Many of us dream of owning our own company or being our own boss, but might not understand what it takes to get to that level. Whether you’re a young entrepreneur or creating your third business, keeping on track with the basic components to your business model will help make the transition period easier, especially as it grows. In this 4-week series, I will be introducing 4 key components to creating your business model. This week we’ll focus on step 1: Core Strategy. Here are the 3 components to keep in mind when creating your business model.
What is the purpose of your business? Creating a mission statement helps understand what your marketplace is supposed to accomplish and why it exists. Whether it’s focusing on quality or quantity, let your audience know. Be clear to help your potential clients understand exactly what niche you are serving and why your value proposition is unique.
Which products or services will you concentrate on? Define your target market and start doing your homework. Study trends, analyze your competitors and investigate similar products or services. Market research will not only help you understand what your target market wants, but it will also tell you how to deliver the most value and help you implement your marketing mix. Once established, get to networking. You’ll want to create a community of customers and partners early on. People who believe in your mission will become loyal to your brand and promote you for free. As we all know, referrals are the best way to get new customers; evangelists are your biggest asset.
Basis for differentiation
How can you be different from your competitors? This is especially important if you are emulating a product or service that has already been around. Understanding your competitors is a crucial part in taking the next steps. While not everyone has the ability to launch the next big thing, creativity can help improve a flawed product or remove barriers that exist in an incumbent model. A great example of this is Apple Inc. They were not the first ones to create a laptop or smartphone with music capabilities. Many were created but not executed in the fashion they did it in. Apple has been able to differentiate themselves from the pack and it reflects in their numbers.
Now that you have a better understanding of the core strategies in step 1, make sure to incorporate them into your model. While it doesn't have to be broken down exactly like this, having an understanding of each of these components is vital to the success of your marketplace. With a strong business model, you’ll have a solid base for your company to flourish upon.