Today, many experts and specialists talk about business process models and talk about their effectiveness, but many novice businessmen and startups do not even understand what it is. In this article, we decided to figure out what this term is and in what cases it is used.

Introduction

A business model is a unique strategy of a company developed with the peculiarity of various nuances, the main goal of which is to obtain maximum profit. The model necessarily includes various values ​​and directions that the company can offer customers, that is, in fact, it describes the possible potential of the organization, the possibilities for creating a certain product and communicating it to the consumer in order to obtain a permanent income.

Scheme of the classic business model

For example, a restaurant model offers a cozy place for the visitor to relax, where he can have dinner and have a good time on his own or with his relatives/friends. The online store model involves the resale of certain products through the network and the receipt of a certain profit, and the commercial site - the sale of advertising or links.

So what is a business model? This is a kind of link between the offer of the organization, the target audience and sales of the company's goods. Bringing this into a single whole, we get the necessary development and work strategy aimed at maximizing profits. When developing a strategy, it is necessary to understand the nuances of the company's work in order to build detailed plan its development. She will answer the following questions:

1. Who specifically influences the conduct of business processes and what exactly he does.
2. What commercial idea works/will be implemented in the company.
3. Who exactly implements the normal course of business processes.
4. What activities need to be carried out to improve communication and understanding of processes between branches or departments of the organization.
5. How to set up effective system that allows you to manage labor resources and train new employees.

What is the difference between strategy and model

Many entrepreneurs and managers often cannot answer the difference between a strategy and a model, confusing these terms or considering them identical. Actually it is not. The model is needed to provide an option for quickly converting the company's offer into profit, while the strategy captures larger time intervals and considers ways not so much to increase profits as to survive the organization.

Attention:the model, unlike the strategy, does not consider where resources and financing will be attracted from, it aims only to increase profits.

It is also more superficial, that is, when compiling, it is not necessary to conduct a detailed analysis of the market, find out how much the product is in demand, whether the staff is qualified to reproduce it, etc.

What is a business model

Popular types

Today there are many different models - it is almost impossible to describe them all. Therefore, we will consider the most popular kinds:

1. creator or manufacturer. It's simple - you create a certain product or product, and then sell it either end customer, or distributors (you can sell goods even to one distributor, transferring exclusive rights to him).
2. Classic retail. The idea is simple - you buy a product from a manufacturer or wholesaler, selling it to the final buyer, receiving a certain percentage or markup for this.
3. Niche work. If classic retail usually offers customers a wide range of general goods, then niche work implies functioning in a narrow direction.
4. Personal sales. The company operates in the field retail, offering a wide range of products to all visitors, but at the same time it has a certain circle of customers who have the opportunity to get nice discounts on popular items. To do this, clients need to pay fees to get into the “club”.
5. The only sale. Retail does not sell a huge assortment, but one type of product per day, but at a big discount. Thereby company chooses stale goods at the supplier and conducts hundreds/thousands of sales per day. Customers are notified about the sale of a new product in the chosen way - via e-mail, instant messengers, etc.
6. Integration. A fairly successful technique that allows you to increase sales through online stores for classic distributors. Buyers purchase goods from them, but at the same time receive them through warehouses in convenient location(or at dealerships).
7. Franchise. A well-known way of doing business whereby a company grants rights to use its trademark and the polished work process of the franchisee, who in return pays a certain percentage of the income.
8. Razor and blade. The classic way, which was developed in the middle of the last century. It implies the sale of a certain product cheaper than cost, provided that the second product is sold with a good markup. As an example, you can consider Gillette razors - the razor itself is inexpensive, but the cartridges are tightened by a serious amount. The second example is printers - a cartridge can cost up to 50% of the cost of a new device.
9. Broker. A classic example of mediation is when a broker finds a buyer and a seller of a certain product/service, receiving a certain percentage or a fixed fee for their actions. Brokerage is carried out according to various schemes: auction (for example, Ebay), rent (Booking), sale of virtual goods (GooglePlay), work with finances (Forex), provision of services (Kabanchik or oDesk), etc.
10. Rent. The company rents real estate, vehicles or certain products, then rents it out and receives a certain income. For example, a company rents an entire office building and then leases out the offices. Or rent a plane, organizing charter flights.

