How To Pick Your Business Model To Support Growth

business-model

You need to establish a business model that will support your plans for growth. If your business strategy changes, you may need to modify your business model to align with it. Here's how to pick your business model to support growth:


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“Show me the money” is the mantra and your business model describes how you use your resources to deliver value to customers while maximizing your profitability and ability to scale.

Questions to consider when deciding on your Business Model

  • Who are your customers?
  • How do these customers use the product/service?
  • What are the available distribution channels (think outside of the box!)?
  • What is your sales strategy?
  • What operational processes do you need to underpin the delivery of the service or product?
  • What are the resource requirements?
  • How do you make money?
  • Which of the business functions/processes can be outsourced? Visualise and write down all the business processes. Take your product/service/business process and list its attributes. For example, shape, size, design, materials, equipment, functions, technology and cost. Then take each attribute and try to find as many alternatives to it as possible. 

Recommended Reading: Understanding The Effects of Rapid Growth In Business

Attribute Listing

  • Split your business process in the smallest parts possible
  • What are the elements of your product/service/business process?
  • What are the alternatives?
Financial Last year Previous year
Sales    
Gross profit    
Net profit    
Your own salary    
Total promoters/management team remuneration

Examine which of your business functions and/or business processes can be outsourced

Businesses that sell the same product or service can have quite different business models and new business models can have devastating effects on the competitors that operate in same markets.

Look at companies such Dell, Ryanair, Skype, Amazon as examples. What is your model, is it profitable and can you scale it? Can it be improved?

Different business models

You could have one or a combination of these.

The bricks and mortar model

The classic shop.

The subscription model

Where your clients sign up and pay a monthly/annual fee.

Lock in model

You sell the hardware cheaply and lock in the need for the supplemental products. This model is implemented with products such as cell phones and airtime, printers and ink cartridges, and cameras, film, and prints.

Multi-level marketing model

You create a group/network of independent distributors who buy products from you and sell the products on to consumers.

Direct sales model

You take out the middle man and sell direct to customers.

Service model

Where you deliver added value directly to customers

Collective business model

You create economy of scale and pool resources for a fee.

Online delivery model

You have digitised your business and deliver it over the net

Internet brokerage model

You bring buyers and sellers together for a transaction fee.

Internet advertising model

You provide free content services and make money by selling advertising.

Information portals

You sell content and information to distributors or end user.

Software rental service

You rent out software

Web communities

Where you build a community online. Word of warning on internet: more than 99% of all web 2.0 properties will never make a dime and 95% of the web is not monetisable according to some of the experts. It is also an ever changing web environment with new models developing all the time. 

Over to you now. How did you go about picking the business model for your company? Tell us your experience in the comments below. 

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Saturday, 17 November 2018
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