Business Model
Business model describes the factors of how an organization creates,
delivers, and captures value in economic, social, cultural or other contexts.
The development of business model construction and variation is also
called business model innovation and forms part of a business plan.
It is a company's plan on how it will make revenues and make a profit.
It describes what products or services the business plans to manufacture
and market, and how it plans to do so, as well as what expenses it will
incur.
There are important phases in developing your business model,
namely: identifying the specific audience; establishing business process;
recording business resources; developing strong value proposition;
determining key business partners; and creating demand for today’s
generation strategy and being open for innovations.
After developing a business model, we will proceed in developing a
business plan. To be able to successfully complete this module, you need
to prepare a business plan and operate your plan and finally keep records
of your business transactions.
Business Plan
What is a Business Plan For?
Entrepreneurs who plan to enter any business endeavor must have a
business plan on hand to guide them throughout the process. Different
business plans are prepared for different purposes. There are business
plans written prior to setting up an enterprise, which are similar to a
prefeasibility study and a feasibility study. Many new enterprises need to
convince prospective business investors about the soundness and
potential of their business.
There are business plans that are written during the first few years of the
enterprise in order to guide the entrepreneur on which strategies would be
most beneficial for the enterprise to take. And there are business plans
that are focused on bringing the enterprise to a higher level of growth, a period
where the enterprise has already reached its peak and would want to enter into another
endeavor by creating and re-establishing itself.
Clearly, a business plan serves many masters. First, it serves the entrepreneur who must
set a navigational course. Second, it serves investors and cautious financiers. And third,
it serves the managers and staff of the organization so that they will know the strategies
and programs of the enterprise.
Read the different scenarios below to fully understand the importance of having
a business plan.
Scenario 1:
“Jessie is the eldest of the five children of Mr. & Mrs. Natividad. The family is
having difficulty to support their everyday needs. Because of this, Jessie tried selling
banana cue and with his dream to make his business grow, he put up many stalls in the
community without considering the advises of his friends to make a business plan before
implementing his decision. After a few months his stalls shutdown.” Scenario 2:
“Mercy is the youngest in the family. She found out that she loves to cut hair and apply
make up on her friends. Until such time that her friends introduced her to their friends
too for haircut and make up when there are occasions. A few months after, Mercy was
told by her friends to put up a beauty parlor in their place. So she asks her mother who is
also a businesswoman to teach her how to make a business plan and eventually ended
with a successful business.”
Scenario 3:
“Monna is a diligent student: because of her knowledge gained from school
about business plan she was able to enhance her skills in business and finally found
herself into her laundry shop business.”
Each scenario taught us that a business is not just about how much income or
profit you can get, but it’s about the life of your business. And in having a business, you
also have to consider Technological forces, Social forces, Political forces, Cultural forces,
Economic forces and Legal forces.
The following are the components found in a Business Plan.
• Introduction - this part discusses what is the business plan all about.
• Executive Summary - is part of the business plan which is the first to be
presented but the last to be made.
• Management Section - shows how you will manage your business and the
people you need to help you in your operations.
• Marketing Section - shows the design of your product/service; pricing, where
you will sell and how you will introduce your product/service to your market.
• Financial Section - shows the money needed for the business, how much you
will take in and how much you will pay out.
• Production Section - shows the area, equipment and materials needed for the
business.
• Competitive Analysis - is the strategy where you identify major competitors and
research their products, sales and marketing strategies.
• Market – refers to the persons who will buy the product or services
• Organizational chart - is the diagram showing graphically the relation of one
official to another, or others of a company.
