The starting point of any public or private business whether for profit or non profit is the business model used to build it. The business model describes mainly how the company will generate profit or at least cover its expenses during a startup or in case it is a not for profit organization.
The Business Model has some key elements that outlines the activities the organization will be performing -regardless of its size- to be labelled a business:
- On the top comes the Value proposition which is the Service or the Product that has a perceived value needed by a Customer
- Here comes the second key element: Customer. Suppose that you are a non for profit organization that supports homeless. The service or product you offer need to reach and be persevered to have value by the homeless.
Same sort of thinking applies if you are offering coffee, retirement pensions, insurance, TV’s, car cleaning or parking or any other product or service.
This will help you create the persona of the customer that you will try to reach
- Then, What are your communication channels?
After figuring out your customer, you need to know:
- how you will reach them? Direct targeting,, word of mouth, referral, third party as retail shops or online platforms
- Where you will do business? In a shop or online
- How you will deliver your product or service
- The next important thing is how you will maintain your relations with your customers
- Is it a one on one relation continuous relations as Doctors, lawyers, accountants
- Do you offer after sales maintenance service, technical support
- Are you going to build loyalty to your brand?
- Do your service include subscription?
- Revenue Stream, that’s the source of income or what you will be paid for. Examples are fees for Subscription, consultancy, training, car maintenance, or cost of a cup of coffee, a new car or a new shaving blade.
It can be an investment funding when we are a startup. It might be donations in case we are a charity organization
- Then comes the Key resources that will facilitate generating and delivering the service or product as a website, assets (equipment, skills, software) brand, networks, etc.
- Based on all the above what are the main activities that we shall be performing:
- Product or service development
- Updating website
- Coping with Regulations
- We are not doing business in a nutshell. There are Business TO Business relations that enables us to do business and they are called Key Partners
- Raw material or parts suppliers in case we are in the manufacturing field
- Retailers when we are a whole seller or a manufacturer
- Whole sellers and manufacturers in case we are retailers
- Logistic agencies in case we outsource this service for transportation our goods
- The hosting server for our online platform or even website
- The last key element of our business plan which must come at the end are our Cost and Cost Structure or Policy
- The Cost Policy is the guide lines of what we are going to invest in and what not e.g. Do we need a physical location? an owned transportation fleet? a website? a luxury office or shop window?
- Do we pay rentals, subscriptions, insurance?
- Marketing Cost and Sales Cost (if any)
- Maintenance or upgrade for assets as website
NOTE: The classification of any industry is based on the product stated in its business model.
What is a business?
A business is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities.investopedia.com
Any business regardless of its size, its first building block is its business model. Regardless of your technology approach, if the business model is not clear to you, then you will stumble for some time till you get a clear start from the business point of view.
Next Step will be generating a business plan. The Business Plan is a detailed document describing the details of the road map to achieve and perform each of the elements of the business model.
Business Plan Definition:A written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statemententrepreneur.com
The summary of the Business Plan should touch on the following key elements:
- Business concept describes the business, its product, the market it serves and the business’ competitive advantage.
- Financial features include financial highlights, such as sales and profits.
- Financial requirements stating how much capital is needed for startup or expansion, how it will be used and what collateral is available.
- Current business position furnishes relevant information about the company, its legal form of operation, when it was founded, the principal owners and key personnel.
- Major achievements points out anything noteworthy, such as patents, prototypes, important contracts regarding product development, or results from test marketing that have been conducted.