7 Elements To Designing A Profitable Business Model

When it comes to planning your business, there are many critical elements you must include.

Contents show

7 Elements To Designing A Profitable Business Model

However, it’s much more than simply drafting a business plan and hoping for the best.

You also must ensure you design a highly operational and profitable business model.

This is where you will be mapping out how you’re going to provide value and ongoing success for your customers.

But how exactly you will do this can be a little complex at times, and you may be wondering how you’re meant to design a good business model.

Luckily though we’ve done the hard work for you. This guide below shows you the 7 elements to designing a profitable business model.

So, if you’re ready to learn more – then let’s get started and find out all the answers!

The 7 Elements For A Profitable Business Model

Without any more delays, let’s dive right into the elements you must include when you’re designing your business model.

Once you’ve comprehended these, you will be better placed to get started on your own.

1. Identify Your Target Audience

Many businesses often fall at the first hurdle when it comes to identifying their target audience.

The key thing to remember when you’re doing this is to hone in on a specific target audience.

Wide audiences are difficult to target, especially for new businesses, and it can make life incredibly difficult to provide your customers with what they need.

Indeed, the customers who definitely need your product or service have to be properly fleshed out.

To do this, you need to identify 2 or 3 different buyer personas and explain in detail all of this audience’s demographics, common challenges and the solutions that your business is looking to provide.

You may be thinking to yourself how stores like Home Depot operate like this.

Well, while they do cater for the “general” audience, their main and primary target audience is homeowners or contractors.

It’s important to note here that the more specific and honed in your target audience is, the easier it will be for you to improve your products and services.

2. Establish Your Business Processes

It probably goes without saying, but before you can actually start your business properly and officially, you need to have a clear understanding for what your business must do and how this will make your business model work.

First, you need to have a clear notion of what your business is offering.

Once you have done this, you will be able to work out what business activities you must perform.

For example, ecommerce sites may need to focus solely on online marketing.

3. List Your Key Business Resources

For your business to operate, you need to know what your business needs so it can carry out its daily processes.

Indeed, to ensure your business model works in the best way and in line with your vision, you need to understand the requirements and resources.

Common examples of this include a website, a warehouse, customer lists or IPs (Intellectual Properties).

This part of your business model may seem a little obvious, but it’s critical that you have a full understanding of what your business needs.

4. Know Your Business’s Value

When we talk about value with your business, we’re not necessarily talking about price or cheaper costing.

What we’re really talking about is how your business will stand out from the rest of the market and how your business differs from others in a positive way.

Indeed, a strong value proposition is where you can fully comprehend why you are starting this business and how it can actually be successful.

However, it’s not just about, for example, selling more products than the competition.

Many businesses identify a gap in the market for business practices which their competitors have failed to do anything about.

One such example here could be a highly successful niche store, but it only takes cash or does not offer home delivery.

Knowing where these competitors have drawbacks is where you can identify your potential value, should you be able to fill these gaps.

5. Know Your Key Business Partners

Without having key business partners, almost no business can properly function – and almost certainly cannot reach its full potential and goals.

However, it’s important that you know your key business partners and why they will be beneficial to your business.

This could be suppliers or partners in advertising depending on what your business is offering.

Once again though, you have to fully understand who these potential partners are – you don’t want to end up being involved in a scandal!

6. Strategize Your Launch

Unless you are going to go in a completely different direction that is much more radical than other businesses, you should design a launch strategy that adds interest to your business, can generate leads and primarily close sales.

You need to know how your customers can find you and what they are going to do once they have found you.

Much like a website, it’s not enough simply for someone to fall upon it. They need to go from interested in buying, to buying.

In other words, this section of your business model is where you will create the blueprints of the customer’s overall journey.

Where are they coming from, how will they get there, why they will stay and why they will buy.

7. Allow Room For Innovation

When designing a business model, especially when you’re a start-up business, you’re working on the basis of many assumptions and guesswork.

This is often done through projections and other data from competitors.

As a result, you are not going to be certain that these business plans you have designed are going to be consistently beneficial for your customers and you’re also not going to be sure that your business model will be the right fit.

This is why it’s important that you do not make the critical error of not innovating.

Always allow room for innovation – because this is how businesses grow and improve.

Remember, things as basic as customer feedback can make a gigantic difference.

The key thing here is to remain humble and always ask for feedback, advice and other information that can better place you and your business in the future.

It’s easy to fall into the trap of business arrogance, so always try to be mindful.

Frequently Asked Questions

Is It Hard To Design A Profitable Business Model?

You should, at this point, have conducted plenty of research to know your market – so it should be clear of the difficulties presented to you.

While it may be difficult, it is necessary!

Who Could I Ask For Help?

There are many online resources, but you may be better off asking a highly established business for their advice.