There are several key factors that contribute to business model success. When businesses are looking for investor financing or when professionals seek to salvage a failing business, they look to see if these factors are in place and working well together.
Once business owners understand what these factors are, they can strengthen any weak areas they find in their business.
Zbig Skiba discussed successful business modeling and the book, Business Model Generation, in a LinkedIn article.
The 9 key elements of a good business model the book outlined were:
- Knowledge of your customer segment and, “distinct target market;” people with similar desires and needs and the ability to pay for your product or service.
- Your unique value proposition. What does your single product or service or bundle of products and services offer your customer segment?
- Having efficient channels. Channels are the way you communicate with your customers. There are sales channels, delivery channels, follow-up channels etc.
- Customer relationships. What is your experience and interaction with your clients? Are they satisfied with your business?
- Revenue Streams, money coming in.
- Key Activities, things you must do to conduct business every day. These might include manufacturing and design, etc.
- Key Resources, your staff, financial resources, physical and intellectual property etc.
- Key Partnerships, your vendor relationships and partnerships that make your business better, more affordable and more efficient; and
- Your Cost Structure, the money you have to spend to run your business, including payroll, loan payments, raw materials, delivery costs, licensing fees and rent etc.
Many business owners and managers have yet to learn that comprehensive data analysis or predictive analytics can help strengthen weak areas in their business models.
- Predictive analytics organizes big data. This helps businesses clearly see what their target market needs, wants and can afford to pay for.
- Once business owners and managers understand their target market at this level, their value proposition becomes clearer.
- Businesses can then start using communication and delivery channels that are convenient to their best prospects and therefore the most effective.
- Customers feel heard when businesses meet their needs and provide the products and services they desire. Satisfied customers turn into long-term clients and brand advocates.
Predictive analytics can also boost sales by helping businesses:
- Identify their best revenue streams
- Understand what activities they should continue and which ones to stop
- Know which employees are right for each job
- Know which vendors to partner with to satisfy their target market better
- Budget more efficiently and stop wasting money on expenses they don’t need