The 8 Essential Components of a Business Model
Your business model is your secret sauce, your magic formula. Your model is what makes your business unique. Your business model is the formula you use to outsmart your competitors, provide ongoing value to customers, and continually grow your business. There are eight essential areas to every business model
- Must have excellent margins
- Must be easy to sell
- Must have The Four Capitals©: Intellectual Capital, Financial Capital, Human Capital and Brand Capital
- Must be able to maintain ongoing competitive advantage
- Must have quality customers
- Must have longevity of the industry
- Must provide for the owner’s graceful exit
- Must avoid pitfalls
The business model is not the business plan. A business plan is how you will execute your business model. Your business model is the single-most important factor in your business’ success. If your business model is not working well, your business won’t be working well. Most entrepreneurs spend too much time on everything BUT the business model. However, without a great model, no amount of great leadership will produce stellar results.