There are other examples building business models: subscription to certain resources or software products, partnership programs, paying rewards for the actions taken, multi-level marketing systems, etc.

Standard Pattern

Consider what the traditional model looks like. The template is shown in the picture below.it lets you understand how things work. The key section is services and products. In fact, there are practically no unique products, so the goods are not actually interesting to buyers, since there are hundreds of similar offers around them. Customers are not interested in the product itself, but in what exactly it will be interesting and useful to them. That's why the "Offer" section is so important - you need to describe what you offer and what the product provides. The main thing is to interest potential customers to make a purchase.

Standard Business Model Diagram

Right side of template are ways to sell goods. It consists of several points, the key of which is the establishment of a channel for working with the client. It is the correctness of the channel construction that determines how quickly the consumer will purchase the product after the company releases a certain offer. It is believed that the channel should work in five steps:

1. Informing the client.
2. Persuasion of a potential buyer.
3. Make a deal.
4. Delivery of goods to the buyer.
5. After-sales communication.

Attention:the last point implies that the employee of the company, after the transaction, will clarify with the client whether he liked everything, whether he is satisfied with the quality of the goods. If necessary, the manager will help the client to issue a return or warranty case.

On the left in the diagram, the costs that an organization will incur to create a product and sell it are considered. It is necessary to correctly assess them in order to understand what difficulties will be faced and how to overcome them correctly. It should be understood that the left block completely affects the right one, that is, the costs affect the formation of profits.

Creation principles

Consider how to properly build your own model for a particular enterprise. To get started, study the template above and think about what you can learn or add from it. Then take a pen and a piece of paper by answering the following 5 questions:

1. What exactly do you offer and why customers should be interested in your offer. That is, why the buyer should be interested and what he will receive by making a purchase. In order to answer this question, you need to make a portrait of the target audience, describe the proposed product, its functions and advantages.
2. Who may be interested and benefit from your product. This question involves working with a dedicated target audience. You need to understand who will make regular deals, who will be one-time deals, who your niche can touch, what segment it will cover, etc.
3. Channels of interaction. Decide how exactly you will communicate with customers: via the Internet, by phone or instant messengers, with the help of personalized meetings (store), etc. Quite a lot depends on the channels of interaction, so this step should not be ignored.
4. Relationship support. It is necessary not only to convey information to the intended buyer, but also to make it permanent in order to increase the number of sales. To do this, you need to provide support for relationships in various ways.
5. For what and how they pay. Decide which products will be especially popular, keeping in mind the 80/20 Pareto rule, think over payment methods, pricing and other financial aspects.

Build multiple business models to determine the most effective

These five questions will help you shape the revenue side of your plan. Next, you need to take on the consumables:

1. Think about what resources and technology are needed in order to launch the sale of products. Resources can be not only material - intellectual, human, etc.
2. What processes need to be run in order to make a profit. Processes can be production, that is, launching the creation of a product, platform (creating a site or connecting payments) and organizational, leading to the solution of various issues.
3. Do you need outside help to implement the project or can you do it on your own?
4. What will the launch of the scheme result in. Accordingly, you need to calculate how many resources you need to invest, which processes will be the most complex and expensive, which will require maximum resources and labor costs.

Is the game worth the candle

In the previous chapter, we figured out how to make up the expenditure and income parts. After that, you need to evaluate whether the process should be pursued, that is, to find out if the idea will be profitable. To do this, subtract the estimated expenses from the estimated income. But, as you understand, these are approximate calculations, because they do not take into account a huge number of real nuances that will arise during the implementation of the project. The question arises - then why make a model?

The answer is simple - in order to choose the most simple and profitable direction activities. You need to make not one model, but several in various directions, evaluating the prospects of each individual case. At the same time, you can studyto understand exactly how such schemes are drawn up, what is indicated on them and how the situation is analyzed.

