Building a Business Model

Building a foundation is essential for any business. Formulating a strategy and conducting research are important elements of this foundation. Both a business plan and a business model are required if the business is to run like a well oiled machine. Some may believe that a business plan and a business model are one and the same, but this is not true. A business plan is much more formal and it includes financial information, competitive analyses, and market assessments, among other information. A business model, on the other hand, is typically is about one page of information about the business and usually has a diagram aspect to it. The information generally summarizes the technical, technological, marketing, advantages, offerings of goods and services available to the public, and the chain of command of the business.

The business model is the infrastructure of the overall business. This infrastructure should include the main capabilities and responsibilities of the business. This infrastructure is the core of the business and it demonstrates what the business is and what it has to offer. It also defines any partnerships that exist within the business itself. These partnerships should be complementary where both parties win and profit.

What the business offers to society also needs to be clearly defined. What is it that sets out your business from others around you? What does your business provide for the public? These are questions that have to be addressed when formulating a business model. The business needs to be an asset to society and present and provide an overall value to the public. The risks such as time, money, and effort invested and the rewards which include greater sales also need to be factored in.

Constructing a business model defines where and how the business will receive money from customers and clients and how that cash is used. It draws the lines as to how the money received from customers and clients is used to obtain products and services from suppliers. A good business model demonstrates how products and services flow from suppliers to the business and then from that business to the clients and customers.

Another element that should be incorporated within the conceptualization of a business model is what makes the business unique, also referred to as the “Wow! Factor.” Customers and clients want to know just what they are paying for and what they are getting for their money. They also want to know just how they are going to benefit from buying into whatever it is that you are selling. For this reason a target market needs to be located. Target customers that are genuinely interested in your products and services need to be sought out.

Once the target market has been defined, the marketing strategy can be put into place. This strategy should cater to the members of the community, whether this community is located within the physical area or online. Sales and marketing techniques are at a whole new level due to the technological advances of today. With the click of a button, mass marketing and promotions can be sent virtually all over the world. Through the use of social networks such as Facebook, MySpace, Twitter, among others, pretty much anyone interested in what you have to say or sell has access to contacting your business. Marketing can also be done the more traditional way with advertisement and mailers as well, but the internet is much more efficient and it reaches a great deal more people within a specified target area.

Business models include relevant financial information, though it may not be as detailed as what is reported in the financial plan. A cost structure paradigm, the number of employees, and members of management are defined. Also, how revenue will be accumulated and how the business will create a positive cash flow is a part of the information included. The business model usually states the number of venues that will be a part of the overall business, as there may be more than one that will have the ability to generate an income for the company and a positive cash flow as well.

The future goals of the company are also outlined. This helps to lead the business in the right direction and allow it to progress successfully. Business owners need to know what the future holds for the business in the long term and also what that has to do to attain the goals they have proposed.

The business model should be at the heart of every business. The key idea behind it needs to be that working hard leads to greater profit. Both the business owner and the employees have to be on track in regards to the mission of the business, the message they want to put out, and the platform they are using to do so. Everyone that is a part of it should be on the same page so that they are all working together with the same vision.

New ideas should be welcomed, but if they do not coincide or improve upon the original business concept, their implementation should be overlooked. A well run business is a reflection of a good team of individuals that are working as a whole. Success should be the common goal.