Business Funding Requirement - Learn How Business Model Generation Can Help

business model generation

Business owners can't source fund due to lack of business model, here is how business model generation can solve this problem.

Lets look at this business model generation in the light of the following headlines:

  1. Introduction
  2. What is a business model?
  3. Types of Business Model
  4. How to generate a new business model
  5. Using the business model canvas tool
  6. Your future Business Model!
  7. To wrap things up

Introduction

Business Model Generation is a term coined by Alexander Osterwalder and Yves Pigneur in their 2009 book of the same title. The book describes a methodology for developing new business ideas and entrepreneurial ventures. Business Model Generation has become very popular as an approach to entrepreneurship, especially in the lean startup movement associated with Steve Blank, Eric Ries and others. 

What is a business model?

Business models are blueprints for running a business or organization. They can be used to create, adjust, or evolve a startup's strategy. A business model must answer the question: "How does your organization make money?" And this is how your funders know how you will make money and how they can benefit by funding your business.

Types of business model

We have being discussing the topic; "Business Design" for quite sometime now. You can read the previous post on the series here - "How to Cash Out from your customers Pain points or Challenge."

Now lets look at the types of business model:

  • E-commerce
  • White Label: You create a product and allow different companies to put their brand on it.
  • Open Source: Software that's open for everyone to use. To monetize it you sell a premium feature.
  • Long Tail: Offer many products that sell frequently. E.g. Supermarket.
  • Franchise: Allowing others buy into a company, e.g. Genesis, Kilimanjaro, etc.
  • Razor and Blade: Is a model where one item is sold at a low price or given for totally free in order to sell the complementary products. Example: Gaming companies after buying a game console you still need to buy software and other accessories.
  • Freemen: Having a product with different pricing and each price has its bonus, e.g. Spotify.
  • Hidden Revenue: Given a product for totally free but generating revenue through promotions and other sources, e.g. Facebook.
  • Auction: Where price is not fixed, you can bid. Example is E-bay.
  • Subscription: Where clients pay monthly or yearly for your products.
  • Passive Business Model: Where people hire your products use and return.

How to generate a new business model

Many companies fail to realize that their business model has become outdated. The problem is that they don’t know how to cope with this situation. However, there are several simple steps that can help you with your business model generation.

The first step is to take a good look at what your customers need, and then come up with new services or products that will cater to those needs. For example, Airbnb was able to create a whole new kind of online accommodation by building on an existing product, in this case home-sharing. Another important step is changing the way you interact with your customers.

Every company has a business model, but it’s not always easy to figure out what it is. It requires a lot of brainstorming and hard work to come up with something you can be confident about.

Use these tips on business model generation to generate a new business model that will increase your revenue streams and make your startup more profitable.

The second step in business model generation is to identify the problems you want to solve. Think about how your company solves them, and think about what problems are still unsolved. This is the place where your new business model should come from.

Using the business model canvas tool

The business model canvas is a strategic planning tool to help you understand how your business works, what it needs to succeed, and how to make it scalable. It is a visual representation of the business model behind any company, organization or project.

It describes an initiative’s purpose, the relationships between its constituent parts, and how these parts interact to create value for customers. It lets you see how your initiative can evolve over time and become something bigger.

It helps you spot potential threats and opportunities in the market. It allows you to compare your initiative to existing business models from which you can learn new ways to improve your business activities and shape its growth.

Your Future Business Model!

The business model canvas tool is a simple diagram that can be used to help clarify how exactly your company makes money. It’s very helpful in starting a business and creating new revenue streams, but it also helps existing companies get their finances in order.

The business model canvas tool can help you determine what needs to be done in order to increase profits and reach your goals. It will also help you put together a plan for the future and define what’s working and what isn’t. Business model canvases are effective tools because they make you think outside of the box.

I recommend you start your business model generation almost immediately so that procastination don't eat up your time and stunt your business growth.

To wrap things up

Do not build your business on social media. Rather use social media as an engagement platform.

Have a database of all your clients’ phone numbers, emails, etc.

Also before launching a business makes sure you design and structure your business. Have a good structure that welcomes clients.

And if you have launched without doing some good homework, then you need to re- design your business and launch again.

So, this is where we draw the curton on this series of business design - business model generation.

Keep in touch as we roll out other interesting articles. Feel free to share with your friends, especially those that will benefit from reading our articles. 

Thank you for following up with the series - "Business Design."

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