Developing a business model isn’t merely about creating a product portfolio or completing a business plan. It’s also about outlining how you plan to generate value for your customers. If you want to acquire a sustainable advantage in today’s ultra-competitive business world, you need an innovative business model with a lot of room for adjustment.
The concept of business model emerged in the 1990s due to technological change, globalization, deregulation, sustainability, and other forces. Designing innovative business models became a top priority for senior executives across industries by 2006, as reported by the IBM Institute for Business Value’s biannual Global CEO Study.
A follow-up study in 2009 revealed that 70% of companies were engaging in business-model innovation and 98% of companies were adjusting their business models according to market trends.
A strong business model provides answers to all questions about your company’s offerings and distribution and marketing strategies. All good business models are self-reinforcing and align with the company’s goals. Here are some core elements of a strong business model:
Targeting a broad audience will keep you from focusing on your core customers who actually want or need your product or service. Determining your primary customers and creating customer profiles are the most important steps in developing a business model. A customer profile maps out the key interests, behaviors, and demographics of your target audience.
The target audience of online casinos like Casino777, for example, is gamers between the ages of 25 and 34. Although their target market includes all gamers, they narrow down their target audience to young gamers as older gamblers prefer land establishments over online casinos.
Activities that a company must perform to make the business model work are key business processes. Identifying these activities is one of the core functions of a business model. From production to product delivery to marketing, a strong business model should provide an understanding of every key business process.
Key Business Resources
Business resources include everything required to accomplish business goals, perform daily activities, and find new customers. Your business model must document key resources that are necessary for sustaining the needs of your company. Capital, intellectual property, customer lists, warehouses and working spaces, employees, and a website are some of the key resources that every business needs.
A Solid Value Proposition
Businesses with strong value propositions stand out from their competitors. Whether your company offers a revolutionary product or an innovative service, establishing why you are better than your competitors is the first step to creating a solid value proposition.
A strong value proposition explains how your offerings can solve customers’ problems and why they should choose you over your competitors. Relevancy, quantified value, and differentiation are key elements of every value proposition.
Every business has some key partners that contribute to its ability to function properly and serve customers, such as suppliers, manufacturers, strategic alliances, and advertising partners. A strong business model should include key partnerships that make your business model work.
These partnerships are created to gain access to unique resources, optimize expenses, and minimize risk and uncertainty by transferring them to an entity that’s better equipped to handle them.
Demand Generation Strategy
Taking a radical approach to starting a business doesn’t work for everyone. By designing a demand generation strategy, you can easily generate leads and bring customers to the last step of the sales funnel. The purpose of a demand generation strategy is to create awareness, drive traffic, expand your customer base, and get customers to take action.
As all business models are based on some assumptions, companies never know if their business model will cater to the changing needs of the customer. You may need to adjust your approach in response to market changes. Therefore, all business models should have room for future innovations.