Business Models- A Track to Run On

Many entrepreneurs are so excited about their opportunity to bring innovation to and extract profits from the marketplace that they tend to overlook a critical distinction in the early stages of their business development and planning. While most will develop a detailed business plan, absolutely required for most investors, few will give as much thought or attention to the concept of their business model. Gwen C. Edwards presents a compelling guide to business models in her recent Business Week article entitled "Your Business Model: More Than a Pitch."

Edwards writes, "An entrepreneur might describe her business as a new approach to video surveillance, conveying the need, market, and scale of the opportunity—and then jump to a description of her technology's unique intellectual property. That is her pitch—but it's not a description of her business model. She'll still need to explain exactly how her business will engage the market. What role will it have in the distribution or supply chain? Is her business a surveillance-equipment manufacturer, a supplier of unique intellectual property that is embedded in each camera, or a provider of video surveillance services?" Her chosen business model must reflect her entire strategy for making a profit. It becomes the springboard for her business plan. 

How does a business plan differ from a business model? Your business plan is likely a long, detailed document with dozens of distinct categories presenting a specific methodology for the daily operation of your business. It is designed to be very detailed, perhaps a hundred or more pages, so that investors know exactly how their money will be working for them and how the company intends to operate daily. A business model is much less detailed, perhaps only one or two pages, and primarily focuses upon how the business is structured to make money.

Henry Chesbrough has articulated six components to consider in developing a strategic business model:
1. Articulate the value proposition
2. Identify a market segment
3. Define the structure of the firm’s value chain
4. Specify the revenue generation mechanisms
5. Describe the position of the firm within the value network
6. Formulate the competitive strategy.

While each of these six components may be further detailed in the operational components of a successful business plan, they clearly represent a different thought process and direction as compared to the business plan. In my opinion, adapting or creating a specific business model first and then developing the specific business plan is the "cart before the horse" approach.

A business model supplies clarity of purpose and clear focus for the entrepreneur. Put that laser focus to work for you in your business.

Comments

[John]

You can offer practically any kind of service using the internet. You just have to make sure there is a market for it and that you can actually fulfill job orders. Some of the most common internet jobs involve clerical jobs such data entry, performing tasks as a virtual assistant, web development, word processing, telemarketing, book keeping and others. You can work as a copy writer, be a sales representative or even become a pro-blogger. You can set up a business that targets clients in your own town or people halfway around the globe.

thanks, John http://www.usfreeads.com/922827-cls.html