Part one: A beginner’s guide to business models

Rome wasn’t built in a day, and neither are successful businesses.

Think of your favourite brand. The products you see being sold are just the tip of the iceberg. The larger part that lies underneath is the strategy and planning, and - when done correctly - is what makes that particular brand your favourite. Harder to see, but far more impactful.

Before you take your brilliant product or service to market, it’s essential to conduct market research and clarify your business model. For first-time entrepreneurs, this can be an overwhelming task - how do you define your target market? What does a strong value proposition look like? Where do you start?

If these questions feel familiar, working with a mentor is a great place to begin. After all, who better to show you the ropes than someone who has successfully conquered them before?

Whether you’re looking to create one yourself or simply want to know more, here’s our beginner’s guide to business models.

Firstly, what is a business model? 

A business model is a company's plan or framework to ensure it makes profit. The core function of a business model is to define the products or services you will sell, your target market and expected cost of production. A strong business model answers fundamental questions about the problem you’re going to solve (the business opportunity) and how you are going to solve it (your value proposition).

When you work with one of our mentors to define your business model, they’ll help you address questions like - do you understand all current and potential opportunities of the business? Do you have enough resources (cash/talent/equipment and tools) to take your business to the next level? Can you define your value proposition, customers, key partners? They can also help you gain a deeper understanding of what each of these elements means for your business.

What is the difference between a business model and a business plan?

Both a business model and a business plan are integral to a profitable business, but they each serve different functions. A business model is the basic foundation that clarifies exactly how you will create revenue, whereas a business plan is the next layer that’s built on top. It will include more detail about how you will bring your business model to life, including timelines and financial projections. The two are very closely linked - and need each other to succeed. 

How do you construct a business model? 

Working with a mentor who is well versed in creating business models is a great way to set your business up for success. A strong business model template will address key areas of your business set up including key partners, activities, resources available, value propositions, customer relationships, marketing channels, plus budgeting and revenue considerations. As this will establish the foundation for your business plan and marketing activity moving forward, it’s important to take time to do this part properly. It may be the difference between your business barely surviving - or absolutely thriving!

Want to learn from the best to set your business up for success? Our Digital Solutions Program offers a number of mentoring opportunities with entrepreneurs who have expertise across a wide range of industries. If you want to create the strongest business model to bring your dream to life, find out more here.
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