search

How to define the business model of your company: Tips and strategies

POR Hispanic Entrepreneurs February 02, 2022
Featured image from the article

A business model is the skeleton of a company, it is the foundation on which everything else is built. And yet, many entrepreneurs struggle to create a business model or have no idea where to start. For this reason, in this article we want to give you some advice and strategies on how to define the business model of your company. Read on and learn how to create a successful business model for your company.

Benefits of a business model

Before going into the tips and strategies to define the business model of your company, let's take a moment to understand why it is so important to have one.

A business model describes how your company creates value through its products or services. However, it goes further; A good business model also explains how you are going to distribute those products and services to customers. The reason this is so important to startups is that without a clear idea of ​​how you're going to create value for your customers, it's hard to get them to buy what you're selling.

So if you still don't have an effective strategy, here are some tips and strategies that can help you:

Step #1: Understand your customer

The first step in designing a business model is to understand your customer. What are their needs and what are they willing to pay? This may seem like an obvious question, but it's surprising how many entrepreneurs don't really know who their target market is.

One way to get to know your customer is through market research. You can use surveys, interviews, focus groups, or any other research method to help you gather data about your customers. Once you have this data, you can start creating products and services that meet those needs.

Another way to understand your customer is by doing customer development, which involves talking directly to current and potential customers to learn about their problems and how they would be willing to pay for a solution.

[wpforms id = "23421" title = "false"]

Step #2: Know your competitors

The next step in creating a business model is knowing your competition. This can help you figure out how much of the market you can capture and what makes your products or services unique.

To do this, first look at other companies that offer similar products and services. If they do well, it means there is demand for them, which gives you an idea of ​​whether or not there is room for more players in the sector.

Next, try to figure out what makes each company different from others that offer similar products. What are your strengths? What does each of them do better than their competitors? Once you have done this analysis, compare these results with those of your own product or service. How do they compare? What can you learn from your competitors?

Step #3: Develop a Business Model Canvas

Once you know your client and your competition well, it's time to develop a business model canvas. It is basically a tool that will help you map out all the different elements of your business model.

The business model canvas has nine boxes, each of which represents an important element of your business model. You can use it as a guide to brainstorm how each element works together.

Here is a summary of what each box represents:

Your Value Proposition: what makes your product or service unique and attractive.

Customer segment: who are your customers? What needs do they have that you can meet?

Channels: how are you going to reach your customers?

Customer relations: how are you going to interact with your customers?

Income streams: what are the different ways to make money with your products and services?

Cost structure: what are your costs?

Operating model: how do you plan to run your business?

Step #4: Develop a strategy for each element of the business model canvas

Once you have created the business model canvas, it is time to develop strategies for each of the elements. This means thinking about how you are going to achieve each goal and what resources or assets you need to achieve it.

The business model canvas is a good starting point for defining your business model, but to develop and put it into practice you need examples to guide you.

There are many ways of doing it. For example, if you want to create an app for people who want to improve their health and fitness, see what other apps have been successful in the past. What differentiates them from the others? How did they achieve success? What features were most important to users?

One way to do this is to look at case studies of how companies have tackled problems or challenges similar to yours. These can give you ideas on how others might address the same issues that may not come naturally from trying new approaches yourself.

Step #4: Test, refine and repeat!

Once you have completed the business model canvas, it is time to test it in the market. This means starting a small pilot project with a few select customers to see if they find value in what you offer.

Examples you can follow to realize your business model

The business model canvas is a good starting point for defining your business model, but to develop and put it into practice you need examples to guide you.

There are many ways of doing it. For example, if you want to create an app for people who want to improve their health and fitness, see what other apps have been successful in the past. What differentiates them from the others? How did they achieve success? What features were most important to users?

One way to do this is to look at case studies of how companies have tackled problems or challenges similar to yours. These can give you ideas on how others might address the same issues that may not come naturally from trying new approaches yourself.

Recommended books to make a business model

Business Model Canvas: Charting Your Path to Success by Alexander Osterwalder and Yves Pigneur.

