subject: Business Planning – why is a good business model critical? [print this page] Business Planning why is a good business model critical?
A business model explains to the reader what all the elements of your business are and how they fit together. The business model, of outlined correctly can also make clear on a single page, what the business does, what its core cost based might be, what its products are and how it can earn revenue from its activity.
Business models are often not well described in business plans. Many standard business planning templates do not even have a section where the business model can be outlined and clearly explained.
An image often provides the clearest overview of the business model. A business model diagram should include 9 key elements of business model design.
Value Proposition What are you offering?
Capabilities/Resources What skills and capacity do you require?
Partnership Who do you need to work with?
Activities What will you do?
Costs What are your significant costs likely to be?
Relationship What formal and informal relationships are required
Channel What are our channels to market?
Revenues What will our customers pay for?
Customers Who are our customers?
The business model explains all the key moving parts of your enterprise, but more importantly, lays out how these parts will work together to deliver value.
After developing hundreds of business plans for clients, we have developed a proven business planning technique called "question led business planning". This technique uses questions to draw out of the planner the key business elements and re-assembles these into a comprehensive business plan. This approach has been combined with document automation to provide a new level of flexibility in business planning. By answering core business model questions, a business plan, executive summary or presentation can be automatically created. All structural and language issues are taken care of for the user, leaving them free to focus on answering a series of questions about their business.
