The business model (BM) or economic model translates the value creation mechanism of the new company which can be expressed as follows: : “How to generate revenue and profitability from this idea and in the ways expected? » This is the central part of the business plan that proves that the project is viable and can go from the state of a project to the state of a company.
Explain how the new company will value all stakeholders (creator, partner or shareholder, employee, business angel, banker) to succeed. Its proposal should be clear: the economic model should be based on a decisive, sustainable and defensive competitive advantage. In general, ideas judged to be “simple” a posterior are the best! The initial economic model should be designed to thrive over time and expand the offer to reach new customers.
The business plan is based on the business model. The promise of the offer must show one or two convincing arguments, the famous competitive advantages: the price, the deadline, the level of quality, the after-sales service, the amplitude of opening a business for customers and the level of profitability, the capital income at the exit of capital for an investor. A new company that would propose to offer too many benefits at the same time is incredible!
How to use this handy sheet ?
* Compare the results documentary studies along with field studies to find convergence points.
* Definitely determine the positioning of the company versus competing offers, featuring the competitive advantage (s).
* Think of ways to generate income for the first year and subsequent years (the economic model).
* Write BM: its definition must be short, precise and competitive. This will also allow communication around the project. Thus, the BM (or its summary) can be found in the Executive Summary.
Procedure and advice
* Write BM with customers in mind, i.e., “what it’s for” and not “how it works” which doesn’t need to be disclosed at this stage.
* Provide customers with significant value (the
* The use of the diagram will help in clarifying the BM.
* The Internet and new technologies have an impact on new BMs, providing the opportunity to offer highly targeted offers (onetoone), to reach micro-niches around the world, to opt for with new pricing methods (used) and new financial models (cost aggregation).
* Pass BM in practiceelevator pitch. Even if you’re not looking for a partner, this exercise is great. It requires simplicity and avoids getting lost in technical or anecdotal twists.
How to be better?
Three basic principles for defining BM:
► Focus your commitment on what you know how to do best and which ones represent true value for the customer
Zara depends on a fast fashion business model. The company offers a large number of collections, therefore a frequent renewal of items, a proximity between the place of production and marketing that allows reactivity: 15 days is enough for design a collection, make it and put it on the shelves.
Ikea and value chain control. Cost control is at every level of the chain: in-house design, centralized purchasing from 2,000 suppliers and customer involvement to reduce costs (selection, transportation, assembly of tools).
The result is clear: in France, prices are 20% to 30% lower than the competition and the company achieves twice as much turnover per square meter with often higher margins; and it has been for 20 years.
► Focus its commitment on a target of very well -known customers. Niche markets offer great opportunities during a crisis
1st comparator in the service of “malussés”, drivers who have several claims to their credit. The message is clear!
Private or company concierge services allow employees of these companies to think of time to focus on their duties. Client companies outsource certain requests (renewal of administrative paperwork, reservations, car washes, etc.) to these specialized companies.
Mom and Babe
This concept allows mothers and their child to go to a hairdressing and beauty salon while relaxing. Their child is cared for, for attractive amounts, during this time. The idea for this designer came when he saw his loved ones overwhelmed with small children and unable to take care of them.
Yariv Abehsera Travelfactory was created in 1999 to offer stays and weekends arranged especially for students under the Golden Voyage brand. In 2002, he created Golden Events, an operational marketing agency that specializes in student targeting. In 2005, he launched the Internet portal Travelski. In 2010, the group was a specialist and leader in online travel and the organization of group stays.
► Focus its commitment on high value use in the eyes of customers
The Iphone from Apple promises to make life simpler and happier thanks to its many uses. In return, the buyer is willing to pay the price accordingly.
The brand of frozen products picard It enjoys a strong public image because, more than its value for money, it allows you to improvise dinners without spending time cooking.
Example of cheap BM
Low cost is a concept based on the standardization and simplification of production and marketing processes for products and services. This way, it makes it possible to sell at a low price.
Cheap business model features:
– standardization of the offer (reduced coverage);
– limited services (only basic services, others are paid for);
– simplified distribution (direct sales, Internet);
-flexibility of staff, often multi-skilled;
– very strict management control (cost hunting).
The most important examples are Ryanair, EasyJet and Hotel Formula 1. ■
■ Clarify its business to focus its activity on its “core business” (main business) and assign the remainder.
■ Talk about your project in strategic terms.
■ Gets agreement and support from partners.
Precautions to be taken
■ Do not use technical or overly special jargon, use simple words.