Business Model Generation

What exactly is a business model?

It was certainly a much used buzzword in the dot com boom in the late 90s and early 2k years and associated with the exact opposite of what a good business model is because so many badly thought out businesses collapsed during the digital gold rush.

The definition of a business model is a plan that is put in place by a company to generate revenue from their operations. This would include the various aspects of the business such as its expenses and how it will not only cover these expenses but also turn a healthy profit.

The concept of the business model is a very old one and in its simplest form is a description of how a business makes its money. Business models can be very simply or incredibly detailed and complex. Some businesses their model is very obvious; a cafe makes its money by providing its customers with food and beverages, a photocopier manufacturer makes and supplies photocopiers and so on, but other businesses have more circuitous and far less obvious ways of generating revenue, such as TV stations who most people would assume they generate income from showing programs but actually their primary purpose is to sell advertising. Many web sites offer free information in the form of content and they attempt to make money from advertising, through affiliate commissions etc.

A business model can be a difficult thing to define and yet can be as simple as saying how do you intend to make money, but then that prompts a lot of more detailed questions such as; who exactly are you targeting as your customers? What problem does your product or service provide a solution to? How much value can you offer your customers? How will you get your customers? What makes your service/product different or better than your competitors?  What will your profit margin be? What are your company's costs? Are there going to be changes in your chosen market and how do you intend to face those changes?

It won't be long after starting your business that you will have to invest time in examining the fine details of your company's financial structure, cash flow, budgeting, income and expenses statements, tax and so on, these details can mean the making or breaking of your company if they are not carefully analysed and monitored. Most importantly you need to focus on where the money is going to be coming from, how much and how often in order to stay in business.

Knowing your customers needs and much they are prepared to pay for what you sell is crucial so is having a close eye on your competition. Having a well thought out timeline for your new business is paramount in the business model generation process. The chances are, your business will start off in debt having spent considerable funds on initial setup costs and it may not see a profit for a number of years. Costs can fluctuate, although they tend to just keep on increasing but you have to be able to accurately predict as many variables as possible if you want to make a profit and stay in business permanently. So take it seriously when you are looking at starting a new business and learn as much as you can about the details in order to produce a business model that will be successful.

<a href="">Miltec Digital Ltd</a> - A trusted company that can help with a suitable business model to target your specific audience and customers, build bespoke, high-converting websites to attract customers for your business and help promote and get your brand name out.

Here is a link to a YouTube video that discusses in detail the various tools available for business model generation  -


What we cover here at Strategy-Hub

  • Business Strategy
  • Branding Strategy
  • Business Model Generation
  • Marketing Plan
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