The very concept of a business model is not a novelty, it has existed since the 1960s. Despite this, many people find it difficult to separate this concept from other closely related expressions such as business strategy, business plan and business concept. A business model describes how your work creates different types of value. It explains in a theoretical and clear way what is important for the business to generate income. So, how does this help freelancers and the self-employed?
A business model consists of several parts.
- A revenue model, which shows how revenue comes into the company.
- A production model, which describes how goods and/ or services are produced.
- A delivery model, which describes how the goods or services will benefit the customer.
Business models are often used to describe and classify companies. Another common area of use is when managers investigate opportunities for future development within a company. It is not uncommon for a company's business model to serve as inspiration for other companies.
At the same time, it is important to remember that your company's business model is unique. For example, you could be your own company - and most likely are - and maybe started one even during the pandemic!. Each company bases its operations on its own unique resources. These resources must always be coordinated in a way that suits the current business. It is not usually recommended to copy someone else's business model straight off.
The Business Model Canvas is a form of visualization of your business idea and the most important business processes, which essentially consists of nine elements and covers everything there is to know about the functionality and cost structure of your business. You can use a business model canvas in addition to the business plan to show in concrete terms how your business should work.
For this purpose, the Business Model Canvas is printed out at least as large as a poster. You can also find out more about this with a manual (“Business Model Generation”: Alexander Osterwalder, Yves Pigneur, et al .; first published in 2010). Osterwalder developed the Business Model Canvas in 2004.
In any case, the analog representation is preferable to the digital one. A poster format also has the advantage that other aspects can be introduced using post-its and the like and a quick overview of all nine areas is guaranteed.
These nine areas can basically be arranged as desired. Different templates, which you can find online for printing under the keyword "Business Model Canvas Template", also have different arrangements. Let us take a look at all nine points.
1. Value Proposition
The value proposition is what actually makes your business worthwhile. Because if there wasn't something that your business could offer your customers in terms of added value, it would simply be lost in the competition. Or it would not even be accepted. The value proposition can take many forms. Questions that you can ask yourself and answer here include the following:
- What does the company do better than others?
- Why is the service or the product unique?
- What distinguishes the product?
- Why should customers buy from the company?
In the classic way, however, this question is in the foreground:
Which customer problem do we solve?
The last question is the most important because it answers the purpose of your company. If you don't solve a problem (although a problem can also be an unmet and perhaps even unknown need), you are not offering anything that someone should spend money on.
The other questions specify the qualities of your business model. Your company's value proposition represents what you want customers to think about the quality of your products or services.
2. Key Activities
Key activities are all those actions that ensure that business is running at all. A lot belongs here. For example, if you produce products, you will need to:
- ensure processing
- Acquire and maintain machines and the like
- Have premises available
- Maintain sales channels
Everything that is necessary to bring customers and the product together and to manufacture the product belongs here.