Moreover, it is necessary to calculate the risks for each stage of cooperation. For example, think about what problems people who have purchased your service or product might have, try to do a little work with a focus group consisting of the intended target audience in order to understand if they like your idea, ask the audience to tell, what interested them, and what did not like or did not cause emotions.Based on the collected information and analytics, try to create a trial version of the product and show it to the audience, having studied their moods and wishes. Find out if you see the problem in the same way as your customers.

In contact with

The business model defines the startup's place in the value chain. A business model is a system consisting of business components such as entrepreneurship, strategy, economics, finance, operations, competitive strategies, marketing, and company development strategies. Based on this, you can determine the main points that need to be considered in the business model from the very beginning:

1. Product.
2. Consumers.
3. Marketing (sales channels).
4. Suppliers and production.
5. Market (type, volume).
6. Competitors.
7. Finance (structure of expenses and incomes).
8. Non-economic factors that may affect your business.

Business Models for Internet Startups

Currently, 99% of companies have their representation on the Internet in the form of a website or page in social network regardless of the field of activity. This is primarily due to the fact that the way of thinking has changed. ordinary person. Think about what you would do if you needed to learn more about a product or service that you saw or heard advertised for? What will you do if you need to know where to find the most Best offer for the price of a new smartphone? Where to watch a new movie with friends? The list of questions can be continued indefinitely, and the answer will be one - on the Internet.

The size of the e-commerce market is constantly growing (see Figure 2.1).

In the field of Internet startups, there are now many areas that are in the zone of special attention of investors. Such directions form trends, here they are:

• cloud technologies;
• education;
• media and advertising;
• game industry;
• social media;
• electronic commerce;
• safety;
• crowdsourcing;
• mobile applications;
• content creation (including user-generated content);
• startup financing;
• business software.

In all these areas, it is possible to implement various projects. There are a number of popular business models on the Internet, for example:

• intermediary;
• advertising;
• informational;
• trading;
• production;
• partnership;
• community;
• subscription;
• by consumption.

Consider the most popular of them.

Paywall business model

The business model based on paid access is popular in the b2b (business-to-business) segment, especially in the SaaS (software as a service) model - a sales and use business model software, in which the supplier develops a web application and independently manages it, providing the customer with access to the software via the Internet. The main advantage of the SaaS model for the service consumer is the absence of costs associated with installing, updating and maintaining the equipment and software running on it. Users pay a monthly subscription fee for using the service. The advantage of this model is obvious (you don't sell everything at once), and in some ways it's easier than selling ads. In addition, in the b2b segment, a solvent audience (this is very important point, since paid access for a b2c (business for individual buyers) audience is not very attractive, one can immediately recall such a model only for Linux Format and Popular Mechanics magazines).

Freemium model

Business model based on paid additional services. This business model is used by various sites, for example, when the user's profile is raised higher in the search results for SMS. Online games in recent times also work on this model. Access to the main service or content is provided completely free of charge, and they earn on different additional services, including selling virtual goods for real money that strengthen the position of the player. Figure 2.2 shows an example of a standard registration page for a Freemium site.

Rice. 2.2.

Business models based on paid placement

There are various websites dedicated to certain services. For example, catalogs of restaurants in a particular city. They are free for users. And they earn by receiving funds from restaurants that want to be in the catalog. Among the sites of such a plan, there are many travel portals with information from travel agencies and hotels. This model is also quite viable in the presence of a popular site.

Infomedia business model

Infomediary is about building a business based on providing data and web analytics, such as:

advertising model

There is a difference in the effectiveness of banner and contextual advertising. Until recently, big money could be attracted for placing banners. But even today, and some time ago, it is not so easy to earn a lot on such a model. Firstly, your resource must have a sufficiently large attendance - about several tens of thousands of visitors per day. Secondly, the theme is important. You need to clearly imagine the audience of the resource, contacts in advertising agencies or a good (experienced) sales manager who knows how to build business communications.

