When we talk about the business model of a company , we make it a more important tool than the business plan at a functional level. Why? Its objective is to clearly define what is going to be offered to the market, to whom and how.
This work serves in the end to know the identity of the company, to know in depth the key activities, and to quickly identify how it is possible to modify or change an activity so that the business for the better .
What is the business model of a company?
Business models represent in a schematic way the operation of a company : how a company is going to invest its money, how it is going to reach the customer, what is it that makes the business itself unique (value proposition), what is it? the cost structure, etc. In short, it is a systematic vision of the company.
To create a successful business model, it is necessary to have a clear value proposition, which connects with the potential consumer and differentiates itself from the competition. Its objective, in this area, is to establish strong ties with the customer and retain them.
Therefore, the most effective method of validating a business model is to obtain customers who pay for the service or product of the company. And that validation is obtained by creating closeness with the consumer, by establishing a close relationship where both the needs and problems of said customers are known.
The business model also has the advantage that it can be easily modified and optimized over time.
What is the business model for?
A business model is a planning of activities that will allow you to clearly define the services or products that will be offered in the market, and the ways to do so.
But what does this really mean? What is a business model for on a practical level? Simple, it serves to specify relevant aspects in any company. These aspects will help to improve the productivity of the company in the short and long term, since they represent important changes within it if applied properly.
Among this series of aspects, some can be achieved such as:
- what kind of products will be offered in the market
- how the products and / or services will be offered
- who will be the customers to whom these changes are being directed
- what are the strategic activities within the company …
All this with the great purpose of generating or increasing income.
A business model is a tool used to monitor the strategic activities of the company and identify possible changes and improvements. It is, therefore, the pillar of the future of a business. And it is that, as when a building is going to be built, first it is defined where the pillars are going to be located.
One of the biggest mistakes an entrepreneur can make is to make a business plan before developing a model.
What key aspects of your company can you define in a business model?
A task of such magnitude is far from easy, and that is why time and analysis are needed to reach the expected result. By making a good business model, you will be able to understand key aspects of your company such as:
- How to define and differentiate the offers.
- How the clients, standards and mechanisms will be selected.
- What will be the image projected to the clientele, the advertising or distribution strategy.
- How to add value to customers
- How the tasks are distributed and who is most responsible for them.
In today’s business models, innovation is increasingly at the forefront of these. This occurs due to the dynamism that businesses require within a digital economy like the one we live in. The perfect example is startups . Therefore, having a complete business model serves as a competitive advantage for the benefits that can be obtained.
Examples of business models
To know the magnitude and relevance of business models, it is a good idea to study the models of large companies such as Facebook and Google. Here’s how your examples have worked:
- Google : Google is a giant that is present in almost any aspect of the internet today , but with its greatness what is its business model and how it generates income. The answer stems from advertising, your first source of income . Google is tied to Adwords to generate profits, which are substantial due to the size of this brand and its reach.
- Facebook : Another great example is that of Facebook that could pass itself off as Google’s little brother, because it was born in a similar way. Its business model is also based on advertising , in this case with Facebook Ads, which in recent years has managed to achieve remarkable growth.
- Amazon: Amazon’s business model is based on an infinite offer and purchase suggestions based on your search profile. It also has one of the economies of scalemost powerful in the entire market due to its high sales volume. Its effort to know customers in depth, and a logistics structure capable of managing millions of orders on a daily basis, allow the user to obtain in a few clicks products that in other cases would have taken days or weeks to find. Another of Amazon’s crucial activities is product reviews. These allow you to create sufficient confidence in the user to make the purchase. If you have ever bought on Amazon, you will see that they actively encourage users to leave opinions of the products purchased after their purchase.
- Wallapop : Wallapop began looking for its expansion through a free service that then went on to create a business model, based on its development, and then act on something that is already successful and works.
- Freemium business models : This product offers variables of micropayments or subscriptions for applications, the purpose is to be able to access the most advanced content by paying. And taking this into account, there are thousands of applications with this kind of operation, because nowadays it is very common to find free games or applications but they need certain payments for more advanced modes. This model is so attractive because it hooks the user, and once the person is used to the content, they will end up paying to access more of it.
What is the business plan and how is it different from the business model?
The business plan is a written document that summarizes the objectives of a company, its organizational structure, the strategies to achieve the proposed goals, the amount of investment required to finance the project and the solutions for the resolution of future problems.
In this guide, other aspects of great vitality for a business are also reflected, such as the products offered, the kind of public to which the offer is directed, and who are the competitors in the market.
Developing a business plan is less complicated than it sounds. Although it should be noted that each project is different and that the basis of everything is a good idea that must be materialized in the following basic points:
- Ideological structure : In the ideological structure, the name of the company will be located along with its mission, vision, values and the description of those competitive advantages of the business as such.
- Structure of the environment : The structure of the business is based on the analysis of the strengths and weaknesses of a company. It also does so in the behavior of the sector of which it is a part, including the competition and special customers.
