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Business model, the structure that supports a business

Business models there are thousands, strategies and skills that combine several elements in which a business plan is the ideal to start rolling. Every idea needs to be expressed and become a business model, every entrepreneur develops a business based on a certain business model, which will determine the way in which things have to be done.

Alexander Osterwalder is the person who created the so-called Canvas model, From this moment on, every entrepreneur has a guiding methodology that helps us create successful and profitable businesses. In this article I want to talk briefly about the 9 segments in which the Canvas method is divided, let’s start …

Business Model- Alexander Osterwalder’s Canvas Methodology

1- Segment customers

To know the market niche and the opportunities of our business.

The central part of the canvas, the people to whom our idea, our products or services is focused, correctly defining from the beginning who is our ideal client will determine all future actions in our business.

2- Define the value proposition well

In other words, knowing why we are innovative and what differentiates us from our competition and brings us closer to potential clients.

Not only what is our product or service, but also and mainly why people should buy from us and not from the competition. Here are the characteristics that stand out of our product, which makes it unique and advantageous over other similar or similar products.

3- Define communication channels

Distribution and advertising strategy that we will follow, to strengthen our brand and business idea.

We have the product or the service, but now we define the way in which we will be able to expose it to our potential clients, in what way, what channels, strategies, what type of advertising, through which social, audiovisual, blogging platforms, etc.

4- Establish the relationship that we will maintain with clients. –

Distribution channels become means to achieve interaction and rapprochement with the potential client, here we are concerned with the way in which we will be part of our clients’ lives.

5- Determine the economic sources of our business idea

A fundamental aspect if we want to be successful. We have a business so we will need to have certain financial means to give life and continuity to it, in this section we define the costs of the project, resources, tools, personnel, etc.

6- Identify assets and resources key that we will need as essential pieces in the gear of the business idea. Related to the previous point, we need to define the tools and resources that will make it possible for our business to express itself and reach thousands of people interested in what we propose.

7- Know the key activities that will add value to our brand, and know the strategies necessary to enhance them. Every business is developed through certain activities, in this section we must clearly define which are these fundamental activities that we must develop to achieve the objectives that were set.

8- Take into account the key partners with whom to establish contacts and alliances for the business.

In other words, define networking strategies with potential partners or suppliers, among other important figures. Nobody creates a business alone, we will always need collaborators, strategic partners with whom we will work to develop our business in the most productive and balanced way possible.

9- Mark the cost structures, to get to know the price that the client will have to pay for acquiring the good or service that our business idea will offer. Knowing what it means for us to run a business is only the beginning, since this will determine the prices or costs with which our products or services reach our customers.

That our business is structured based on a business model will guarantee to have a plan, a plan, a map, to achieve success and we can develop a profitable business.

Many entrepreneurs, both online and offline, are unaware of this methodology, so many times they find themselves on the road with situations that had not been raised at the beginning and that often become obstacles that slow down our business.

The Canvas method can be used in any type of business such as affiliates, multilevel, consultancies, franchises, memberships, etc.

Video: Business model canvas structure that supports a business


Business Model Generation: How to turn your idea into a plan

Do you have an idea. Perhaps you have invented a new product, or have a unique service that could help potential customers in a new and different way. You want to take this idea and start a business. Along the way, someone has probably told you that you need a business model. And so here you are. Probably thinking: «What exactly is a business model?»« Is it the same as a business plan? » “How important is business model generation to all of this starting a business process?”

All very reasonable questions. After all, not even management experts have come to a true consensus on what exactly it is. a business modelor. It seems that the scope and definition of the business model can be as varied as the businesses themselves.

In this business modeling guide, we go over everything you need to know to put your idea on paper and develop a watertight business model.

Business model generation: Starting at the beginning

Before you start generating business models, do yourself a favor. Stop. Take a deep breath. And stop thinking about business models. Get all the big, technical and fancy business words out of your head and focus on the basics.

