A business model is basic when it comes to starting a business, whether big or small because it is the mechanism that will help us figure out how to generate revenue and make a profit. But the majority of entrepreneurs are stuck in this part of the process before starting your business.
And no wonder: A business plan is complex to perform if we never written one or if our business experience is minimal or nonexistent even if we wish to form our own company.
Here are all key step in designing your own business model and get to become a successful entrepreneur from minute one in which you open your doors to the public.
What format should my business model be and to whom the product is intended
A business plan is something nobody should do the same way. All these templates to download you can find on the Internet that can serve as a guide, but your business model should raise it (and write) differently depending on who is intended.
If what you want is to find private investors or borrow money from a bank to start your project, you must include all detailed data as possible. Created at the end of your business model an annex containing all the necessary economic data.
If your business plan is made for yourself, to be able to assess how much money you need, what niche is your goal, etc. you must also include all possible numbers and curriculum of your competitors to know what risks you may face in your company.
Regarding the format, the ideal is to have between 20 and 25 pages, and the typeface should have a size that can be easily read. It is also a good tactic that is also visual, ie incorporate charts, graphs, pictures…
Creating the summary and description of your project
Focusing on your business model, the first part you have to develop is the executive summary – in which you must not overdo over 2 pages -. This summary must be direct, and must get across the idea of your business in an attractive way so that the person who has in his hands latches and still want to read the rest.
It must describe the project, and include in it why adding value to the customer ; we must also clearly state why this project will succeed, and the market you are targeting (to which customers would be interested in, which profiles are these people, why buy the product or services …)
Other important aspects to be included are the money that will be needed to start the business, and what is the estimated amount that (revenues and profits) is anticipated profitability would be.
The project description is basically the abstract but in a more expanded form: is to reflect more accurately what is business, what you want to offer, why is different your product or service the rest of your competitors, and if there really is a business opportunity behind it.
What will be my market?
In the next section of your business model, you have to specify which market you’re going to set your project. Therefore, it is important to investigate before how much money moves your product in different companies dedicated to it every year.
Then you should note specifically what will be your customer type. You must answer questions such as who is your customer? Why buy your products and not those of your competitors? Ultimately, specify what will be your potential customers.
It is also clear that competition is another factor that can cause your business to fail, and it is almost mandatory that you add a study of practice: which companies in your industry that would compete with you, is how they will behave when entering your product at the market…
Also add a good description of your unique value proposition, that is, the answer to the question why customers will buy from me and not my competitors?
Your team working
A key point for both your business plan to later form, your company is certainly the team that surrounds you, because they are – with you – those who will be able to bring a project idea on paper to reality.
It is not necessary in this section detail to all members who will be your personal, but must specify a description of the key people who will be part of your company through an organization in which you include:
- The name of each person and the position they occupy.
- A brief description of a few lines on past experiences that show that will benefit your company.
Normally are typically included in this chart to a CEO (chief executive officer), the person responsible for the commercial or business activities, and those with technical responsibilities.
How will you operate your business internally
You have already shown how the company will operate externally (what your customers will be, the product or service to sell, etc.), but at this point, you must reflect another very important part of the business model : the operation of the company at the domestic level.
To do this, it shows the value chain of your business, which will give a good overview of the main tasks and how they fit together. Below is a picture with a clear example of what this chain value, which is very useful to identify those primary activities and which ones they support.
- Production: how much it costs to produce the product or service, what other people are involved in this production …
- Marketing: how the product price will be determined, how the customer wants to pay, how the company will unveil …
- Sales: how these products or services will be sold (in local, via the Internet, will be digital products or physical products), how many customers or market sector aims to achieve for those sales …
In what state is your business
Something that many entrepreneurs often forget to make their business plan is to translate what historical moment is their company. This is an important factor whether to present the business model to investors or if only we go to read the proposal.
You have to answer questions and from what date it is working in the project, the kind of contributions that have been received so far (well be money, time, or both), if you’ve already got funding or not, the release date for the product or services …
Ideally, that also is attractive and clear to see especially if presented business model, some investors is that a graph is made with a timeline in which these aspects are included.
Detailing financial business plan
This part is essential to be reflected comprehensively and more detail, because it is the most vital part of all our business model. It should address the following issues:
- What is the investment that is needed, and how it will spend that investment.
- The type of company to be set up (SA, SL, etc.).
- What is capital with which it was constituted or has become our company.
- Occurs when the balance point, that is, the amount of sales that are required to cover all costs of the process.
- What will be the investor profits if we are looking for an outsider that we finance our project.
What risks can have your company
This section of the business plan is vital to anticipate possible risks that our company may have and also to have a solution in advance of this, although many entrepreneurs tend to forget about this issue; but it is certainly something that will help us to react to future problems that may arise.
The ideal is to include in our business model this section with a table that the risk to run, the impact that this risk may have (high, low, medium), identify the probability that something happens, and possible solution that we could give you.
The most common risks are often to include new competition that may appear in our market niche, that slower growth than expected, do not we attract as many customers as we thought, or that will have production costs higher than expected.
Tips for completing your successful business model
In addition to including all of the above in your business model, there are a few tips you should consider when designing and presenting it to investors who want to support your project (in case you require external funding).
If you are looking for private investors to start your business, ideally along with your business plan, also you design a presentation – either with slides, PowerPoint, or even a funny and original video! – In which you collect all the key points summarized. This will make your proposal more attractive in the eyes of investors.
Also in the section of risks it is good idea to present several scenarios that may arise; that is, introduce 3 types of situations : the pessimistic (worst that can happen), expected, and another optimistic scenario.
And finally, if there is any question that has no place in all the preceding paragraphs, you must also address it in a final section. For example, if your investors want to remain in the project only a certain time or want to be always in the company, what they want to achieve, etc.