Six key elements in the business model

Business model design for the enterprise is very important, determines the success or failure of the enterprise, therefore, enterprises should be found and validated market opportunities, system thinking, refining product concepts, product definition, financial analysis and provide organizational support six steps to design their own business model.

A business model is a conceptual tool that includes a set of elements and their relationships to clarify the business logic of a particular entity. So how do companies design their business models in this mode?

First of all, enterprises must be clear to which part of the people service, locking a relatively narrow market, market research and consumer psychology research, the limited resources used in the blade. Then it takes time for companies to look at what is wrong with this segment of the target audience (find the source of innovation as described in the previous column). Finally, we must tier customer needs: It is important and urgent, important but not urgent, urgent but unimportant or neither important nor urgent. If you can grasp the important and urgent needs of customers, it is easy to succeed.

Enterprises also need to consider the purchase motivation of customers, generally speaking, food and clothing customers are most concerned about the economic factors (that is, the price), well-off customers the most concerned about the function (practical value), while the rich customers most concerned about psychological factors (face). As a result, the social strata of the niche groups affect their valuation of the various solutions.

How to provide customers with unique value? Business can be considered from four aspects: first, what elements have you strengthened? Those that are better than existing solutions; second, what do you weaken? That is, those customers do not care about, the thankless things to minimize, or lower standards; third, what did you remove? That is to remove the functions that customers cannot use; four, what elements do you innovate? That is, the original aspects.

With the initial concept of product innovation, enterprises must communicate with the target customers to test their own ideas whether it has practical significance. At the same time, we must understand whether the customer is willing to pay a certain price to consume this product, their switching cost is very high, this is the market research most easily overlooked point.

Systematic thinking

Small and medium-sized enterprises should be able to use the simplest language to say what they want to do, the customer, suppliers, partners and other related relations described. The best way is to paint, the idea of their own with a picture of the show, this is the graphical thinking, communication. After that, enterprises must integrate the corresponding external resources, the business model map of the core units, upstream and downstream enterprises, various partners, all kinds of external resources are taken into account. The next thing to consider is how each stakeholder in the value chain benefits, which is something that every participant will consider.

There are three ways to design a business model: The first is to learn from foreign successful business model, the second is to learn from foreign successful models, and according to China's national conditions and industry characteristics to improve and innovate; third, they invented a business model, according to the results of market research and the source of product innovation, New thinking to change the current market rules of the game, and even subvert the industry over the years to form the rules of the game. According to their own strength and industry competition, enterprises to choose their own business model design methods.

Systematic thinking this part also requires enterprises to analyze the situation of competition, including the analysis of competitors and potential rivals. Small and medium-sized enterprises generally lack capital accumulation, directly to large enterprises, brand launch offensive is not advisable, my personal preference is circuitous flank tactics: not with any enterprise head-on conflict, dislocation competition, with unique value of products to open up new markets; At the same time, to launch the best-selling products, we must grasp the opportunity to find the trigger point- – Opportunities often occur at economic turning points, in times of rapid social change, and in a relatively stable market where opportunities are difficult to find.

A product concept that impresses people

Product concept best can be summed up in a sentence, that is, in 30 seconds will be the value of the product positioning to say clearly, people heard after the resonance, causing excitement. With a complete product creative thinking, we must go out with customers to communicate ideas, listen to the feedback of the creative customers in order to grasp the attitude and reaction of customers. The best way to make the target customer understand the value and function of the product is to make a sample, which can be an electronic version of the simulation sample (through the computer to demonstrate the slide), or it can be a real sample. In short, to make customers see, touch, which is much better than words or verbal instructions.

The result of the concept test is easy to guide the market personnel to summarize and refine the product's value appeal. Here is a description of fab analysis: F (Features) refers to the characteristics of this product, mainly the inherent characteristics of the product itself; A (advantages) is to say that this product is better than similar products where, what is the advantage, emphasizing the difference, is a relatively comparative advantage of the concept; B (benefits) is to say that this product to target customers what benefits and value, focusing on the customer's "buy" and consumer motives. Fab refined out, the product's value appeal came out, the customer purchase reason is also full.

