Business Model

To those entrepreneurs who are planning to establish a

business, they must first develop a business model or plan
before venturing into a business, regardless how small or big
enterprise it might be. Here are some of the reasons why it
is important to prepare a business model:
 a. serves as an extension of the feasibility study;
 b. combines all the factors in a business plan in order to
visualize the proposed enterprise or business; and
 c. conveys the vision, mission, and objectives of the
enterprise or business to the internal (board, employees,
etc.) and external parties (potential investors, public,
etc.).
The business model must
contain the following:
 Forecast of business revenues
Costing
 Estimation of profits
 Projections of its five-year
financial statements
Seven (7) Steps Recommended in
Establishing the Right Business Model

1. Size the value of the solution in the target

segment.
 Estimate the costs, as a lower bound on a
price. Expensive products may be hard to
sell and if you price low, it will leave an
exposure. Assess your market, observe your
competitors and match with their prices
2. Confirm that the product or service
solves the problem.
 Put your prototype or alpha version
into test; let the real customers
experience your product so that you
could have an honest feedback. Based
on their feedbacks, you will be able to
establish what things or factors need to
be improvised or maintained.
3. Test the channel and support strategy.
 In this part, you pitch your business
model to a group of customers, which
includes all elements like pricing,
marketing, distribution and
maintenance. This is the chance to
make pivots for almost no cost.
4. Talk to industry experts and investors.
 A third-party advisory board with
experience of the same field could give
you an honest and unbiased needed
feedback. They might have connections
or recommendations for setting up your
distribution and sales channels. It is
also valuable to talk to potential
investors for they could be invest
additional source of capital for your
business.
5. Plan and execute a pilot or local
rollout.
 It tests the cost, quality and the level
of pricing of your products in a
community or target market.
6. Focus on collecting customer
references.
 Pay attention to those first few
customers, and ask for their
testimonials and wordof-mouth to
support and spread the word of your
product and services. Without them, it
would be difficult for the business rate
your project.
7. Target national trade shows and industry association
groups.
 Asa final validation of the business model, you should
gather the positive visibility, credibility and feedback
from the organizations as well as the product model, in
the context of major competitors.
 Thismay also be a great factor that will help you enhance
your product and/or services offered. Many business plans
have highly on competitive product features, but helps on
the business model for details and innovations
Ex.