Changing your company’s business model to create more value and ensure its sustainability has become a necessity, especially for the companies hardest hit by the crisis.
In the catering sector, for example, we see the appearance of what are called dark kitchens, these restaurants without premises, exclusively dedicated to home delivery.
The Certified Public Accountant has a real role to play in supporting his client, whether it is a project to create a business or to improve the value offered.
The business model, or economic model in French, should not be confused with the business plan. It is a tool that describes the company’s process of creating value for itself as well as for its customers..
The main purpose of a business model is to present the financial viability of an entrepreneurial project in a clear and fast way.
To build it, you must first and foremost listen to the needs of your customers and thus avoid the main cause of failure for entrepreneurs: a product or service that does not live up to customer expectations.
For an existing business, changing business model sometimes involves anticipating changes in its environment. Companies must therefore be more reactive in order to be able to better adapt to variations in activity and to ever faster and sometimes uncertain development.
How to create an effective business model?
Choosing a business model requires reflection and diagnosis. To complete this step and prepare your project while defining your company’s strategy, it’s important to answer the following few questions about your business model:
- What is the goal? Who is the product for? Who are the potential customers? ;
- what is the offer? (the products, services to be sold);
- what is the value of the project? (to stand out from the competition and gain a competitive advantage);
- what will be the company’s position in its market? ;
- how to reach, acquire and retain the customer? ;
- how to generate income? ;
- what pricing strategy? Will the activity be profitable? What will be the profit margin? What will be the cost structure? ;
- how to reach, acquire and retain the customer?
To answer these questions, it will sometimes be necessary to conduct market research.
In any case, a business model can always (and even should) be refined over time (testing what works and what does not). The ideal is to arrive at a business model that offers an adequate and above all interesting level of income.
For inspiration, several examples of business model are available for the company, we quote the most famous of them:
- freemium : the company offers a free limited service and additional paid services (premium);
- subscription : the company offers its services in return for a periodic subscription;
- peer-to-peer : the company receives a brokerage commission between customer and supplier;
- the auction : the product is sold at auction the one that offers the best buy offer;
- membership : because of its reputation, the company offers another company to sell its products or services through its website for a commission of the turnover obtained;
- the printer model : this business model consists of selling a product at a loss or with a very low margin and then offering accessories at a higher price;
- home sales : one of the forms of direct sales consists in a company selling its product after a direct demonstration (at home) to one or more potential buyers;
- the low cost : it’s about offering products or services at very attractive prices to attract more customers. Products and services sold based on this model are more simplified and focus on the essentials (few accessories, few options). The customer who wants to take advantage of an extra service or option has to pay more to get it.
Presentation of the business model canvas
The business model canvas invented and modeled by the Swiss Alexander Osterwalder, is a tool that makes it possible to present and formalize the company’s business model in a very simple way.. It is perfectly suited for the business start-up phase or the launch of a new product or service. This graphical tool divides the company’s business model into 9 sections:
- the value proposition : where the company should present the added value of its products or services, in particular what they allow to bring to the customer (example: delivery speed, sales price, service quality, customer experience and its satisfaction, etc.) and how it differs from the competitors;
- customer segmentation : this implies an explanation of the customer segments that a product or service is targeted at (example: the budget of young managers between 22 and 30 years in a geographical area, etc.);
- distribution channels : this involves explaining how the product or service will be sold and through which distribution channel (directly: for example on the Internet or in a physical store, or indirectly through retailers, etc.);
- customer relationship : it is a matter of presenting the means of communication that the company will use to reach its potential customers or retain its current customers (advertising, blog, telephone collection, after-sales service, possible returns, etc.);
- sources of income : the essential element of the business model is to show how the company intends to make money and what its pricing policy will be (subscription, direct sales, package, rent, affiliation, etc.), how many customers the company should have, it is customary to give a positive result, etc.? ;
- key resources : these are the necessary resources that a company must implement to launch and succeed in its project, they can be classified as human resources including staff and management team, intellectual resources such as knowledge, brands and patents, financial resources such as cash contributions, material resources such as equipment etc. ;
- key partners : it is a matter of a list of the various partners in the company that will help it promote its products or services or supplement its offerings (prescribers, commercial partners, suppliers, subcontractors, sponsors, financial partners, etc.) as well as their costs ;
- main activities : these are the activities that are necessary in the company for the company’s business model to work, for example IT development and marketing development, after-sales service, the supply chain, etc. ;
- cost structure : this involves the presentation of the various costs that the company bears (fixed and variable costs, direct costs, indirect costs) for its proper functioning.