What is the Business Model (BM) ?
The objective of any entrepreneur is to find a business model. It is the set of bricks that captures value. It emerged in the mid-1990s, driven by the growth of the commodification of the Internet. The WB is based on the concept of a “value proposition” which is characterized by product innovation. The approach aims to think about customer needs to solve problems and produce an innovative product. We do not start from the final product but from the customer’s need. A real management tool that ensures the adequacy between the product and customer satisfaction for the entrepreneur and his team.
To choose the business model, you must know your sector of activity well
In general, the BM defines :
- The value proposition delivered to the customer
- The manufacture of the value proposition
- Compensation, the revenue model of the value proposition
What is its purpose ?
The Business Model is the photography of your company. It is composed of 9 blocks allowing to quickly visualize the following 4 dimensions :
- Financial viability
In these 9 blocks, you will find :
|1. The value proposition|
| For each product/service, what are the targeted segments ?|
What needs/problems will your company/project address ?
|2. Distribution channels|
|Where will your product/service be sold ?|
|3. Customer segments|
|For each product/service, what are the target customer segments ?|
|4. Sources of income|
|Do the revenues come from direct sales, subscriptions or other sources ?|
|5. The customer relationship|
|How to communicate with our future customers and current customers ?|
Which channels to choose (advertising, blog, telephone solicitation,
etc…. ) ?
Do you need to automate and/or personalize your customer relationships ?
|6. The key resources|
|What resources are needed to launch your project ?|
|7. The key activities|
|What needs to be in place for your business model to work ?|
|8. The key partners|
|Do you need external partners to promote your product/service ?|
|9. The cost structure|
|What are the different types of costs for your project ?|
It allows you to :
- Define a direction. This means asking yourself the question of the business model to adopt. Some exploit a niche, others are based on free, etc..
- Get a clear and simplified view of the different flows of your company.
A business model cannot be decreed, it is discovered !
- This document is shareable and scalable. It allows you to remember partnerships, distribution channels, cost structure, etc. Not insignificant elements that can give you a competitive advantage.
Rotate your business model to better bounce back
Startups are said to be agile because they are able to modify their business model to meet their customers’ expectations. This requires an analysis of the situation on what is not working, while we find success.
Some types of business model
- Freemium : Part of the offer is free but part of the content is blocked and reserved for premium members. It is the latter who pay.
- Auctions : Customers choose the price of the product or service.
- Subscription : A service or product is marketed for a fixed period of time.
- Affiliation : A commission is earned each time a user clicks on an advertising banner and performs an action such as a registration or a purchase.
- The low cost model : An existing business model is used to offer a reduced offer by removing everything that is not essential.
- The time-spent model : Consumers can enjoy the services as long as they have paid for the time they use them.
- The transaction on sales : Revenue is generated through commissions on sales.
- All free of charge : The service is free as long as advertisers finance supports such as the website, newspapers, etc.
- Adaptive : Prices vary according to customer demand and consumption patterns.
- The use model : A low price is applied to the customer to encourage him to repeat the act of purchase. Example the coffee machine.
There are many other types of BM.
Some online tools to make your BM
- GRP Lab : A collaborative and interactive tool that mobilizes the GRP model. G to generate value, R to share its success and P to signify partners (employees, customers, suppliers, financiers, etc.)
- Social Business Models : This site offers you specific tools for entrepreneurs and social project leaders.