Now let's look at the classification of business models. Probably the most comprehensive classification of e-commerce business models is "Business Models on the Web" by Professor Michael Rappa. The main categories of business models include:

1. Intermediary (Brokerage). Organizations receive a percentage or fee for transactions, most often in business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) segments. This includes not only all kinds of exchanges and resellers, but also payment systems that receive their percentage of transactions.
2. Advertising (Advertising). Revenue comes from displaying ads or user referrals to advertiser sites; the functionality of the site often serves to attract a mass audience or target advertising.
3. Informational (Infomediary). Income is obtained through the sale of information: audience data, meta-intermediaries between sellers and buyers, and others.
4. Trading (Merchant). Direct sale of goods and services.
5. Production (Manufacturer / Direct). Here, the manufacturer of the goods benefits not due to the Internet as such, but due to the reduction of the "distance" between him and the consumer of his products.
6. Affiliate (Affiliate). Again, a kind of advertising model, where income comes from the owners of partner sites in exchange for incoming buyers (visitors).
7. Community (Community). Here the name of the class of models characterizes not even the source of income (it can come from the sale paid services, advertising or donations), but the environment where this income is generated.
8. Subscription. Revenue comes from users who subscribe to certain services.
9. By consumption (Utility). The "antipode" of the subscription model, where a certain service is also provided to the client, but the form of payment is based on the traffic consumed / information received or other quantitative indicator, but not on time (as is the case with the "classic" subscription).

These models can be implemented different ways. In addition, a company may combine several different models in its overall strategy.

Next in line is a new section of the business plan:. Today we will tell you why and how you need to draw up the next part of the business plan. And even if it seems not so obvious, to some extent repetitive, in a professional (and not only) business plan, this is a necessary part. If only because it will give a new look at your small business idea and the prospects for its improvement.

Description of the business model

Why is a business model section needed in a business plan?

An analysis of the business plan process shows the relationship between the business plan as the product of this process and the business model as the starting point of any planning process. The business model is at the heart of the business plan and can even simplify the process of planning the main lines of business. At least the basic calculations of costs, revenues and profitability can be seen through the business model.

The business model focuses on the four main elements of a business: customers, supply, infrastructure, and financial stability. These elements are discussed in detail in the business plan.

It's easier to start planning if we have a foundation. With the help of the business model in the planning process, our focus will be on the right things.

And, of course, it will be easier to convince the investor of the profitability of the investment if a working business model is presented that will make the business profitable.

What is a business model?

As a formal definition, we will use the definition from the book "Business Model Generation - Alexander Osterwalder & Yves Pigneur":

A business model describes how a business creates, acquires and delivers value.

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Description of the business model: what questions should it answer?

To facilitate the completion of this part of business planning, we will try to classify the main questions that you, as an entrepreneur, must answer:

• What market segments will the business serve, or ?
• What value or benefit will the business offer?
• How will this value be presented to the market? This is a simple answer to how your product and/or service will reach the attention of each segment you have identified above. Please note that different segments may prefer different delivery channels.
• What will be the relationship with consumers? Both before and after the sale of a product or service, a business must maintain certain relationships with consumers. The answer to this question should be given here.
• What will be the income? Income is the result of the process of delivering value to consumers and receiving money for that value. To do this, you need to project the size of each segment and its market share. Note: use only assumptions and your previous knowledge here, and you will do a full market analysis later.
• What do you need in order to deliver the value you offer to the market? This includes all the resources your business needs to successfully produce and distribute value to consumers. It can be people, equipment, knowledge, technology or something else. Everything should be listed in this subsection.
• What do you need to do to realize this value in the market? You must undertake different activities to complete the main task - the production and delivery of value. For example, production, marketing, sales...
• Who are the key partners in the business process? You are not alone in this process. You have suppliers, investors, consultants, partners...
• What is the economic structure of a business? All items within a particular business model create or have some value. It is best to develop in this section economic structure, to determine the possible costs, although, of course, there will be details in the financial part of the business plan.

Rethinking the business model

You should be aware that the business model, like the business plan, is subject to change. This is the cycle that ensures continuous improvement in your business. Without it, it will be difficult for a business to develop. Moreover, at the current pace of development in all areas, constant changes are simply necessary, including business.

At its core, a business model is a description of how a business makes money. It explains how you create value for your customers at the right price.

The term "business model" has become widespread with the advent of personal computer and spreadsheets. These tools allow entrepreneurs to experiment, test and at the same time to plan costs and revenue streams. Spreadsheets help entrepreneurs make quick changes to business models and see at a glance how those changes could affect their business today and in the future.

