Business Model is a company's profit-making plan. It identifies the products or services that the business will sell, the target market, and the estimated costs of a business.
A new and growing business needs to have a business model to attract investors, recruit talent, and motivate management and employees. Businesses are often established and must review and update their business plan regularly, otherwise they will not be able to anticipate the trends and challenges ahead. Investors also need to review and evaluate the business plans of the companies they are interested in.
“For more than 60 years, investors, analysts, business leaders, and even governments, have classified companies based on industries... If leaders want to take their companies into the next decade, they need to start looking beyond their vertical industry designation and best practices. They should be focusing on business models and thinking about pivoting to a more valuable one”
The Four business model archetypes:
The Asset Builders: Companies that build, develop, market and distribute physical things.
The Service Provider: Companies that have employees who provide services to customers OR products they provide which they charge per hour/week/month/year.
The Technologist: Companies that develop and sell intellectual property such as software, analytics, pharmaceuticals, and biotechnology. This model also has low marginal cost to create product copies.
The Networker: Companies that orchestrate a network of peers in which the participants interact and share in the value creation. They may sell products or services, build relationships, share advice, give reviews, collaborate, co-create and more.
Business models scale differently. Each business model has different Activities, KPIs and assets. Businesses need to answer the following questions:
Which of the following activities is most important for the competitive success of your organization?
What KPIs are the most important for leaders to track in your firm?
Values to consider your values, it's helpful to start by reflecting on how you think about the four types of assets?
Business Model Canvas
A business model canvas is a visual representation of a business model, highlighting all key strategic factors. In other words, it is a general, holistic and complete overview of the company's workings, customers, revenue streams and more. The actual business model canvas definition was first proposed by Alexander Osterwalder, a Swiss entrepreneur, and consultant, but has gone on to be used around the world.
Investor's Perspective What does evaluating a business model mean to an investor? When considering a company as a good investment option, investors will find out exactly how the company makes money. That is the company's business model. Through the business model, they will have a more accurate sense of the company's data.
Finding a suitable and effective business model is always a difficult task for businesses when they start a company. Business Model is the way that the founders need to map out to guide the company in a certain type of business, helping all members of the company have a common goal to then maintain and develop the company in a more sustainable way.
Join the Web3 Space Acceleration Program Batch 02 today to learn more about business models, as well as general and strategic knowledge to solve business problems and develop your project. Register now at HERE