Having an idea for a business involves much more than inspiration. Your business idea should also include a strategy to make the idea profitable. That strategy is known as a business model. The role of a business is to provide products and / or services that help customers solve their business or consumer needs. Additionally, your business must work for you and generate a reliable and ideally abundant income stream from which you draw your annual income.

Before continuing, let’s clarify the meanings of the business model and business plan. Your business plan is a document in which you describe your business mission: target customer groups; the market and the competitive environment in which it will operate; your marketing, financial and operational plans; and the legal structure that will be given to it.

Your business model will detail how the company will achieve and maintain profitability. The cornerstone of a good business model is competitive analysis, which will help you verify target markets (customer groups) and establish your competitive advantages in the presence of other companies offering similar products and services.

The main ingredient in your competitive analysis is customer insight, an asset I often recommend cultivating for aspiring entrepreneurs. Information gathering is a vital and ongoing business function. James King, director of the Small Business Development Center in New York (state), notes that “customer buying patterns change quite quickly and if you are not ahead of your customers, you are not making sales.”

Along with the selection of products and services that your company will provide and your customer acquisition strategies, the operational aspects, that is, the process by which the products or services will be manufactured or acquired and made available to the market, must comply with expectations often fluid. of customers and, for that reason, an operations component should be included in the business model of your company.

Once you have developed a draft business model, it can be instructive to ask a trusted potential client or friend who owns a non-competing business for feedback on what they have proposed. Discovering and closing immediately obvious gaps is something you’ll want to do before your business is up and running.

King recommends that aspiring entrepreneurs “Sit down with someone who doesn’t have a vested interest and ask them to poke holes in your model. If they do a good job, they’ll be better prepared for any eventuality.” risk you can eliminate, the more likely it is to be successful. “

It is recommended that you review your business plan and business model every two years, or at least when changes in your industry, local business environment, or technology have the potential to affect your sales revenue or how you do business. This practice will also give you the benefit of reviewing your projections in regards to expected vs. real target customers and allow you to refine planning for growth and expansion, as you create strategies for sustainable business success.

Thank you for reading,

Kim