Developing a Business Model

So, how do you go about developing a business model?

As defined previously, a business model describes what problem a business intends to solve (the value provided for customers) and how it does so profitably.

Osterwalder, Pigneur and Tucci (2005, p.4) offer the following definition of a business model:

"A business model is a conceptual tool that contains a big set of elements and their relationships and allows expressing the business logic of a specific firm.

It is a description of the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams."

Developing a comprehensive business model is an iterative process, where you start with a basic idea, which is clarified, redefined and expanded as you do the work to fully investigate the potential of your model.

You generally start the investigation of your business idea with a relatively simple description of your business model, which should include:

• What you plan to sell,
• Who you will sell it to, and
• How and where you will sell it.

“My business sells coaching sessions to middle level managers in the private sector looking to improve their skills to enable them to advance their careers.

The sessions will be delivered once a week for a twelve week period using the telephone, and will be supplemented with email communication between sessions on a just-in-time basis.”

Do you already have an idea for your business? If so, you can skip ahead to analyze your business idea and convert it into a workable business concept.

If not, move on to the pages about generating business ideas.

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