To launch a startup or promote an existing business, one idea is not enough. The development of any enterprise requires a systematic approach and a clear understanding of how the company will operate. That is why it is so important to correctly draw up a business model and responsibly approach the development of a strategy.
Defining a Business Model
Many aspiring entrepreneurs confuse the terms “business strategy”, “business plan” and “business model”, often believing that they buy telemarketing data mean the same thing. In fact, these are completely different components of the system.
- A business model is a schematic description of the main processes of an organization.
- Business strategy is a comprehensive plan that determines a company’s path to success in a competitive environment.
- A business plan is a detailed elaboration of the company’s goals for several years and a clear program of actions to achieve them.
Thus, the analysis of the system of internal structural and operational processes of the enterprise, including the control system, management, communication with clients and work regulations, as well as the study of ways to make a profit is the business model of the company. It describes the mechanism for the organization to make a profit.
The Main Functions of a Business Model: Why Business Needs It
Despite the fact that the model does not contain precise calculations and does not set specific goals, it significantly simplifies the management and promotion of business, performing a is reading necessary to advance in the creative industry? whole range of tasks. This tool allows you to determine the paths of development of the company, methods for optimizing its work and the resources necessary for development.
- Creating a holistic scheme of the organization’s activities. The result of modeling is a clear understanding of what needs to be done for successful promotion in the market.
- Description of the company’s interaction with suppliers and customers. Drawing up a production business model allows you to determine how the purchase and delivery of materials will take place, what partnerships are needed and what are the main preferences of the target audience.
- Attracting investments. An investor who does not understand the concept of a company will never invest in it.
Common Types of Business Models
The modern market is dynamic: it changes, and business models change with it. Mixing elements my blog of different models is becoming a common practice, which has repeatedly proven its effectiveness in entrepreneurship. Let’s consider the most popular types of business models and their key features.
- Direct sales
The basis is communication between the seller and the buyer without intermediaries. Thanks to this method, it is quite easy to adjust sales tactics. The model is suitable for both small startups and giant companies.
- Mediation
The organization acts as an intermediary between the manufacturer and the end consumer, receiving a percentage of sales. An example of such a business model is most tour operators, real estate agencies, and online learning platforms.
- Freemium
This business model of the enterprise assumes providing the consumer with the basic version of the product for free, which allows to develop a large customer base. The free version can be a monthly subscription or the ability to listen to music in the background for a limited time.
Business Model Structure
Most business models consist of several interrelated elements:
- the product and the resources used in its production;
- sales and advertising tools;
- price competition strategy.
How to build a successful business model?
- Analyze existing areas of activity.
- Choose the direction that suits you. Think over ideas for the future enterprise and business model.
- Conduct a market analysis and evaluate the activities of competitors.
- Determine what makes your product unique and how you will sell the product/service.
- Proceed to the actual business modeling. Create a business model structure using the template.
One of the most popular templates by A. Osterwalder and I. Pigneur includes nine blocks: resources, key partners, target audience segments, product advantages, features of income generation, internal processes, distribution channels, interaction with clients and costs.
Running a business requires a deep understanding of business modeling and strategy development . If you want to launch a truly successful startup or breathe new life into an existing enterprise that is not bringing the desired profit, contact the specialists of our agency. The 360 MEDIA team will conduct an audit and help determine a development strategy, taking on the tasks of online promotion of your business.