Building a Proper Business Model
The creation of a business plan does not revolve around writing a proper business plan or identifying the products to be pursued. One is deemed to have created a proper business plan after they map out a technique to create a progressive value for the customers and themselves. The plan has to be detailed and well documented, outlining the projected value of the business. It must provide an in-depth description of the business’s aims, needs, and objectives. Alexander Djerassi outlines some of the steps to form a strong business model.
Establish a Specific Audience
The first step to creating a strong business model is identifying the target audience. What are the people that will be using or purchasing the product or service? Who are they? What do they want? How can you provide it to them? The questions one should ask themselves have to narrow down on the customer’s demographics and common challenges. After identifying the target audience, it is important to ensure that they represent the general population. Therefore, the business model should offer a solution to the general population.
Establish Business Processes
The activities responsible for running the business model have to be precise. The business model should have a process for each step. It must be clear where the business is headed and how the company will get the targeted position. The process should be detailed and well documented. The core role of the business will be key in establishing the various activities that should be involved in the business model. It will also help clarify how the business will be run. According to Alexander Djerassi, some of the business model activities include:
• Product delivery management.
• Customer acquisition and retention.
• Marketing and sales management.
• Finance management.
• Human resources management.
• System integration.
Establish a Financial Model
A business model will not be successful if it does not have a clear financial model. The business’s financial model has to clearly define the cash flows to know what is spent on the various activities. The various activities of the business should be divided into separate expenses so that they can be accurately calculated. The cash flow analysis should identify how much money is used and the profit or loss is generated from each expense. A risk analysis will also help determine what might happen if something goes wrong with the company’s operations.
Identify and Record Key Business Resources
The key business resources necessary for an organization include capital, labor, and information. The capital is the money required for start-up and operations costs in general. In most cases, this refers to money borrowed or raised from investors or other sources. Labor is also a key resource for any company as it can provide the expertise and skills necessary for running a company. Information is also important as it provides knowledge about what needs to be done in effectively running the business model. These should be used effectively to make sure all of the processes are being run properly and efficiently. All the resources have to be properly recorded to uphold the business’ progressive nature.
