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.
The 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.
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@rocketpad.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.
