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4.2 Develop The Business Model
4.2 Develop The Business Model
"red lights"
What do we mean by Green Lights?
refers to the positive signals or
qualities that can help
entrepreneurs develop ideal
business models and eventually
succeed.
Factors in determining whether your model
meets each Green Lights
1. Target or Acquire high-value customers.
They are someone who:
is easy to locate/find
allow you to charge a profitable price
is willing to try your product after minimal marketing
expenses (least marketing effort).
Can generate enough business to meet your sales and
profit objectives.
Factors in determining whether your model
meets each Green Lights
2. Offer products or service with great value to customers.
Unique advantages in features and benefits
Better distribution through retail or distribution
More complete customer solutions through alliances with other
companies
Lower pricing due to manufacturing efficiencies or pricing
options
Faster delivery, broader product line or more customization
options
Factors in determining whether your model
meets each Green Lights
3. Offer products or service with reasonable profits.
2 ways in achieving reasonable profits.
1. increasing markup
2. decreasing operational cost
To do this entrepreneur should:
Use a more efficient distribution channel.
Lessen unnecessary manpower efforts an much as possible.
Apply industry-leading lean manufacturing process.
Offer more auxiliary products or other opportunities for revenue without
increasing cost.
What do we mean by Red Lights?
refers to the negative or signals
qualities that can derail/wreck a
business.
Factors in determining whether your model
avoids each Red Lights
1. Satisfying the customers becomes too costly
and irrational.
High warranty costs
After sale cost
Extensive technical support
Extensive installation requirement
Extensive customer service
Interface problems with other equipment
Factors in determining whether your model
avoids each Red Lights
2. Maintain market position – Being a market leader is
difficult to sustain.
Signs that it will be difficult to sustain:
Two or three major customers buy most of your product.
development.
There are alternative technologies being developed to meet the
same need.
You have well-funded potential competitors who could quickly
Read more: Forecasting https://www.investopedia.com/terms/f/forecasting.asp#ixzz55fkn48ib
Forecast Revenue
What is Revenue?