Dealing with Change
Understanding what business models are and why they cannot be neglected.
Even in the midst of the pandemic there are still people determined to open up a business. If you are one such person then I wish you luck and the most amount of success your new business can possibly bring. Since you are getting ready to go into business for yourself, have you developed your business model? Business models can seem arbitrary and abstract in nature but I assure you, it’s far more practical than you may think. If you search “what is a business model” on google the first result will be a definition from Oxford Languages.
“a design for the successful operation of a business, identifying revenue sources, customer base, products, and details of financing.”
My goal is to simplify the subject and discuss why a model is important to maintain.
1. Business models don’t have to be complicated
As you work through the early planning phases of your business plan understand that the business model does not need to be over complicated. The definition above is a fancy way of asking what do you sell? Who will buy it? How will you make money? How will you deliver your products? And, where will the money come from for startup? There is a lot more to business models, but this is an excellent way to start.
Chances are you’ve already thought of these things so congratulate yourself for realizing that you already have a business model in the works. I recommend that a business model only be as complex as is necessary. When it comes to business operations and processes keep efficiency in mind. When you are looking at revenue, keep products with the most profit margins and drop those with the least. Remember that you will gain valuable experience as time goes on. You will learn what works and what doesn’t; draw from those experiences every time you evaluate your business model. Beyond that, I recommend reading Business Models for Dummies. It is a great resource for every entrepreneur who needs guidance on the subject.
2. Maintain and innovate your business Model
One of the most important point’s Business Models for Dummies makes is that business models die. Over time market forces will erode your business unless you take action to stay relevant. Consider the fact that with the advent of the internet, doing business in person is all but a thing of the past. If you depend on doing business in person and your customers prefer the internet then it is time to innovate. Consider retail; Amazon has dominated the industry with online sales. They’ve impacted retail so much that brick and mortar locations are closing.
Consider the pandemic; theatres have closed due to Coronavirus concerns bringing the box office to a halt. Universal studios is attempting to innovate their business model by releasing new movies directly to digital. This will allow the consumer to stream directly from the comfort of their living room instead of going to the theatre. This is case in point when it comes to maintaining and innovating the business model because the innovation of one company can disrupt another. In an attempt to innovate and stay relevant in the marketplace, Universal Studios put AMC Theatres on red alert. Now everyone in the theatre business is scrambling to stay relevant and meaningful too.
Business models are an interesting topic and the rabbit hole can go deep. My recommendation is keep it as simple as possible, especially in the beginning. Make sure your business plan is solid and be confident in your business model. After you have opened up, stay vigilant. Keep an eye on the competition and other market forces because they can threaten your business.