Why do you want to launch this business, anyway? Who are you trying to help?

Imagine yourself telling the story of your business. Develop the character that is your customer. What is the plot of your client’s story? What does your customer need to achieve? How can he or she make that happen? And how does your business fit into your client’s story?

Before dressing your business model in its technical and official form, this is all it is, in essence: a story.

Choosing a business model generation process

Of course, there are as many ways to generate a business model as there are companies in the world. Just as there is no precise definition, there is also no precise process. That would be too simple.

As with most aspects of entrepreneurship, there is no standard formula to follow. The process requires constant innovation, constant redefinition.

The closest we have to an accepted formula for the generation of business models comes from Clay Christensen, from Harvard Business School, who proposes a simple method that consists of four elements: a value proposition for the client, a benefits formula , key resources and key processes.

Working from the four elements of Christensen, consider the following comprehensive six-step process for building business models:

1. Determine your customer value proposition

What does your offer do for your customer? How do you solve your customers’ problem in a different way than other similar offers on the market? Answering these questions will help you define your unique customer value proposition.

In order to determine how your company is going to do business and make a profit from your customer, you must first understand why your customer would want your offering, and what value you provide through your product or service.

2. Design your earnings formula

Think of your earnings formula as a treasure map. It describes the terrain and gives specific instructions on how your business will make money.

According to Christensen, your earnings formula should include four components:

Income model: Determined by factoring the price of your offer by the volume you will be able to produce and distribute.

Cost structure: This includes a detailed analysis of direct and indirect costs, more specifically the costs of your key resources, which we will discuss in the next step of business model generation.

Margin model: Given your expected costs and volume, what price will you have to charge to achieve your desired profit margin? Is that price reasonable given your customer value proposition?

Resource speed: How quickly and efficiently will you need to produce and distribute your offering to maintain your desired volume and profit margin?

3. Identify your key resources

What assets will you need to deliver your defined value proposition to your customer? These can include people (employees and their time, skills, and talents), technology, products, facilities, equipment, intellectual property, or just about any other resource.

To prevent your list from becoming overwhelming, focus only on the most essential assets that differentiate your business competitively from others in your market.

4. Determine your key processes

Next, how will your resources interact with each other to achieve your defined customer value proposition? How will you repeat this process to deliver a reliable offer with a consistent profit margin?

Consider in detail what specific training, craft, manufacturing, distribution, or service processes you will need to implement to meet customer needs in a regulated and reliable manner.

5. Evaluate and innovate your business model

The business model generation process is more than just a leap forward in the process of launching a new business. It’s a continual and ever-evolving journey that will continue throughout the life of your business.

Once you’ve defined your customer value proposition, benefits formula, key resources, and key processes, it’s important to consistently evaluate those definitions and innovate your business model.

In fact, business model innovation is so important that the IBM Institute for Business Value Global CEO Study reported in 2009 that an incredible 98% of companies were in the process of modifying their business model to some degree.

Throughout the life of your business, regularly rethink the basic model. What works? What is not working? What has changed in your client, your product or your sector? And how can your company participate in the innovation of a relevant business model to adapt to those changes?

6. Consider competing models

When evaluating your business model, don’t forget to consider how your competitors’ choices and strategies will impact your business.

As Joan Ricart points out in a 2011 edition of the Harvard Business Review, almost any company can be successful with business model generation if it has the good fortune of being the only company in its market. For the vast majority, competitor analysis can be the essential step that defines the success of a business model.

“Independent evaluation of models leads to faulty assessments of their strengths and weaknesses and poor decision making. This is a big reason why so many new business models fail. “

Business model generation: The choice is yours, Simply put, your business model is a series of options. While Christensen’s definition provides a simple and effective formula for business model generation, it is by no means the only process available. In fact, your most radical and potentially most profitable outcome might require you to completely break the mold of business model generation.

Ultimately, whatever means you use to determine and explain how your business will serve your customers and generate revenue has the potential to result in a winning proposal.