- Mechanical structure : This part lists those sales, distribution, advertising and marketing strategies. In short, the actions to be carried out to achieve the goals of the conceived business idea are grouped together.
- Financial structure : Now is the time to test the visibility of the idea according to economic terms. For this, scenario calculations and projections are used.
- Human resources : This defines each of the jobs that need to be filled and determines what are the obligations and rights of those who make up the organization.
How to generate your own business model?
It is common that when starting a business project, the people who head it have all kinds of doubts and questions about it. For example, some will abound like where do I start? How did you generate customers? What is the initial investment level i need? What are the difficulties that will arise?
All these doubts are realistic, but whether you are an autonomous entrepreneur or you are in a more complex business structure, there are tools and strategic studies that are very useful to answer all these questions. The resolution of them will generate a better strategic vision and operation, something that will end up attracting external investors.
The quintessential tool: the Canvas Business Model
The Canvas business model is an amazingly useful tool, with which you can create your own business on a blackboard. Something that is possible because the Canvas business model template allows the interconnection of ideas and encourages creativity using its visual format.
It was devised by Alex Osterwalder. In it you can have a vision of all the key elements of business activity in one place. It is a methodology for the definition of new business models or to provide the necessary help so that an already established company can quickly identify what changes to make in its current business model.
This is also widely used by startups thanks to its flexibility and the simplicity with which it is handled. This method consists of answering a selection of key questions and distributing all the elements that can intervene with the activity of the company, according to an ordered way in a diagram that has nine blocks. Which are:
- Customer segmentation : Customers are defined and other aspects such as their diversification and types of users are detailed. Is it a mass public or an exclusive one? Along with other questions of this nature.
- Value proposition: This is the proposition or propositions of value to the solution of a specific problem or to the satisfaction of the client’s needs. Examples of this are the customization of the deal, or it can also be to improve a price compared to the competition.
- Channels : These are the means used to deliver products or services to customers. These means must be simple in the development of the ordering processes or after-sales service. The channels chosen are responsible for complete customer satisfaction, be it a physical product or a digital one.
- Relationship with customers : Here you must define the type of relationship that will be maintained with customers, and the way in which this will affect the other cava canvases. This is because personal or automated assistance will have a direct impact on the value proposition, for example. It is the link established with customers, responsible for a higher level of loyalty.
- Income flow : These are the mechanisms for the company to obtain income by defining the unique prices or subscription plans, as well as other points that will determine the available liquidity, the flow relationships, etc. All this will influence the rest of the blocks in lower or higher profits.
- Key resources : For a successful development of business activity, it is necessary to identify and establish human, physical and monetary resources. The reason is that if few resources are allocated to launching a product, it will be poorly managed. And on the contrary, a waste of resources is responsible for a high opportunity cost. Everything is about the right measure.
- Key activities : It is on these fundamental processes that a good interrelation falls between the various blocks of the business model. They are internal in nature such as marketing, production, logistics, etc.
- Key alliances : These allow the creation of links with agents such as companies from different sectors or suppliers, that is, those who carry out activities that the company does not generate by itself. Examples are web hosting or transportation.
- Cost structure : This must be determined to obtain returns to scale or decreasing media costs. It is the cornerstone of economic viability.
New OnePlus 9RT: Specs, launch date, colors revealed
OnePlus hasn’t said how much RAM the 9 RT will feature, however Geekbench has shown that it will sport 12GB of RAM. However, an 8GB variant will almost certainly be available.
Shenzhen [China]: The OnePlus 9 RT’s launch date and specifications have been revealed by OnePlus ahead of its official announcement.
According to GSM Arena, the OnePlus 9 RT will go on sale in China on October 13, or next week.
Although the new OnePlus smartphone will be unveiled in China first, it is expected to make its way to India as well. In India, the OnePlus 9 RT has yet to be announced.
The Snapdragon 888 SoC will power the OnePlus 9 RT, which will be paired with LPDDR5 RAM and UFS 3.1 storage. It will have a 120Hz E4 screen and a 4,500mAh battery that will charge at 65W. The primary camera on the 9 RT will be 50 megapixels.
OnePlus hasn’t said how much RAM the 9 RT will feature, however Geekbench has shown that it will sport 12GB of RAM. However, an 8GB variant will almost certainly be available.
The phone maker also revealed that the 9 RT will be available in two colour options: black and grey, and that pre-orders will begin on October 13 in China, with the first sale on October 19.
We’re still four days away from the launch, so expect more information regarding the OnePlus 9 RT in the days leading up to it.
Meaning of CEO, COO, CFO, CIO, CTO and CMO: Calling each executive by name
The adoption of business terms and technicalities from English-speaking organizations is increasingly widespread, and acronyms that describe executive positions are often favorites when used by those responsible for the areas of the company. The use of acronyms such as CEO, COO, CIO, CTO and CMO has become widespread, both in more traditional organizations such as startups and other technology-based companies.
But what is the meaning of these acronyms?