The business model structure consists of three parts:

1. All it takes to do something: design, raw materials, production, labor, etc.
2. Everything you need to sell a product: marketing, service provision, promotion, sales.
3. How and what the client pays: pricing strategy, payment methods, payment terms, etc.

Obviously, a business model is just a study of what costs and expenses you have and how much money you can charge for a product or service.

The essence of an efficient business model is to get more money from customers than is required to develop a product.

Different business models can enhance any of these three components. You may be able to minimize costs at the design and production stage. Or you have resources for more effective marketing and sales methods. Maybe you are ready to offer an innovative payment method for customers?

Be that as it may, keep in mind: for effective strategy a new business model is not required, it is enough to peep an existing one on the market. For example, most restaurants operate under a standard business model, but each establishment focuses its strategy on a specific category of customers.

7 questions for evaluating a business model according to Osterwalder:

1. Switching cost

How difficult is it for consumers to switch to another company's products or services?

2. Regular income

Does each sale require new efforts, or does it provide some guarantee of subsequent sales and revenues?

3. Income and costs

Do you receive income before or after costs arise?

4. Revolutionary cost structure

Is your cost structure different and fundamentally better than your competitors?

5. Shifting work to other parties

Does your business model allow consumers and third parties to create value for your company for free?

6. Scalability

Can you easily grow without facing barriers such as infrastructure, customer support, hiring?

7. Protection from competition

Does the business model protect you well from competitors?

17 Most Common Business Models

The vast majority of companies use already existing and proven business models, only improving them in order to find competitive advantages. Here is a list of business models that you can use to start a business.

1. Advertising

The advertising business model has been around for a long time and is getting more original as the world moves from print to online. The foundations of the model are built around creating content that people want to read or watch, and displaying ads to their readers or viewers.

In an advertising business model, two groups of customers need to be satisfied: readers or viewers, and advertisers. Readers may or may not pay you, but advertisers certainly do. The advertising business model is sometimes combined with the crowdsourcing format, when content creation does not require financial resources, since it is provided by users.

Examples: The New York Times, YouTube

2. Affiliate program

The affiliate business model is related to the advertising model, but has some specific features. Most often, the affiliate model uses links (they are embedded in the content), rather than visual ones. advertisements, which are easily identified.

For example, if you run a book review site, you can embed affiliate links to Ozon or other online bookstores in your reviews. If a visitor clicks on a link and buys a book, the partner will pay you a small commission for the sale.

Examples: Alpina Publisher, Ozon, Aviasales

3. Commission

Intermediary businesses connect buyers and sellers, thereby simplifying the transaction. They charge a fee for every transaction with either a buyer or a seller, or sometimes both.

One of the most common intermediary businesses is a real estate agency, but there are many other types of services. For example, some help construction companies find buyers.

Examples: real estate agencies, PR agencies, recruiting agencies

4. Customization

Some companies use existing products or services with elements that make each sale unique to a particular customer.

Consider, for example, special travel agents who book trips for wealthy clients. Customization applies to products like Nike sneakers as well.

Examples: NIKEiD, "Custom Shirt", " "

5. Crowdsourcing

If you were able to combine a large number of people who supply your site with content, then you are using the crowdsourcing model. This business model is most often combined with advertising format to generate income, but there are many other variations of this model. For example, you can give designers the opportunity to design T-shirts and pay them a percentage of sales.

Companies that are trying to solve complex problems often go public with their problems so that someone can offer advice. The authors of successful solutions receive awards, and the company can develop its business through these tips. The key to a successful crowdsourcing business is to provide the “right” incentive to attract the “crowd”.

Examples: LiveJournal, YouTube, P&G Connect and Develop

6. Refusal of intermediaries

If you want to manufacture a product and sell it in stores, then you will have to work through intermediaries to get your product from the assembly line to the store shelf.

Working without intermediaries means that you bypass everyone in the supply chain and sell goods directly to consumers. This allows you to reduce costs and build direct and honest relationships with customers.

