Hatching a business idea involves much more than inspiration. Your entrepreneurial idea should also include a strategy to make the idea profitable. That strategy is known as the business model. The function of a business is to provide products and/or services that help customers meet their business or consumer needs. Also, your business must work for you and generate a reliable and ideally abundant income stream from which you draw your annual income.
Before we continue, let’s clarify the meanings of business model and business plan. Your business plan is a document in which you describe the mission of your business: target customer groups; the market and competitive environment in which it will operate; your marketing, financial and operational plans; and the legal structure that will be given.
Your business model will detail how the company will achieve and maintain profitability. The cornerstone of a good business model is a competitive analysis, which will help you verify your target markets (customer groups) and establish your competitive advantages over other companies offering similar products and services.
The main ingredient of his competitive analysis is customer insight, an asset I often recommend aspiring entrepreneurs cultivate. Information gathering is a vital and ongoing business function. James King, director of the New York (State) Small Business Development Center, notes that “customer buying patterns change pretty quickly and if you’re not getting ahead of your customers, you’re not generating sales.”
Along with the selection of products and services to be provided by your company and your customer acquisition strategies, the operational aspects, that is, the process by which the products or services will be manufactured or purchased and made available to the market, must meet with expectations, often fluid. of customers and for that reason, an operations component must be included in your company’s business model.
Once you’ve developed a draft of your business model, you may find it instructive to ask a trusted prospect or friend who owns a non-competitive business to give you feedback on what you’ve proposed. Finding and immediately closing obvious gaps is something you’ll want to do before your business is up and running.
King recommends that aspiring entrepreneurs “sit down with someone who has no vested interest and ask them to poke holes in your model. If they do a good job, they’ll be better prepared for any eventuality. The more risk you can eliminate, the greater the probability for it to be successful.”
It is recommended that you review your business plan and business model every two years, or at least when changes in your industry, local business environment, or technology have the potential to affect your sales revenue or the way you do business. This practice will also give you the benefit of revising your projections against what is expected versus what is expected. target real customers and allow you to refine your planning for growth and expansion as you strategize for sustainable business success.
Thank you for reading,
Kim