If we pay careful attention to its definition, we will see that the meaning of CEO and the rest of the management figures of companies are much simpler than you thought.
What is the CEO of a company?
The CEO of a company is the acronym corresponding to the acronym for Chief Executive Officer, which in Spain we usually know as CEO or Executive Director. He is the head of administrative management and direction in the company.
Who is the COO?
It comes from the Chief Operating Officer and can be translated as Director of Operations or Chief of Operations, responsible for the daily operations of the company such as production, logistics, etc.
What does CFO stand for in English?
CFO is the abbreviation for Ch IEF Financial Officer. In our business culture it corresponds to the Chief Financial Officer and his responsibility is the economic and financial planning of the company based on the objectives established by the board of directors, generally made up of those responsible for each area that we are analyzing in this post.
What is the CIO of a company?
It comes from the acronym for Chief Information Officer. Their role is attributed to the person responsible for the company’s information technology systems and usually falls into different professional profiles depending on the organization’s structure. Thus, the position of CIO may be the counterpart of the systems manager, although there is ambiguity in its implementation and it is often confused with the CTO, which we explain below.
What does the acronym CTO stand for?
It is the abbreviation of Chief Technology Officer and it is usual to give it the same treatment as the system manager in an erroneous way by many companies. The main difference is that while the CIO is responsible for the company’s information services at the process level and from the planning point of view, the CTO is the technical person in charge of the development and correct operation of the information systems from the point of view of execution.
What is a CMO in a company?
It corresponds to the acronym of Chief Marketing Officer and its translation in our business language is that of Marketing Director as the head of sales and product development, among other functions.
Its application in practice is different according to the structure of each organization, and there may be various combinations in the hierarchy of these executive positions. In general, the meaning of CEO of the company falls on the highest part of the organization and has as subordinates the executives responsible for each area, who report directly to this CEO to make his decisions. However, in other organizational models, the position of CEO held by its president as the visible image in communication and public relations of the company, delegating the highest decision-making authority to the COO.
The meaning of CEO extends
This definition nomenclature of executive positions in companies does not end here. Many of these terms did not exist a few years ago, and the increasing specialization of departments in large organizations gives rise to new positions, which after the meaning of CEO and the other positions that we have seen evolve into new figures such as the CSO (Chief Science Officer), CCO (Chief Commercial Officer), CLO (Chief Legal Officer) among many other definitions of executive positions.
Coworking: Need or Opportunity?
Many times when it comes to undertaking we see that there are a great multitude of impediments that stop our initiative.
One of the most obvious, especially in times of crisis, is financing. That is why a work modality called coworking has proliferated in Spain for a few years. But what is coworking?
The foundation of coworking is to bring together professionals from different fields in the same space where they can develop their activity, which means significant cost savings. In other words, it’s like having roommates with whom you share expenses.
Surely, you have heard a friend talk about a coworking space, collaborative work, cost savings, … So far great, but the philosophy that underlies this type of work is even broader. The work tends to be increasingly multidisciplinary and many times, as entrepreneurs , we cannot cover the requests of a potential client.
We are going to put an example. Let’s imagine that we are a freelance professional specialized in Online Marketing and we have several accounts as a Community Manager.
As you are self-employed, but you are not motivated either by being in your pajamas all day locked at home listening to music, or worse, some gossip program that they give in the morning on TV – not to mention going to work in a library where the WIFI is slower than on your first Smartphone – you decide to try a coworking space where you have all the comforts for a small price and from which you can always “run away” if things don’t go well for you.
One fine day comes the opportunity to create a Social Media plan for a company. Within this Plan the creation of a corporate blog, the creation of videos,… to which you obviously answer: “no problem!” Is contemplated, since it is an opportunity that you cannot miss.
Once you dismiss the client, you sit in your chair and a cold sweat starts to run down your forehead thinking “now how do I do all this?”
From its programming, database creation, corporate identity creation … to the creation of promotional videos and a long etcetera.
Suddenly you raise your head like a meerkat in the African savannah and you see Nika, that nice girl who is a web designer and a little further on you see Alfon, that “compi” with whom you go out for beer on Fridays when you finish ” currar ”and it turns out that in addition to working as an illustrator, he has a hobby which is making videos, especially for his friends, and on top of that, it’s really good!
Et voilá! You already have a fully qualified team to carry out your project… and who knows if a future company. This idea is what underlies the coworking philosophy : Being able to create flexible collaborative environments that adapt to the needs of projects or clients.
Obviously, cooperative work has its advantages and disadvantages. Creating a multidisciplinary team for a project can be complicated, since managing the team is not an easy task when the participants do not share a mutual philosophy or common goals. Therefore, it is important to create a team that complements each other both on a human and professional level, and above all that wants to move the project forward.
From my own experience, if you want to develop your own project and do not have funding , it is better to make it very clear to the participants the delivery times and what their role in the team is. Otherwise, you will end up spending more time trying to coordinate people than working directly on your project.
“Luck is what happens when preparation and opportunity meet and merge.” Voltaire