Review: In recent years, we have seen the arrival of new disruptive business models that have revolutionized the market. They all have one thing in common: they challenge the norms and conventions of past business models, which had dominated the world until then. In this book we evaluate them and provide you with simple and proven techniques to put them into practice.

Examples of How to define the business model of your company: Tips and strategies

Franchise business model: McDonalds

The business model of a franchise is one in which the owner of a certain product or service (in this case, the restaurant) licenses the use of that brand and related know-how to others. In return, the franchisor receives regular payments from the franchisee, which typically include a percentage of sales.

The key elements of this type of business model are:

  • A known and trusted brand.
  • A proven system for delivering the product or service.
  • Support from the franchisor in areas such as training, marketing and operations.

Freemium business model: Dropbox

The freemium business model is one in which a company offers a basic product or service for free, in the hope that users will upgrade to a paid premium version.

The most common example is software, where the basic product (such as word processing or photo editing) is provided free of charge, but more advanced features (such as document collaboration or HD video editing) are offered free of charge. ) are only available to those who purchase a subscription.

The key elements of this type of business model are:

  • A low-cost or no-cost entry point
  • Optional upgrades that provide added value at a higher price
  • A way to measure and track participation in enhanced features, so you can identify the most likely.

Subscription business model: Spotify

The subscription business model is one in which a company charges its customers on a recurring basis for access to a product or service. In many cases, this type of business model is used when the company has something that its customers need on an ongoing basis.

The key elements of this type of business model are:

  • A way to charge customers on a recurring basis
  • A product or service that is needed regularly
  • A way to measure and track customer engagement so you can identify those who are most likely to renew their subscriptions.

A common challenge with this type of business model is that it can be difficult to convince customers to sign up for something they may not need right away (or ever). This makes marketing and sales efforts especially important.

Main differences between a business plan and a business model

A business plan is a description of your company's strategy for doing business, including what products or services you will offer and how you will deliver them to potential customers.

The main objective of a business model is to demonstrate to investors that there is sufficient demand for the product or service offered by the company, and that it can be supplied at an acceptable cost.

Business plans are often used as part of funding proposals to raise money from investors; while business models are designed to help companies make decisions about their future operations (such as whether they need additional resources).

How to validate your company's business model

There are several ways to validate your company's business model, and the most effective approach will vary depending on the type of business you have.

Some common methods are:

  • Customer surveys
  • Discussion groups
  • Online surveys or polls
  • Interviews with potential clients or partners.

One way to validate your business model is to conduct customer surveys. This involves sending out questionnaires or interview requests to customers who might be interested in using your product or service, and then analyzing the responses to see if there is enough demand for what you offer. You can also use this data to find out who your target market is and how best to reach them.

Another option is discussion groups. It's about bringing together a group of people who fit your ideal customer profile and asking them questions about their needs, wants and desires. This can be an effective way to validate a business model, because it allows you to see what real people think, rather than relying on self-reported data from surveys or interviews.

https://youtu.be/a4pihckUGOk

A third option is online polls or surveys. They are often used by companies like Facebook, who want to know how many people use their platform each day (or at least enough to be able to estimate).

The advantage of this approach is that it's quick and easy, since all you need is some software tools like Survey Monkey, but there are also drawbacks: not everyone has access to the Internet; These types of surveys do not always reach the right demographics (they can be easily manipulated by people who are not interested in the product or service).

The last option to validate a business model is interviews with potential clients or partners. This involves talking to people who might be interested in using your product or service, and trying to get them to commit to using it (or at least trying it).

The advantage of this approach is that you can get feedback directly from customers about what they like and what they don't like about the product or service. You can also ask them if they are likely to recommend it to others.

Concluding paragraph: So there you have it, entrepreneurs. These are the steps you need to take to create a successful business model for your company. As we've mentioned before, having a well-defined business model is essential to the success of any organization, so make sure you put in the time and effort to get it right. And if you need help along the way, don't hesitate to contact us at Hispanosemprendedores.com: we're always ready to lend you a hand!