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Developing an Effective Business Model

2 min read

  • Business Model
    • A company’s plan for making a profit
    • The proper time to develop a business model is following the feasibility analysis stage and prior to fleshing out the operational details
  • Classes/Classification of Business Model
    • B2B
      • Business 2 Business
    • B2C
      • Business 2 Customer
    • C2C
      • Customer 2 Customer
  • Categories of Business Model
    • Standard Business Model
      • Existing plans or recipes firms can use to determine how they will create, deliver, and capture value
      • Some of these Business Models include:
        • Advertising Business Model
        • Auction Business Model
        • Bricks and Clicks BusinessModel
        • Franchise Business Model
        • Freemium Business Model
        • Low-Cost Business Model
        • Manufacturer/Retailer Business Model
        • Peer-to-Peer Business Model
        • Razor and Blades Business Model
        • Subscription Business Model
        • Traditional Retailer Business Model
    • Disruptive Business Models
      • They are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry
  • Barringer/Ireland Business Model Template
    • A template for crafting a Business Model
    • Consists of 12 elements divided into 4 categories
    • Following are the categories along with their elements:
      • Core Strategy
        • Describes how the firm plans to compete relative to its competitors
        • Business Mission
          • Why it exists and what its business model is supposed to accomplish
        • Basis of Differentiation
          • Basis of differentiation is what causes consumers to pick one company’s products over another’s
        • Target Market
          • Which sector will your product target?
        • Product/Market Scope
          • How do you plan to expand to your target market?
      • Resources
        • Core Competency
          • A specific factor or resource that supports a firm’s business model and sets it apart from rivals
        • Key Assets
          • Assets that a firm owns that enable its business model to work
          • Could be physical, financial, intellectual, or human
      • Financials
        • Revenue Streams
          • Describe the ways in which it makes money
          • Can be a single or many streams
        • Cost Structure
          • Cost analysis
          • Cost-driven or value-driven?
        • Financing/Funding
          • Indicate the appropriate amount of funding that will be needed and where the money will most likely come from
      • Operations
        • Product/Service Production
          • how a firm’s products and/or services are produced
        • Channels
          • Describe how it delivers its product or service to its customers
        • Key Partners
          • Partnerships formed to achieve a goal
          • Following types of partnerships can be formed:
            • Joint venture
            • Network
            • Consortia
            • Strategic alliance
            • Trade associations

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