What is your business model? This is a question every investor wants answers to from entrepreneurs. It is the key to getting funding as every investor wants to know how your idea can make money. To define how sustainable business ideas are and their ability to repay investments, entrepreneurs need to define their business models. It is the key to the growth and earning potential of the business.
Businesses are about structures, a system of operation and of getting results. That is simply what a business model is. It is the framework of how a business intends to make money or better still how it intends to operate, create and maximize value for stakeholders in a competitive market. It asks the questions; who is the customer? What does the customer value? How can we deliver value to customers at the right price? And try to proffer not solutions but answers on how to structure the organization into one driven by a strategic objective focused on turning the value created into streams of income.
Strategy! Strategy is the language of business, knowing how to outsmart competition at every move and how to manoeuvre even the most impossible situations. As such strategy has become so synonymous to business that one is simply left with the thought that business is simply a game of strategy. But strategies are simply tools, tools to achieve results; they do not form the core of business. They exist to aid the achievement of results and the implementation of business models. Strategy builds on a good business model. Without a business model, organizations lose sense of the value creation process. They would merely exist to add to the number of offerings but not to value created. Business models give organizations a clear sense of direction and strategy is the key to transforming these models from theory into the realms of business.
Your business model influences your strategy. A Business model is the playing field and strategy is the game plan. Nothing defines the entrepreneur’s journey like a good business model. Entrepreneurs must learn how to create strategic business models that drive the organizations value points in the value creation process. The focus should be on growing and sustaining the competitive advantage. And that is only possible with a strategic business model that wins on the playing field of business.
In creating strategic business models entrepreneurs must look to the decision points of their businesses and outline the key decision points or drivers and weigh their influence on the value creation process and the business as a whole. From that point they should outline their value proposition, their profit formula, key resources, and key processes. Align it with company goals; ensure they are self-reinforcing and robust enough to ward off threats from competition and the business environment. They must ensure that the model drives the core objective of the business and carries a value orientation. In the end they must implement through strategy.
The success of a business model lies in the implementation process. Without a formidable game plan, even the best ideas will lose voice and meaning. Entrepreneurs must channel their energy at ensuring that their strategies reflect their effort in achieving results. The true power of a strategy lies not in the actions taken but in the effect created. Focus on ensuring your business model creates an effect that creates ripples or virtuous cycles that translate into streams of income. Let your strategy drive innovation and the value points of your business and see results emerge. Your business model is the gun and strategy is the bullet better start shooting. It is not enough to have a business model, it must be strategic.
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