The Business Model

Before you start – The business model This is the most important part of starting a business. It is simple, yet most people never do it. I have no idea why, but perhaps because it is so seldom discussed when planning, as everyone is fixated on the “Business Plan”. A business model is a framework that outlines how a company creates, delivers, and captures value. Essentially, a business model serves as a blueprint for how a company generates revenue and sustains its operations over time – ie. the business plan. A business model is a framework that outlines how a company creates, delivers, and captures value. Essentially, a business model serves as a blueprint for how a company generates revenue and sustains its operations over time. In simple English the business model is a question you need answers to which I have split here for ease of reading: - What will I sell to make profit? - Who are my customers? - How do they pay? Most businesses cannot answer this question if you ask them to define their business model. Here is an example to make it easier to understand.

“I will rent baby prams families with newborn children for a period of 12 months with payment on a monthly debt order.

”This is very simple, exceptionally clear, easy to understand and easy to implement and manage.

This is a very narrowly defined business model. It could be easily expanded without reducing the focus. I will rent baby prams could be very easily expanded to Baby prams, car seats and cots. This would be a positive improvement to the business model. Why? You are selling the additional products to the same clients. The same clients would quite likely need all these items, not just a pram. They only need these products for a year or two. A rental maybe a cheaper option for the parents. The rental business would get the items back and then be able to sell them or rent them again. A win-win business model that could quite likely succeed.