Different levels of consumers in the selection of products focused on different points, any product is difficult in terms of price, practical value and face three aspects at the same time to achieve breakthroughs. According to the level of the target customer base, the enterprise should determine which aspect of its products must surpass the competitor, so as to give the customer a reason to choose you.

Product definition

The concept of a complete product needs to be considered at the product definition stage. The complete product consists of three levels: the innermost layer is the core, including performance, index, function, quality and so on, is the key factor that the product plays a role; the second layer is the outer layer, mainly value-added services, the purpose is to let customers better play the effectiveness of the core products, such as pre-sales/after-sales service, telephone consulting services; The third layer is the epitaxial layer, mainly customer experience and feeling. Small and medium enterprises are best to attract customers by the differentiation of peripheral products and epitaxial products. After the product definition is completed, the second version of the sample will be made, followed by the Focusgroup test, one of the important test parameters is "wow" effect, that is, when the customer first saw the product, how many people were surprised.

One of the most important tasks in product definition is pricing, because the product is positioned behind the pricing. The pricing method can be divided into four kinds of high quality price, high quality same price, homogeneous low price, low quality and low price, and the enterprise should choose the appropriate pricing method according to its own customer level. Products come out through what channels to market, but also in the product definition phase must be completed a work, that is, clearly from the manufacturer to the customer need to pass through which intermediate links. It is best to express it in the form of a diagram, which is a concise and clear view of the relationship between the various channels.

In order to improve the efficiency and success rate of sales, to leave a good impression on the target customers, enterprises should first do the market, and then do sales, that is, first design a good product of the unified rhetoric, clear the value of products positioning, to the sales staff ready "guns and ammunition." Where does the unified rhetoric come from? It is based on fab analysis completed in the product concept and definition phase.

Financial Analysis

With a good product, we also need to make a sophisticated sales plan, according to different sales channels, different geographical division. After the sales target is decomposed into people, it requires each salesperson to develop a sales plan. In addition, also consider the sales and channel personnel training, teach them how to sell, communicate with customers, and even how to "sell ideas", the goal is to improve the success rate of sales staff, and then improve morale.

Next, enterprises should be based on sales indicators to determine the next year's resource allocation plan, the implementation of human, financial and material resources. Higher indicators of the department supporting more resources, the contrary is less, the management of the use of interest-driven approach to motivate employees is a very effective way. The fixed cost of people, money and things to implement, the rest is the operating costs and other variable costs. With sales targets, fixed costs and variable cost budgets, a year of financial analysis came out, measuring the level of enterprise management operating profit can be calculated, all parameters can be quantified.

For risk investors, in the audit of an entrepreneurial project, the most concern is how to achieve a doubling of sales, that is, whether there is a doubling of the product, business model. For new projects that want to get venture capital, the multiplier mechanism for product and business models must be clearly articulated.

Organizational security

Only good products, business models and financial analysis is not enough, the organization of the enterprise design should also be reasonable, which is to achieve the organization of corporate goals and security. For entrepreneurial projects, must be clear about the sponsors and core team members of the advantages, so that investors feel at ease. In addition, companies want to show investors how the future organizational structure is designed, it is best to use a picture to describe, at the same time, the ownership structure to show investors.

For risk investors, how to exit is a priority, and they need a mechanism to get the benefits, rather than holding shares as long-term shareholders. Entrepreneurs who want to develop by attracting venture capital must be prepared to do so: The company is bigger than it is, or it is listed as a public company or acquired by other companies. Of course, in order to prevent investors, promoters or other start-up shareholders premature withdrawal, you can agree to the timetable and basic principles of investor withdrawal beforehand.

Following these six steps, companies are likely to design a business model that offers unique value, is difficult to replicate, and is down-to-earth. It is hoped that small and medium-sized enterprises can build their own business model in the exploration and practice, and make rapid and continuous development in the competition.