The business model (BM) or the economic model translates the value creation mechanism for the new company, which can be expressed as follows: : “How do you generate revenue and profitability from this idea and with the intended funds? » It is the central part of the business plan, which proves that the project is viable and can go from the state of a project to the state of a company.
Explain how the new business will bring value to all stakeholders (creator, partners or shareholders, employees, business angels, bankers) to succeed. Its proposal must be clear: the economic model must be based on a decisive, sustainable and just competitive advantage. In general, ideas rated “simple” a posteriori are the best! The initial economic model must be designed to evolve over time and expand the offering to reach new customers.
The business plan is based on the business model. The promise of the offer must present one or two convincing arguments, the famous competitive advantages: price, deadline, quality level, after-sales service, amplitude of opening a business to customers and level of profitability, capital gain on capital withdrawal for an investor. A new company that would propose offering too many benefits at the same time would not be credible!
How to use this handy sheet ?
* Compare the results documentary studies with the field study to find convergence points.
* Determine final positioning of the company compared to competing offers, which highlights competitive advantages.
* Imagine ways to generate income for the first year and the following years (the economic model).
* Write BM: the definition must be short, precise and competitive. It will also allow for communication around the project. Thus, the BM (or its summary) will be found in the Executive Summary.
Method and advice
* Write the BM with the customers in mind, ie. “what is it for” and not “how it works”, which should not be disclosed at this time.
* Give customers significant value (the
* Using a chart can help clarify BM.
* Internet and new technologies influence new BMs, allowing to offer highly targeted offers (onetoone), to reach micro niches around the world, to choose new pricing methods (in use) and new financial models (cost pooling).
* Expose BM to the exercise ofelevator space. Even if you are not looking for a partner, this exercise is excellent. It requires brevity and avoids getting lost in technical or anecdotal meanders.
How to become more efficient?
Three main principles for defining BM:
► Focus your promise on what you know how to do best and which represents real value to the customer
Zara rests on one fast fashion business model. The company offers a large number of collections, therefore a renewal of frequent items, a proximity between place of production and marketing, which allows reactivity: 15 days is enough to design a collection, manufacture it and put it on the shelves.
Ikea and value chain control. Cost control is at every level of the chain: In-house design, centralized procurement from 2,000 suppliers and customer involvement to reduce costs (selection, transportation, assembly of furniture).
The result is clear: in France, prices are 20% to 30% lower than those of competitors, and the company achieves twice as much turnover per capita. square meters with an often higher margin; and has been for 20 years.
► Focus its promise on a goal with highly identified customers. Niche markets offer great opportunities in times of crisis
1. comparator in service of “malussés”, drivers with multiple claims on their credit. The message is clear!
Private or corporate concierge services allow employees of these companies to consider time to concentrate on their duties. Customer companies outsource certain requests (renewal of administrative paperwork, reservations, car wash, etc.) to these specialized companies.
Mother & Babe
This concept allows mothers and their child to go to a hair and beauty salon while relaxing. Their child is being cared for at attractive prices during this time. The idea for this designer came when she saw her loved ones being overwhelmed by small children and unable to take care of them.
Yariv Abehsera created Travelfactory in 1999 to offer stays and weekends tailored specifically for students under the Golden Voyage brand. In 2002, he set up Golden Events, an operational marketing agency specializing in the student goal. In 2005, he launched the Internet portal Travelski. In 2010, the group is a specialist and leader in online travel and the organization of group stays.
► Focus its promise on a high use value in the eyes of customers
Iphone from Apple promises to make life simpler and more cheerful thanks to its many uses. In return, the consumer is ready to pay the price accordingly.
Branded by frozen products picard has a strong image with the public because, in addition to its value for money, it allows you to improvise dinners without spending hours cooking.
Example of low cost BM
Low cost is a concept based on standardization and simplification of production and marketing processes for products and services. That way, it makes it possible to sell at a low price.
Features of low cost business model:
– standardization of the offer (reduced reach);
Limited services (only the basic service, the others are paid);
– simplified distribution (direct sales, internet);
– staff flexibility, most often multidisciplinary;
– very strict management control (cost hunting).
The most notable examples are Ryanair, EasyJet and Hotel Formula 1. ■
■ Clarify its business to focus its activity on its “core business” (core business) and delegate the rest.
■ Communicate about your project in strategic terms.
■ Receives agreement and support from partners.
Precautions to take
■ Do not use technical or overly specialized jargon, use simple words.