How do you fish? Do you throw in a hook without bait? Do you launch tasteless baits? Or do you fish where there are no fishes at all?
A great business model should launch tasteful bait in a reliable hook where fishes are many.
Having a great business model is the underlying secret of every successful business. The frontend and the backend of your business have to align adequately. In actual fact, having a great business model is much more important than having a great product or service.
Google entered the world of search engines and revolutionized advertisement with Google Adwords and Adsense. Referring to Google ads, Michael Eisner who was involved in managing one of the search engines in existence before Google, says, “I never thought you could identify the ads, put them on the right side of the page … – how many billions of dollars slipped through our fingers? … I just missed it”.
Similarly, in less than 10 years, Facebook has been able to grab a huge share of internet advertisement with its sponsored ads and sponsored stories.
What separates organizations like these from most other organizations is a great business model.
These organizations understand baiting in fishing. Google was quick to bait Internet users by offering a very powerful search engine free-of-charge in order to promote their ads. Equally, Facebook baited Internet users with their user-friendly social network free-of-charge so that they can use their age, location and interests to allocate targeted ads.
Many of the very successful organizations developed a great business model wrapped around offering an outstanding free service as a bait to get the information required for the profit-driven motive.
What Is the Business Behind Your Operation?
Be careful to be sure you are not fishing without bait, and your bait is tasty enough for the kind of fishes your business needs.
One thing I have come to understand in business is that, a clear and realistic business model is more important than the product or service, if profit is the ultimate goal. If you are able to develop a good business model, you will also be able to align them adequately to bring huge success.
A good business model will revolutionize how you do business. That is the test of a good business model. Except it is not strong enough, its power will keep you on your feet until you have implemented every bit of it.
But, how can you know if you have a good business model?
A good business model answers the following questions:
- Who is the customer?
- What does the customer do?
- Where does the money come from?
- How can we deliver superior value to customers at lower cost?
In addition, a good business model has to be,
- Logical and
It must be logical in that, the model should be realistic. You should be able to explain it in simple terms. As it is often said, one sentence should be able to convey the logic behind your business model.
Your business model should be arithmetic such that your facts and figures are very accurate or nearly accurate. Clouded thinking can be a strong enemy of a good business model, so ensure your business model is simple, logical and arithmetic.
Always bear this one thing in mind;
“The strength of a business model lies in the interlocking of all its different elements.”
Finally, ensure you can clearly delineate your business model from your business strategy. Your business strategy should focus on competitive advantage while your business model should focus on profiting at the lowest cost.
Further Reading for Business Owners
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