Why you need a business model

In order to grow a successful business you need to look strategically at the way you run the business and manage its development. Without an overview it is likely that you will just drift along in business, much as you can in life without a plan.

Credit: www.freedigitalphotos.net/

Credit: www.freedigitalphotos.net

Many business owners run a business without any business plan or strategy. The question is how much more successful could their business be with some more thought and planning.

A business model is a formula that you are following in your business in order for it to make the best profits possible. A business model covers three main areas:

  • The business offering (product / service)
  • The monetization (how the income is bought in)
  • The sustainability (how the business will survive)

In developing your own business model you need to be clear about what your business offers, how it will bring in the money and how you will sustain that business to achieve your overall goals and dreams. Your business model should give you a blueprint of how you wish to run your business. It should have an overall mission or vision for the business, the objectives you are aiming to achieve, the strategy by which you intend to achieve them and the day-to-day tools you are planning on using.Watch Full Movie Online Streaming Online and Download

Every business has a business model even if you don’t realise it or know what it is. Some basic examples of business models include:

  • Bulk buy / cheap delivery model for example Lidl and Aldi. They gain customers by offering everyday products at value price, they can service this by buying in bulk, quick turnaround and basic offerings. They make money by buying cheap and having only small margins but low running costs. This is also similar to a market trader.
  • Membership model Weight Watchers for example gain customers by offering a support service they need at a low price, provide them with the basics (in this case some advice, weighing etc.) and a sense of belonging to a group. They tie them in to a membership package and upsell additional products (for example food items etc.). This is similar to gym membership, online membership to knowledge-based communities etc.
  • The auction model – known by many as the eBay model – is nothing new. As long as there have been flower, fish and fruit markets there have been auctioneers who provide a service to the producer of the product (the vegetable grower) and the shop (the greengrocer). The auctioneer makes his or her money by taking a percentage cut of the price achieved.
  • The franchise model for example McDonald’s. You provide your franchises with the products, processes and marketing support for which they pay you and then they run the business and continue to pay you for that privilege. Often used by new business start-ups to find their way in the world of business.
  • The pay as you go model such as with mobile phones. You offer your client a way of paying for something over time or as and when it is used to avoid the upfront cost.

There are literally hundreds of models out there. What you need to do is think about your own basic idea / model and think how it can be used to keep your business going in the right direction.

For personal support in developing your business model I offer one-to-one mentoring, or  you might like to join one of my mastermind groups and explore business models with other women business owners.

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