When someone wants to start a business or an entrepreneurship, they always need to create a business model. Either by creating their own from scratch or by taking an existing one and making modifications so that it has its own original touch. However, what makes a profitable and viable business model? Here we bring a compilation of tips on this.

Things that every business model needs

As you already know, a business model is simply a guide that shows how a business works. It contains important elements such as the value proposition, the target market, costs and profits, etc. Anyone who’s interested in creating their own business or company should take the time to create one. And for this reason, there are hundreds of successful business models around the world. But what makes them successful?

You must be clear about your value proposition

The value proposition is what your business offers to people. It’s the answer to the question: “What necessity is satisfied or what problem is solved to the people through your business?” As an entrepreneur, business person or business owner, you must learn to differentiate yourself from the competition. Why should people buy your product or service and not any other?

Milton Friedman Proposal Quote
The American economist Milton Friedman once said that “if you cannot express a proposal clearly and unambiguously, you do not understand it”. Source: Wall Street Journal

Unless you offer low-priced products, no one will be interested in what you offer if it’s more of the same. According to an article in the Negocios y Emprendimiento website, it’s necessary to establish what are the specific needs and wishes of your clients that you seek to satisfy and fulfill. The more you differentiate yourself from other brands, your business will be more original and will attract more customers. Therefore, it’ll be more profitable.

Related: 5 Common Mistakes Found In A Business Model

Is your business model repeatable?

This means that your business model should be able to be applied anywhere. Meaning said business isn’t limited only to a customer base of a specific locality. But that it can satisfy that customer base anywhere in the world. This is expressed in an article by Colombian professor Guiovanni Quijano, who emphasizes that this allows you to turn your business into a franchise.

Uber repeatability
Uber is a private transport company that operates through sharing economy. Despite suffering legal regulations, it’s profitable in many parts of the world. Source: as.com

If you’re looking for your business to grow and expand, it’s important that you work on its repeatability. This also includes its scalability and profitability. Scalable means that your business can be created and replicated today, tomorrow and so on until it’s fully established in the market. And profitable, namely, that manages to generate enough income so you can keep it running and that gives you a great return on investment.

Related: Uber & 4 Business Models Based On Sharing Economy

Don’t neglect your financial plan

Like any other start-up, you’ll need money to start your business. It’s your responsibility to evaluate which financing method you plan to use for your company. And that from the financing you obtain, you’re able to create a sustainable business. Especially to avoid a time when you cannot continue because you don’t produce enough money to maintain your company.

financing plan business model
Determine how much money you need and how you’ll invest it. Establish the way to finance your business and try to raise enough money through sales to save more money and sustain it.

There are many forms: bank loans, investors, startup accelerators… And then crowdfunding, being one of the most convenient ones. Consider carefully how you’ll raise the initial capital of the company. The management of money and resources during the development of your business model is vital. To sum up, it means making sure that the company has money for its premiere and enough money to be able to continue in full operation.

Related: Netflix: How Is Its Business Model?

Add value to your business model

The creator of the Canvas business model, Alexander Osterwalder, expressed something quite interesting. That “customers are the heart of any business model, without customers, no company can survive for long.” This means that the way to create value in your business model is to build a customer base. Understanding their wishes and needs from the beginning and maintaining a close relationship with them.

relationship with customers
Meet your customers, find out who they are and what kind of lives they have. Then, look at what they want or need so that you’re the one who gives them a satisfactory solution. Source: Leaderonomics.com

There are three elements that usually guarantee the success of a business model. These are: desirable, viable and profitable. Make sure you offer a better solution to a problem or need of your customers. Ergo, a good business model leads to looking for a different way of competing in the market. More important than offering the best product or service, is to develop the business model that’ll allow you to be a very competitive brand.

We hope you enjoyed this entry. Thank you for reading! We invite you to share it with your friends, so you offer them interesting content and help us reach more people.

Related: Ryan: The YouTuber Child Who’s Doing Business With Walmart

Are you ready to create your business model…?