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Defining Your Business Model

By admin

Value Propositions that Solve Problems

The key ingredient in the recipe for creating a successful business is creating value for its customers. This may appear obvious to some, however its an ingredient that often doesn’t get the focus it deserves. When a business (online or offline) is able to solve a customer’s problem or satisfy a customer need, it immediately creates value.

Building blocks for Business Model GenerationDefining the value proposition for the business model is a must. The key is to determine what problem it solves for what group of customers. Four key questions need to be considered when defining this business building block:
> What value does the business deliver to the customer?
> Which of the customer’s problems are we helping to solve?
> Which customer need/s are we satisfying?
> What product/service bundles are we offering to each customer segment that we are seeking to serve?

Its important to note that value propositions may be quantitative or qualitative in nature. Quantitative values include things like price and speed of delivery. Qualitative values would be things like product design and customer experience.

Being able to clearly communicate your value proposition is a critical step in defining the business model, particularly for small business owners who service targeted niche markets.

Create Positive Targeted Customer Experiences

It’s no secret that the ability of any business to create positive targeted customer experiences will significantly impact on its success. The three building blocks that relate directly to the creation positive customer experiences are:
> The Customer Segment building block. This block defines the specific groups of customers we serve, each of which may have different problems to solve.
> The Customer Channels building block. This block defines the way in which we communicate and deliver our value proposition to each customer segment; and
> The Customer Relationship building block focuses on how we establish and maintain relationships with each customer segment.

Its important to gain customer insights as we develop and implement our business model. This will ensure that we are creating the right kind of experiences for our customers.

The Empathy Map

The book written by Alexander Osterwalder and Yves Pigneur, Business Generation Model describes ‘The Empathy Map’. Its a tool designed to help us move beyond the basic demographics to better understand the environment, behavior, concerns and aspirations of our customers. By considering what our customer sees, what they say and do, what they hear, what they think and feel, the pain they are experiencing, and the gain they will realise from doing business with us, we are able to better define appealing value propositions.

The lesson here is that business models should not be built by only considering the perspective of the business owner. Focussing on the insights gained from our customers will strengthen the business model. This is equally true whether we are seeking to serve the business-to-consumer market or the business-to-business market.

Don’t Try To Go It Alone

The challenge for the entrepreneur or small business owner is often the lack of team support. The question is can they really benefit from the process of Business Model Generation. The answer is yes, but only if we are willing to invite, accept and consider input from others.

> Recognise that every business has a business model, whether it’s defined or not.
> Outline the current business model in the context of building blocks.
> Share this working version of the business model with others and solicit their insights, while also studying it privately and looking for ways to enhance it.
> Revise and enhance the model, and evolve the business based on your new perspective.
> Commit to regularly reviewing and enhancing the model to strengthen your business in the face of the ever changing market place.

These steps will put you on the path to a more successful enterprise through the process of Business Model Generation.

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Categories : Business Growth


  1. Solid Plan for growing a business, John!

    I appreciate the building blocks and how they represent the significant elements of interaction in developing and sustaining a business. One point you’ve made which I think alot of small guys overlook is their reluctance to seek input and advice. Even if it’s not a mastermind as such, our peers can often provide invaluable insight in to our biz.

    I think the emphasis as always, is the prime focus you’ve made of our attention to the customer and the feedback you get from them. It always comes down to that, doesn’t it? …whether it’s consumer, or B2B – the customer is KING!
    Chris McCargar recently posted..The Seeds Of SUCCESSMy ComLuv Profile

  2. Arlan Murata says:

    Hi John: Appreciate your post. Value, Value, Value is the name of the game in our giving. Thanks

  3. I have run into this very issue with many bad results. creating a product or service based on what I wanted and not what the customer wanted. This is obviously a recipe for disaster.

    Thanks for this blueprint, I am sure it will help many people on their way to building and solidifying their business.
    Jose H. Caraballo recently posted..Loan Modification Success Part 1My ComLuv Profile

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