What is an impact-driven business model and how can it benefit you?

Opinions expressed by Entrepreneur the taxpayers are yours.

When we think of a diversified business model, it almost always comes with thoughts of multiple streams of income. It sounds wonderful. Wouldn’t we love money coming from many different sources? Better yet, let some of those sources be passive income streams and we can just sit back and watch the money roll in, right? It doesn’t quite work that way, however.

If you’re like many entrepreneurs, you probably also spend a lot of your time and energy on parts of your business that you intend to be future sources of income that aren’t paying off yet. They may be efforts that aren’t currently bringing in money, but they are what you intend to be the future of your business and primary sources of income.

For example, take the consultant-turned-author who aspires to speak on big stages giving speeches. Now, we know that it will take some time to reach that lofty goal. In the meantime, a disproportionate amount of time and energy will be spent trying to get these shows while it brings very little money in the short term.

Or take the launch of a new product or service that you believe will eventually pay off. Maybe it’s marketing efforts, like an ongoing newsletter, podcast, or writing a book, that require an enormous amount of time and initial effort long before they pay off.

Unlike a revenue-driven business model where you base your decisions on where to put your effort in proportion to what is making you money, an impact-driven business model is putting your time, energy and resources into the impact you want to make in your business and trusting that the money will follow.

This is an important distinction because, without realizing the difference, many entrepreneurs and business owners wonder if they are wasting their time – because the effort they are putting in and the time they are putting in far exceeds the revenue. With a traditional income-based model, you prioritize by income. With an impact-driven business model, you prioritize the work you want to do and the difference you want to make, even if the revenue doesn’t yet exist. An impact-driven business model is particularly important today, as more people are driven by passion and purpose and need a business model that reflects that.

However, their effort is not entirely driven by passion, abandoning future income. In fact, the intention is that this effort will eventually lead to substantial income. The problem is that as long as people believe they should focus on an income-oriented business model, they will question whether they are wasting time or feel their business model is broken, because traditionally companies focus on income first. . Don’t get me wrong — income is critical to a solid and profitable business. But many more business models seem to be impact-driven today. Leading with impact, trusting that the money will come next.

The important thing about this is knowing where to put your time and effort at the moment. With an impact-driven business model, it’s okay, even expected, that you’ll put more effort into growing this part of your business than the revenue it currently provides. If you’re focused on an income-oriented business, you’re likely to make very different decisions about where to put your effort.

This shift from income-based business models to impact-based business models is likely due in part to who is starting businesses today: older (middle-aged, you might say) business owners, people who left their corporate jobs in years or the millions who would be considered part of the Great Dismissal and are starting their entrepreneurial journey a little later in life. They are entrepreneurs driven to make a difference in the world, to impact an audience that means something to them and to make a serious bank, because they still have a long life ahead of them. However, they are also patient. They’re in it for the long term, so leading with impact makes sense. They know the money will come.

Therefore, when planning your business year and future years, it may be wise to adopt an impact-oriented business model. When defining your current and future income streams, consider that where you put your effort today may not be where you expect the most amount of revenue yet.

I like to look at it like levers on a control panel. Be clear on which levers you want to increase and push harder in proportion to the impact you want to make. And what levers do you want to moderate or decrease, because those income streams, maybe even significant income streams, just don’t require as much effort right now? That way, you’re making decisions based on effort and impact, not just revenue, trusting that revenue will follow. Considering it as a control panel, you can scale up and down any effort whenever you want. What I believe this offers is clarity on where to put your time, effort and energy.

If you make all your decisions based on which efforts generate the most income, you might earn the money, but did you achieve your real goals? Did you make the impact you set out to make?

With an impact-driven business model, you get the best of both worlds: the satisfaction of knowing you made the impact you set out to make, and ultimately being financially rewarded with a strong income stream.

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