What are the fundamentals of a business model?

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Business Model structures are becoming more virtual

The virtual business phenomenon is transforming the way millions of Business Models operate. Some business owners are outsourcing nearly everything, by utilising cloud technology. Does your business model take into account outsourcing possibilities?  They are including people and partnerships in their Business Models who may be anywhere in the world. Great Business Models are also needed to cost effectively and quickly start-up new ventures.

With ‘Generation Y’s and Millennials coming into the business world, hierarchies are starting to disappear. They expect to work in communities of mutual interest and passion, not structured hierarchies.

They want and indeed expect flexibility in their working arrangements, along with a nice working environment. Also, more and more businesses are becoming home-based.

Consequently, people management strategies will have to change. They need to look more like Facebook and less like the pyramid structures you might have been used to.

“Your business plan won’t survive in the cold hard light of day if your business model is not sound and fit for purpose”. Peter Sergeant

Your value chain should be part of the business model

Broadly speaking, this chain has two parts.

  • Part one includes all the activities associated with making something. Designing it, purchasing raw materials, manufacturing, and so on.
  • Part two includes all the activities associated with selling something. Finding and reaching customers, transacting a sale, distributing the product or delivering the service.

A new business model’s plot may turn on designing a new product for an unmet need, as it did with the traveller’s check. Or it may turn on a process innovation, a better way of making or selling or distributing an already proven product or service.

Mobility combined with cloud computing is enabling businesses to adapt to rapidly changing markets. All businesses, non-profits and communities need to move quickly to capitalise on cloud computing which is the biggest innovation. It is currently causing the biggest disruptions to old Business Models or ways of doing business. One important consideration is to keep your business model flexible.

[read more=”Personal Experience” less=”Personal Experience”]

Personal Experience

I find creating a new business model is a lot like writing a new story. At some level, all new stories are variations on old ones.

It means a reworking of the universal themes underlying your current operations. Similarly, all new business models are variations on the generic value chain that supports all businesses.

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