Examples: Casper, Dell

7. Crushing

Instead of selling the entire product, you can only sell a portion of that product using a split business model.

One of best examples of this business model is a joint rental property, where a group of people owns only part of the vacation home.

Examples: Disney Vacation Club, NetJets

8. Franchise

Franchising is especially common in the restaurant industry, but you can also often see examples of it in all service industries, from cleaning services to staffing agencies.

This business model involves selling a strategy to launch and maintain successful business to someone else. Often you are also selling brand access and support services that help the new franchise owner succeed in the marketplace. In essence, you are selling access to a successful business model that you yourself have developed.

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Drawing up a business model helps to structure information about the company, identify strengths and weak sides, build a development strategy. Exist different variants, but one of the most popular is the Alexander Osterwalder model. It includes nine main points:

• who are your customers;
• What value does your company provide?
• sales channels;
• customer relationships;
• key resources;
• key activities;
• key partners;
• income;
• costs.

Draw up a business model

Who are your clients

Your customers can be divided into groups according to certain criteria. You don't have to use the template sex/age/marital status. You can take more understandable, simple and capacious descriptions, for example:

• customers who want everything at once, are not used to waiting, do not accept refusal, are ready to pay well;
• customers who want to get the maximum number of services for the minimum money make decisions for a long time, make constant complaints about work, and do not make additional purchases.

If your clients are other companies, then you work in the business-to-business (B2B) segment, if you are individuals, then in the business-to-consumer (B2C) segment. In some cases, both forms of work occur. Answer the following questions for yourself:

• What segment do you work in?
• Why exactly in it?
• On what grounds can customers be divided into groups?

What value does your company provide

Answer the following questions for yourself:

• What is the value of the product or service you provide to the customer?
• What problem does he solve?

There are a large number of values, primary or secondary. For example:

• the speed at which the product or service is provided;
• quality of service;
• price;
• convenience;
• brand.

The basis of innovative business models is customer value. If it is difficult to formulate it right away, consider this question. If there is value in your proposed product, analyze how you can increase it.

Sales channels

Determine how the user learns about the product and service and how he receives it. There are five main ways:

1. personal contacts or telephone;
2. website or shop;
3. delivery;
4. Internet (blogs and social networks);
5. traditional media (radio, television, etc.).

To determine the quality of your own channels, answer the following questions for yourself:

• How are your potential clients learn about the product and service?
• Are these channels effective?
• How can they be improved?

Relationships with clients

Analyze what type of relationship will be established with each client or group of clients. For one business, the best option is personal service, assigning a manager to key customers. For the other, self-service and automated systems sales. Define for your company:

• What form of customer relationship will be optimal?
• What to focus on: attracting new customers or developing a loyalty system and retaining old ones?
• Is it necessary to increase the average check and is it possible to do this?
• How often do customers make repeat purchases?

Key Resources

Key resources include:

• human,
• financial,
• intellectual and
• material.

Answer the questions for yourself:

• Which of them are used in your business?
• Are they enough?
• Can they be improved or increased?

Key activities

Here it would be easier to describe the business processes or the main tasks that are performed in the company. But the business model requires you to identify key activities in terms of creating value for the customer.

Key Partners

No organization can exist in a business vacuum. For effective work build strong relationships with partners. Here it is important not only to assess the quality of existing partners, but also to analyze how relationships can be made more profitable and useful. In some areas there are companies that have a similar target audience but they are not direct competitors. Develop joint promotions, exchange customers, help each other in development.

Income

Consider sources of income. But shift the focus from your own company to the customer like this:

• What is the customer willing to pay for?
• What is his preferred payment method?
• Does the client pay once or are payments regularly repeated?
• Is there a system of repeat and additional sales?

Costs

Based on the analysis of key activities, resources and partners, calculate the main costs. Be sure to include in this paragraph:

• fixed costs;
• variable expenses;
• options for optimizing costs (changing suppliers or contractors, transferring some functions to outsourcing, abandoning unprofitable areas of work).

Based on this information, make several options for business models so that they differ in the content of different blocks. Use uncomfortable questions or make assumptions that at first glance seem impossible. Analyze the result, identify growth areas and choose the best business model for your business.