Re-Inventing Your Business Model
As an entrepreneur, you must learn business model. Business model is what we do to make money; your business must have a model. If you don’t live for designing business model, your business won’t last. Business can only make progress when it is been re-invented on a daily basis. Ask Blockbuster why they lost the video rental business to Netflix- Business Model.
To move faster from the neutral phase to the beginning phase during transition period, you must always build intellectual capacity for where you are going.
By definition, business model is a plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing.
A business model lays out a step-by-step plan of action to profitably operate the business in a specific marketplace. The business model for a restaurant is significantly different from the business model for an online business for instance.
To put together a business model, let’s look at the following points that make up a business model canvas.
Key partners: Who are the key partners for your business? Identify them and deal with them accordingly and have a good business relationship with them.
Key activities: When we say key activities, I mean what are the activities done on a daily, weekly and monthly basis in your business? All these must be identified and documented. This will help you put structure to your business and it will help you make informed decisions that will move the company forward.
Key resources: Key resources talks about the tools you can’t do without on a daily basis for your business, like the location for your business, human resources, recurrent expenses, and every other resources that will make your business profitable. Let’s take for example a website designer, he may not necessarily need an office, but he needs a laptop to work with, he would need internet data, he would have to get a domain name and hosting package.
Value proposition: What are the values you want to offer your customers? What are the features intended to make your company or product attractive to customers? Value proposition is what your customers want to hear about your product or services.
Customer relationship: This is the way you deal with your customers; it could be an existing customer or a potential client. Customer loyalty is very key in business and for a customer to be loyal, the relationship between you (your business) and the customer must be unwavering. You must possess the following qualities for you to be in a successful relationship with your customers; transparency, integrity, swift response to customer complaints, quick delivery of goods ordered and so on.
Customer segment: Customer segment is a function of customer relationship, it is the practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests and spending habits.
Channels: What are your channels of delivery? How do you intend to deliver your products or services to your customers? Let’s say you are into a bakery business, while some of your customers may come to the bakery to pick up their goods, you can also arrange for a vehicle to go supply to customers that are not close by. In this wise, there’d be two channels of delivering your products to your customers which will eventually boost your profits.
Successful businesses have developed business models that enable them to fulfill client needs at a competitive price and sustainable cost. Over time, circumstances change especially in this information age, and many businesses revise their business models frequently to reflect changing business environments and market demands.
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