Many people have business ideas but they struggle with how to structure their business model. They feel that it is complicated. In this article I share an easy way to build a business model as taught to me by my mentor Prof Don Mitchell. Please enjoy and reinvent your business.
Any entrepreneurial venture should have a business model on which it is based. This model may require being reviewed and re-engineered as the environment and the taste of customers change. Mitchell and Coles insightfully indicate that a business model can be crafted by answering the following seven questions:
1. “Who?” defines all the stakeholders served or affected by the entrepreneurial venture. Stakeholders include you, your family, customers, suppliers, employees, shareholders and regulators.
2. “What?” describes the product or service offerings and their benefits and negative impact on each stakeholder. You want to maximise benefits to your clients from your product and minimise negative impact to the environment or affected parties.
3. “When?” captures the time of the offerings’ effects on stakeholders. This includes the opening hours etc. these may be extended by having a web presence for your product to be available continuously.
4. “Where?” identifies the location for the delivered benefits. What is the physical location. How accessible is it to your customers?
5. “Why?” gives the rationale for providing the stakeholder benefits delivered. Why provides the motivation and drive for you to be in the line of business and for your clients to want your services. If you have a strong enough why — you can face any challenge and win.
6. “How?” explains the method of service or product delivery and how to be compensated for it. Describes how you produce the service or product.
7. “How much?” states the price customers pay and incur.
By relooking at these seven questions one can easily reinvent the business model. A change on any of these dimensions results in innovation in the business model.