Your business model is an outline of your business offerings, resources, processes, people, target markets, channels, cost structure and revenue streams.
It serves as a summarized representation of what your business is about, who it is for, what they are paying you for, how much they are paying you, who is helping you and what it is costing you to make available your product or service.
According to Al-Debei, El-Haddadeh and Avison (2008), Value Proposition, Value Architecture (the organizational infrastructure and technological architecture that allows the movement of products, services, and information), Value Finance (modeling information related to total cost of ownership, pricing methods, and revenue structure), and Value Network articulate the primary constructs or dimensions of business models.
This is both the “what” and the “why” of your business. This represents what you are in business for and why your customers should buy from you.
To create a compelling value proposition:
- You must be absolutely clear about what problem you intend to solve and who you are solving it for.
- You must know if there are other people solving the same problem
- You must know how they are solving the problem
- You must be clear about why your customers should buy from you and not from your competitors.
Here, you are to define the key activities of your business, the key resources you need and the channels you’ll use to reach your customers.
Depending on your kind of business, your key activities might include:
- Marketing and sales
Also, your key resources might include financial and human capital resources, your intellectual properties, copyrights, licenses etc while you might be considering both offline and online channels for the delivery of your service or product.
So, these are some of the things to consider.
Tomorrow, we will look at the next.
Here, the considerations are:
- Your key partners: who is working with you? Who are you collaborating with? Whose platform are you leveraging?
- Your customer segments: who needs your services? What is your Buyer Persona?
- Your Relationship with your customers: what kind of relationship do you intend to have with your customers?
These are all things to consider.
Lastly, here you are considering
- Your cost structure: what does it cost you to provide your product/service and why? Also, can it cost less? Or should it cost more? Basically, here you are looking at your fixed costs, variable costs and Economies of scale.
2. Your Revenue streams: what are customers paying you for? What more can they pay you for? What other potential services can you provide to your customer? How will you charge them for it?
These are all things to consider when crafting your business model.