of
the No Ordinary Business Model
Canvas's 9 "building blocks" has
TWO levels - franchisees, and
franchisees' customers
What is the franchisees'
part in the Key Activities
and Resources? What
tools and resources will
the franchisor require
in order to support the
franchisees?
How does the franchisor make
money? How does the franchisee?
What is the ideal balance?
What channels other than
franchising are available? Is
there any conflict of interest?
How can new business models
such as e-commerce be integrated so as to benefit rather
than disadvantage franchisees?
page15
Introducing three new services for those
looking to start a new business or give their
current business a new lease of life
Every business owner recognises the importance of working on the
business, not in it, but that’s easier said than done. Especially when
the business owner and his or her team has had a stake in developing the current business model. Challenging the status quo can be
seen as career threatening.
That’s why strategy experts advocate getting help with the business
model review and innovation process, a third party who truly offers a
“fresh pair of eyes” and the expertise to guide the team through the
process.
Because of our knowledge and experience in this field, we have
introduced three new services designed to meet the different business modelling needs of our clients:
Thinking about starting a new business but
not sure how the business model stacks up?
Or concerned about the robustness of the
business model in your current business?
B Model Assess provides you with an independent analysis and reality check.
Designed specifically for start ups and new
business units, B Model Design utilises a
variety of strategies and techniques—
including environmental scanning, customer
insights and market research - to come up
with innovative business model options and
prepare them for prototyping
page16
It’s one thing to identify promising new
business models, but quite another to obtain
the necessary buy-in from your people,
teams, partners and stakeholders, and implement them in your business. But B Model
Shift is not just about change management,
it’s about developing a whole new culture of
innovation within your organisation to
ensure your business model remains fresh
and relevant in the long term.
Who are we and how we can benefit you
In thirty exciting years, Robin La Pere of No Ordinary
Business and Franchise Consultants has been at the
forefront of tremendous innovation and change
across industries as diverse as banking, FMCG,
retail and construction. He has combined his
wealth of experience as a senior corporate
executive, franchise director, business owner
and consultant together with the latest thinking on business model generation to meet the
changing needs of modern businesses by
producing exclusive versions of the
Business Model Canvas for specific
industries such as franchising, retail
and e-commerce.
page17
Why we broke the mould for business and
franchise consulting firms
Arguably the biggest risk you can take in business today is to be
“ordinary”. As the name implies, No Ordinary Business and Franchise
Consultants was founded by Robin La Pere to be anything but
ordinary. We believe that by being “not ordinary” ourselves, we can
help our clients truly think outside the box and achieve extraordinary results.
What puts us in a league of our own?
1. We have developed exclusive tools that will help to unlock a
more relevant and sustainable business model for you.
2. We’re renaissance people, meaning we can provide you with a
wide range of services to meet your exact needs, whether they be
the need for a better business model , business plan, or marketing
strategy. Because of this, we’re seen as a trusted long-term business partner by many of our clients.
3. We’re so confident that we will add extraordinary value to your
business that we’re prepared to make an offer no other consultancy ever would - that is, to pay us only what you think we’re
worth. See our website for more details.
Why work with a New
Zealand based consultant?
That’s obvious if you’re a New Zealand-based franchise.
But if you’re Australian-based, here are four great reasons
to work with us:
1. We’ll bill you in New Zealand dollars, not Australian
dollars. Thanks to the currency exchange difference,
you’ll save 20%.
2. We speak the same language, share a similar culture, laws,
heritage and, if you live in Tasmania, climate.
3. We’re only three hours’ flying time away, closer than Perth if you
happen to live in Sydney, and only a little further than a Brisbane
to Melbourne flight
4. Robin La Pere’s mother was born and raised in NSW. That makes
him half-Australian.
Our other services for franchisors
and other business owners
Strategy review, development and implementation
 Business planning
 Benchmarking and Best Practice
 Innovation and design strategy

Franchise feasibility, development and implementation
Franchise system performance reviews and reengineering
 Intranets and documentation
 Franchise recruitment and selection strategy
 Franchisee development and training programmes


Marketing strategy, planning and development
Market and competitive research and intelligence
 Online and offline strategies and campaigns
 Trade show and event management


Contact details
Robin La Pere, Director
No Ordinary Company Limited
Tel + 64 9 3606063
Mob + 64 27 4487881
Email robin@noordinary.co.nz
Web www.noordinary.co.nz
NO RDINARY
businesses and franchises
Visit our website www.noordinary.co.nz for:



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