what is a business model

What is a Business Model?

A business model is something you create for yourself in the primary phase of starting a business – in other words the “blue print” of your business. It helps clarify that you have a product or idea that people are interested in and are willing to buy. A business model also helps identify who your potential customers are and how your business will operate.

Why Use a Business Model? Too often business owners start a business without taking the time to map out each area that will allow them to run and operate a successful business. By working out a business model you are forced to focus on creating a product that meets your customers’ needs, revenue strategies, costs, margins, distribution strategies etc. If done properly, it will reduce your chance of failure.

what is a business modelThe Business Model Canvas

This is a strategic management and entrepreneurial tool created by Osterwalder & Pigneur. Here are the nine different segments of the Business Model Canvas to help you design yours:

1)      Value Proposition: What needs are you trying to meet?

2)      Customer Segments: What type of customer relationships do you need to build? Will they be low touch or high touch or in between? 3)      Channels: Which channels are available to create awareness around your product or service?

4)      Customer Relationships: How will you create demand?

5)      Key Activities: What things need to happen to get the wheels of the business turning? Think of everything here, from office to website. 6)      Resources: This includes looking at suppliers, commodities and funding.what is a business model

7)      Partners / Stakeholders: Accounting, bookkeeping and legal as well as platforms that can work symbiotically with your business. 8)      Cost Structure: Where will your business operate? Will you need a laptop? What kind? Your Business Model needs to include all these potential overheads.

9)      Revenue Streams: Consider your different revenue streams. Don’t focus on price, but rather look at how people will buy and how to monetise.

Online Resources https://strategyzer.com/canvas/business-model-canvas

Recommended Business Model Tool to Use The Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers is detailed and provides you with a template, as well as questions to guide and assist you to develop and map out your business model.

For a secondary analysis on creating a disruptive Business Model read this great article on A New Approach to Business Model Innovation and feel free to contact us if you need any encouragement or advice.

Contact: Nokwazi Mzobe, Founder at Matoyana

Email: nokwazi@matoyana.co.za

Matoyana Business Solutions is a boutique business consulting company located in Johannesburg, South Africa. It is targeted at start-ups, small and medium enterprises across Africa.

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