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How to Create a Business Model

Think of your business model as a football playbook, as a way to implement
and execute your plan of success. The touchdown is your revenue. As the coach
(or small business owner), your job is to sift through the variety of ways
that will show how you are going to achieve your ultimate goal. By “drawing out”
your plan of action, you are simply showing how you will implement your
plans and what outcome is anticipated.
The purpose of a business model is to let others know about your product, the
value it brings to your target market, who that target market is, how you will
compete with similar companies in the same market, and how you will make money
using all of these components. Once you know the components of your business model,
structuring it will be easier to do, but first you need to know what type of
business model you should be looking at. This will be completely dependent on the
product or service you are providing and what you ultimately decide to do with the business

Though there are many different business models to consider, a basic structure
of a business model is a good place to start. Knowing how you will get your product
or service to the end user or customer will give you an idea how to choose the model
best suited for you. For small business owners in this day of technology, creating
a business model that will include social media is a key point for any market.

Traditional business models for example would include:1) direct marketing to customer
(think Dell), 2) retailers or sell to distributor and allow them to sell it for you,
3) exclusivity (rights to certain distributors only, such as music), 4) franchise and
5) advertisers (that sell ads for others). New business models are emerging with the
expanding technology of online. You will do well to utilize the social media platforms,
blogs, websites, content marketing, email blasts, and SEO.


Companies like Amazon, EBay, and Dell have captured the online
market with their business model. Some of their components allow the customer freedom
to shop whenever they please and have their items shipped straight to their home.
However, brick and mortar companies, such as Wal-Mart and Best Buy have amended their
business models to give customers the convenience of online shopping capabilities
combined with the ability to same day pick up.


So how do you draw out the business model once you’ve finalized your final draft?
Consider using PowerPoint or Google Docs for creating your model. Both
provide the tools you need to create professional looking business model designs.


An example of a simple business model created in PowerPoint:



As you can see, a business model can be as simple or as complex as you like.
Just keep in mind that the most important points of your business model should
be included. If your business is going to place the focus online, include that
as a point. Do not confuse a business model and a business plan. A business
plan is far more detailed and complicated than your basic model. Remember, your
business model is only to represent your plan of action, a visual of your ideas
and the ultimate goal in a simpler way.

Ryan Franklin is a guest blogger who writes about small business issues and technology on behalf of Ordoro.