Developing Holistic Business Models
It’s not a secret, every entrepreneur wants a successful and profitable business. With the rate at which markets change and new technology is developed, it is important to have a play on how your business will fit and thrive in today’s market.
There are many factors that come into play when determining the potential success of a business; the team, product-market fit, and performance management, but, the most important factor is the effort put into planning and execution.
With the plethora of business strategies and advice circulating, it can be easy to get lost in the process of trying to keep up with the Joneses. Having a well-thought-out business model can help narrow your focus on what really matters in creating your successful business.
How Do You Start?
It starts with evaluating the opportunity that has presented itself.
If you haven’t had the chance to read our article on the evaluation of opportunities, please click here
The point is to create a product or provide a service that has a market-ready for it or the potential of creating a new market. We established in the article that the priority of the entrepreneur when evaluating an opportunity should be determining how the opportunity fits into their long-term goals and how feasible and sustainable the opportunity will be.
If your opportunity made it through the rigorous assessment, the next step is to create your business model.
A business model describes the rationale of how a business creates, delivers and captures value. This serves as the first step before developing and executing strategies.
Just as everything that’s worth building is done in phases and with certain materials to last, the diagram above depicts what are called the building blocks to create a business model.
The basic functional alignment in business centers around the product, operations, growth, and finance, and each of these blocks falls under these segments.
Product
Value proposition falls under this segment and it represents the product or service your business is created to offer. Each business has its competitive advantage, this segment allows you to highlight and define the value to be provided by your business and also ideate on possible bundles that can be presented with the resources available to you.
Growth
Now that you have your value proposition determined, you want to determine what your key market is and the most efficient way of interacting with it.
Customer segment, customer relationship, and channels fall under this area. You identify the personas of the customers for your product and highlight the best means by which you can get information to them and earn their trust.
Operations
This segment highlights your business’s daily activities and highlights what the strength of staff for your business should be. Key activities, key resources, and key partnerships fall under this segment.
After highlighting the key means of interacting with and reaching your target audience, your key activities indicate the tasks that need to be done to ensure your value proposition is delivered (roles and responsibilities can be determined from here) and key resources highlight what needs to be available to have your key activities done efficiently. Key partnerships help you highlight the people or companies that will be involved in your key activities outside your company.
Finance
This is the most important part of your business model, it ensures the sustainability of your business. Cost structure and revenue streams fall under this segment.
As the building block’s name suggests, here you highlight the activities, resources, and partnerships that need to be funded and with revenue streams, you highlight the different ways your business can make money.
After the above has been determined, other areas like infrastructure and internal processes will need to be reviewed and determined depending on the industry and office model you want to adopt for your staff. Through your formulated business model, you can have a more focused approach to developing your branding, marketing, talent management, customer acquisition, fundraising, and financial strategies amongst others.
From your assessment process when evaluating your business opportunity, you would have highlighted key organizations to model your business after. Even though a majority of businesses copy tactics where they can from established product leaders, it is important you perform your analysis to determine what works best for your product and environment.
Last but not least, as your business grows it is important to understand that the strategies that helped you launch your business might necessarily not be what helps you stay successful in the market. Over time, you have to update your model to reflect the growth you have achieved and to also assess risks with updated information.
In our next article, we will be running you through the process of developing an effective pitch.
