Business Model

A business model shows you how your business will make a profit. It visualises how you’ll deliver value to your customer on a single piece of paper. (see example below).

Whether you’re an established business or just starting up. It’s a powerful tool to help you reach your goals. You can design your business on one page and see if it will be profitable. Having the right business model can shoot you to success or failure. Watch the 2-minute video below to gain a better understanding of the business model.

On the single piece of paper, you’ll be able to see how your business will work to make money. And you can test it to see if your business will be scalable and profitable. There are four things your business model will show you:

  1. What your offer is – the value proposition or core product
  2. Who your customers are;
    1. How you will sell & deliver your products to them
    2. The relationship you will have with them
  3. What it takes to make it;
    1. Activities
    2. Resources
  4. Finances;
    1. How and what the customer will pay
    2. And the costs to run your business

And how it delivers the value you to your customer. It’s split into nine sections which you can visually see on one page. 

And you can test it to see if your business will be scalable and profitable. There are four things your business model will show you:

  1. What your offer is – the value proposition or core product
  2. Who your customers are;
    1. How you will sell & deliver your products to them
    2. The relationship you will have with them
  3. What it takes to make it;
    1. Activities
    2. Resources
  4. Finances;
    1. How and what the customer will pay
    2. And the costs to run your business

And how it delivers value you to your customer. It’s split into nine sections which you can visually see on one page. You can categorise the nine sections into four:

9 Sections of Your Business Model

  1. Value proposition – Clearly define your product and its main benefits
  2. Customer segment – Define your target market. Who are they? How old are they? Be specific.
  3. Channels – How will you reach them i.e. Social media, Amazon, Google. Focus on one channel to begin with
  4. Customer relationships – What type of relationships will you have with them? i.e. one-off, membership, regular customers.
  5. Revenue streams – how will you charge your customer? i.e. one-off, recurring or both?
  6. Key activities – what key activities need to happen for you to deliver your product?
  7. Key resources – what resources do you need to create and deliver your product?
  8. Key partners – what partners can help you deliver your product? i.e. suppliers, couriers etc
  9. Cost structure – what costs do you incur to create your products? Rent, supplies, marketing?

Your Turn

Go to the next lesson to create your own business model.

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