A business model is extremely important to ensure a business is set up properly and has the ability to run smoothly. The business model is the main component of a business plan and this is necessary when looking for investors from both individuals or banks.
There are 8 components which make up Business Model:
Firstly, Value Proposition, which basically outlines why a customer would buy from you. There must be a definition of what product of service you provide and why customers would choose you.
Secondly, Revenue Model, stating exactly how the business will make money. Earning revenue and generating profits is usually the primary objective of a business so this is particularly important.
Thirdly, Market Opportunity refers to a company’s intended market space and the overall potential financial opportunities available to the firm in that market space.
The fourth component to the model is Competitive Environment whereby other competition selling similar products and operating in the same market space are outlined along with additional information such as how large they are, their net profits, their share of the market space and the price of their product.
The fifth component to the model is Competitive Advantage. To compete against established and well trusted companies, your firm must have some kind of advantage over the competition which will encourage customers to use you products or service. It may be a cheaper product or a higher quality.
The sixth element is Market Strategy, a Plan that details how a company intends to enter a new market and attract strategy such as promoting products or services to attract a target audience.
The seventh element is Organisation Development, explaining what types of organisational structures within the business need to be in place to ensure it runs smoothly and all the necessary work is completed.
The eighth and final element is Management Team, whereby the credentials, experience and skills of the company leaders are explained in order to attract customers and investors.
There are 8 components which make up Business Model:
Firstly, Value Proposition, which basically outlines why a customer would buy from you. There must be a definition of what product of service you provide and why customers would choose you.
Secondly, Revenue Model, stating exactly how the business will make money. Earning revenue and generating profits is usually the primary objective of a business so this is particularly important.
Thirdly, Market Opportunity refers to a company’s intended market space and the overall potential financial opportunities available to the firm in that market space.
The fourth component to the model is Competitive Environment whereby other competition selling similar products and operating in the same market space are outlined along with additional information such as how large they are, their net profits, their share of the market space and the price of their product.
The fifth component to the model is Competitive Advantage. To compete against established and well trusted companies, your firm must have some kind of advantage over the competition which will encourage customers to use you products or service. It may be a cheaper product or a higher quality.
The sixth element is Market Strategy, a Plan that details how a company intends to enter a new market and attract strategy such as promoting products or services to attract a target audience.
The seventh element is Organisation Development, explaining what types of organisational structures within the business need to be in place to ensure it runs smoothly and all the necessary work is completed.
The eighth and final element is Management Team, whereby the credentials, experience and skills of the company leaders are explained in order to attract customers and investors.
