What is a business model?
Your competition is not from the guy across the street. Your competition is the ‘business model’ that the guy across the street uses. It is the way that he or she conducts business, the style, the standards, and the methods used to acquire and keep customers that makes the guy across the street or you competitive.
What is a business model?
A business model is the way a company plans to generate revenue and make a profit from operations. A business model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs. For example:
A restaurant’s business model is to make money by cooking and serving food to hungry customers. MacDonald’s cooks and serves food to hungry people, so does Wendy’s and so does the local Steak House - what they serve and how they serve it is very different - it is their ‘business model’ that differentiates them and makes them competitive.
A web site’s business model might not be quite so clear, as there are many ways in which they can generate revenue. For example, some make money (or try to) by providing free information or service and then selling advertising to other companies who want to reach the people using the free service or information. Then there are those who choose to sell a product or service directly to customer they reach on-line.
Why is a business model important?
Your business model defines the style, the way you plan to deliver your goods and services, and sets a standard. It becomes a touchstone, a benchmark, a way to differentiate yourself from others serving the same market.
A business model defines how you plan to compete, it communicates how you create additional ‘value’, and becomes the magnet that draws customers whose needs are in alignment with your business model.
The process of building your business model will help you identify new opportunities, learn more about their business, and become the competition - the guy to beat. You could discover something that causes you to completely transform your business, identify how to breakthrough major obstacles, find a unique and new way of delivering value to the market which leads you to increased sales and profits.
Business Design & Transformation
Whether you are looking to totally renovate and revolutionize your existing business or start a new business and need a blueprint for delivering a compelling customer experience - designing your business model will set you up to succeed and dominate your niche. Your business model becomes a breakthrough tool to uncover new products and services, leadership opportunities, and becomes the strategic focus of your marketing and sales strategy.