At a most basic level, a business model is how the business intends to make money.
It's a framework for creating economic value, and let's face it, without profit,
there is no business, so it is imperative you get this right.
A business model consists of nine basic building blocks that work together to form
your business blueprint.
Seeing how these elements work and fit together can help you spot opportunities
for innovation or to differentiate your business from the competition. Your
business model isn't set in stone: in fact, reassessing it on an annual basis
is advised, so you can evolve and adapt to market changes.
Putting your business model together is like piecing together a puzzle. The easiest way
to set things out and see how they work together is to use the business model canvas framework.
Core Elements of a Business Model
1. Products and Services
What do you sell? Think about all the options available to your customers. This could
be products, services, or both. Which problems are you helping to solve or which need
does your business satisfy?
Who are you selling to? Who are you solving a problem or need for? Segment the customers.
Does what you are selling match their needs?
Channels are customer touch points that help you build your customer experience. How are
you reaching and communicating with your people to deliver your product or service?
Will you be selling direct through a website, via a retail outlet, in person, or through
door-to-door sales? Which channels work best?
4. Customer Relationships
How are you building and maintaining relationships? What types of relationships do each
of your customer segments expect you to establish and maintain with them? Social media,
blogging, email, and networking events are all examples of ways you can connect and stay
in touch with your customers.
5. Revenue Streams
What is the revenue model? What pricing strategies are you using? Consider subscriptions
fees, licensing models, and fixed pricing. What works best? How do your customers want to pay?
What are the most important things you need to make your business work? Consider the financial,
physical, intellectual or human resources you may need. Start-up money for equipment?
A physical space to sell from? Additional training or qualifications? Employees?
These are what you need to do to keep your business running, communicate with customers,
and deliver value. Don't just consider the administrative tasks: also think about how you
will keep your business thriving. It might include developing new products and services
or coming up wit new ideas.