Business planning is out – Business model creation is in……………

Most business plans that I have seen are very similar; in fact, they all appear to have been taken from the same source. “Old fashioned” business planning is out; building or generating a business model that is “built to suit” is the only viable alternative in today’s business climate.

Building a business model is like putting together a puzzle. In this case, the individual puzzle pieces have to be identified and then prioritized. With which puzzle piece should you start? If you are starting a business or are currently in a business, the first and most important consideration (puzzle piece) is to identify who will be buying your products or services.  No business can survive without paying customers! There are many factors involved in the understanding of this first piece of the puzzle. It is a process that takes time and study and cannot be “short changed.” I use a stretch factor challenge in this initial model creation stage as it sets the foundation for everything else that follows. There may be a small niche or a mass market (and everything in between) that will be identified while working with this puzzle piece.

The next puzzle piece is the value piece.  This piece identifies the reasons why these customers want to buy your products or services and how do they differ from  your competitors. Perhaps your product or service is new and nothing else like it is available; perhaps there is another differentiation such as price, or quality of service or???  This value piece identifies which customer needs are satisfied, what benefits it provides. There are many different ways of providing value and each must be identified and analyzed and then the second puzzle piece can be secured.

Reaching the customer is the next puzzle piece. This piece is multi-faceted.  It not only includes the different methods of reaching the identified customers, but how they are “helped” in the decision process to select your product/service.

There are many more “puzzle” pieces that have to be identified and put together. The completed puzzle will be a picture of a profitable and sustainable business. No, I did not identify and explain each puzzle piece as they are unique to the individual business model that is being created for a specific business. Yes, there is at least one more that is common to all businesses and that is the puzzle piece relating to cost. Like the other puzzle pieces we looked at, this one has a depth of issues that must be considered in order to obtain the desired profitability.

Conformity is the jailer of freedom and the enemy of growth.                        John F. Kennedy

Nick J. Petra CFP