There are two types of businesses in this world.
- One where the owners fly by the seat of their pants.
- The other where the owners plan the future.
You must clearly understand what value you provide and to whom. Then you must understand why your customers will be willing to meet your price.
If you clearly understand these two things you have identified your Business Model. Your customers come to you because… convenience, location, after sales service, you are the only real choice, you have a unique understanding of their business, your product/service is the best value for money and no one else can supply it and so on.
A business model is defined as the combination of the following elements:
- What products or services you sell
- Who buys them
- WHY they buy them
- HOW do you make a profit?
There is always at least one reason why a customer will buy from you, and these reasons vary over different market segments.
- Don’t take your Business Model for granted.
- Know what it is that makes you successful.
- Keep it relevant to circumstances.
- In a dynamic business environment a Business Model can lose value quickly, e.g. impact of digital cameras on Kodak, or the impact of direct customer access to online flight and accommodation bookings on traditional travel agents.
- Businesses with an outdated Business Model are going to feel the pain quickly.
You must re-examine your Business Model and make sure what you are doing is relevant to the current market place, because if you are not doing the right things strategically, the right things will not happen in the rest of your business. Do a self check of your business model here