It is interesting to analyze how entrepreneurs react to certain business terms such as operating strategy or business model. In my experience, the results range from utter disdain to an extended discussion of the crux of their business. Again, it is difficult to generalize, but the more mature a company is, the greater the development from a brilliant idea to sustainability with acceptance of the importance of planning and structuring. At this point in time, a so-called fashion statement becomes a necessity and the creation of a business model becomes a reality.
To be fair, structuring a business model is a difficult task for most startup companies as there is still confusion about how to define it. A wide variety of terms such as strategy, tactics, method, process, etc. can overwhelm an entrepreneur or startup, especially if raising funds and building a market are the most important elements in their thinking.
One way forward is to make building a business model an integral part of a company. Therefore, a holistic view during the business planning phase is essential to ensure that every segment of a company is tied to the overall goal of the founding team. At Burasa we try to tie all the dots together to ensure that the business foundation that is being established has a well-defined outcome. Our business plans have a strong focus on how each segment helps highlight a great business opportunity.
Without exception, the business model concept refers to a whole new range of business design possibilities and can be easily explained as a concise representation of the business processes of an organization, which ends from the value proposition to the generation of sales. Now we are singing the right hymn to attract an investor by addressing the two most important aspects of the business; H. the business value of the company and the prospects for generating revenue. Again, a strong caveat, having a good business model in a great business plan doesn’t guarantee funding, but it does give a solid view of how you plan to sell and make money on your product or service.
Standard framework for characterizing a business model
Business models don’t last as long as they used to. New players emerge quickly with innovative technologies and unorthodox methods. Business model innovation is becoming the new strategic mantra. Great, but as a business owner you might be tempted to play a guessing game because if a business model is dynamic and has a short shelf life why plan in the first place. Be reactive rather than proactive.
Trial and error sure is an option, or is it? With the stakes high, a better way forward may be to hire a professional business planning firm with extensive business and domain experience to work on building a robust business model for your company.
This is where we from Burasa come into play. We use extensive market research and real business experience from our consultants to define a framework that characterizes a robust business model. It should be noted that no two companies are alike and we analyze each company before we adapt solutions for them.
However, our experience shows that regardless of the business area, certain aspects remain business-critical and must be clearly defined. These include:
a) Customer Value Proposition: It’s something that needs to be addressed. Put simply, it is the type of product / service mix and the value it can generate in order to meet customer expectations. Value creation justifies the business unit.
b) Type and size of the market: Every company must define its target customer base from business to business and market segment.
c) Revenue model: The revenue model is the core element of a business model and every entrepreneur should have a master plan for how he wants to generate revenue. Entrepreneurs should clearly categorize their sources of income, costs, investment strategies, volumes, margins and operational leverage when structuring the revenue model.
d) Entrepreneur’s goals: The business model should also emphasize an entrepreneur’s time, scope and investment ambitions. Every entrepreneur should set the right goals. A wake-up call if predefined milestones are not achieved is essential.