Creating a Business Model
In This Chapter
- Examining advanced entrepreneurship, also known as business models
- Harnessing your business model to execute your business plan
- Considering how competitive advantage fits into your business model
- Finding out what all business models have in common
- Perusing popular business models
So what is a business model, anyway? Is it the way you make money? Yes, in part. Is it competitive advantage? Yes, in part. Is it your business plan? Not really. Simply put, a business model is your profit formula. It's the method you use to acquire customers, service them, and make money doing so. You can break down a business model into three primary areas: Offering, monetization, and sustainability. What is your offering? How will you monetize the offering? How will you sustain it?
Many businesspeople mistakenly believe that a business plan and a business model are one and the same. They're not. Your business model is the core concept upon which you build your business plan. Therefore, your business model should be a significant portion of your business plan. Too many business plans gloss over the business model in favor of lengthy financial projections and operational details that go along with business plans. Without a solid business model, though, these projections and details are likely premature. (Book II Chapter 1 is devoted to business plans.) In today's turbulent environment, having a strong business model is more important than ever. This ...