Business Model for Entrepreneurs – Are you making a fashion statement?

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By Arnab Ray

It is interesting to analyze how entrepreneurs react to certain business terms like operations strategy or business model. In my experience, the outcomes range from absolute distain to an extended discussion around the “nuts and bolts of their business”. Again, it is difficult to generalize, but the more mature a business, greater is the evolvement from “a brilliant idea to sustainability” with an acceptance towards the importance of planning and structuring. At that point in time, a so called fashion statement becomes a necessity and creating a business model a reality.

To be fair, structuring a business model is a difficult task for most startup businesses, as ambiguity still persists in defining it. A host of terms like strategy, tactics, method, process etc. can overwhelm an entrepreneur or start up business, especially when sourcing funds and building a market are the most important elements in their thinking DNA.

A way forward is to make building a business model an integral part of a venture. It is therefore imperative to take a holistic view during the business planning phase to ensure that each segment of a business is interlinked with the overall objective of the founding team. At BPlanExperts we try and link all the dots to ensure that the business foundation being set has a clearly defined outcome. Our business plans provide a strong focus on how each segment helps to highlight a great business opportunity.

Without exception, the business model concept is related to a whole new range of business design opportunities and can be explained simply as a concise representation of the business processes of an organization, which starts from value proposition and ends in revenue generation. Now we are singing from the right hymn sheet to attract an investor by addressing the two most important aspects of a business i.e. the business value of the venture and revenue generation prospects. Again, a strong caveat, a good business model within a great business plan does not guarantee funding, but sure does give a solid view on how you propose to sell your product or service and make money out of it.

Standard framework for characterizing a business model

Business models don’t last as long as they used to. New players are rapidly emerging with innovative technologies and following unorthodox methods. Business model innovation is becoming the new strategic mantra. Great, but as an entrepreneur you might be tempted to play a guessing game because if a business model is dynamic in nature with a short shelf life, why plan at all.  Be reactive rather than proactive.

For sure, trial and error is an option, or is it? Given the high stakes, a better way forward can be to engage a professional business planning firm with extensive business expertise and domain experience to work on building a robust business model for your business.

This is where we at BPlanExperts come into the picture. We leverage extensive market research and real business experience of our consultants to define a framework that characterizes a robust business model. It is to be noted that no two businesses are alike and we analyze each venture before customizing solutions for them.

However our experience shows that irrespective of the business domain, certain aspects remain mission critical and need to be clearly defined. These include;

  1. Customer Value Proposition: CVP is something that needs to addressed. Simply put, it is the nature of the product/services mix and the value it can generate to meet customer expectations. Creation of value justifies the business entity.
  2. Nature and scope of Market: Every business needs to define their target customer base (b2b/b2c) and market segment (niche/local/national/international).
  3. Revenue Model: Revenue model is the core element of a business model and every entrepreneur should have a master plan about how they plan to generate revenues. Business owners should clearly categorize their sources of revenue, costs, pricing strategies, volumes, margins and operating leverage while structuring the revenue model.
  4. Entrepreneur’s goals: The business model should also emphasize on the time, scope and investment ambitions of an entrepreneur. Every entrepreneur should set proper targets for themselves. A wake up call in the event of failure to achieve pre defined milestones is essential. Avoiding entrepreneurs’ myopia is key.

 When in doubt call in the business plan doctors. You can reach us at www.bplanexperts.com

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