Explaining The Business Model Concept
The term "business model" has been making a way for itself through our vocabularies since the beginning of the "dot com" era
. Generally speaking, it is used to denominate the way in which a particular company plans to obtain revenue from its operations. Nowadays, this concept is considered to be the cornerstone of any successful business; having a viable model determines the success of an activity, while having a faulty one will surely make you go down in time.Drawing up such a plan requires knowledge from many areas, such as economy, law, advertising and even some sociology. Still, it's not a difficult job, as long as you stick to the basic structure of a business model. First of all, it should enunciate the purpose of the company: what products or services it will offer to the public and why. Then, it should identify the segment of the market that the company targets as buyers and explain in what way the products will improve the quality of their lives.
Another important part of the business model is the one that refers to external relations, such as alliances or partnerships with other corporations. This section should include competitive techniques that are to be used against rival companies, as well, because they will determine the entire marketing and advertising strategy. Finally, financial details such as the cost and profit structure should also be pretty clear even from the start, as they will allow you to keep track of your expenses and gains.
The first element that a business model must include is the type of services or products that the firm will offer on the market. Then, it should state what category of clients it will attract and how exactly the products will help improve their lives. Another important element is the channel (or channels) through which the customers will be reached and what the ideal client-provider relationship would be. Financial issues are also very important, as the business model should also comprise a cost and revenue structure to clarify these issues from the beginning. You should also include details about eventual alliances with other corporations, although that may be more of an ulterior plan than one you start with.
Finally, know that a good business plan is considered to be the cornerstone of any successful corporation. It will help you remember the essence of your activity, as well as the reasons for which you first went into business: to help people, while at the same time helping yourself.
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