Business Model: Get to know the Business Model and Business Model Framework
For those of you who want to create a new business, you should know the business model first. The business model will help identify a product, target market, and the required budget.
Definition and Benefits of Business Models
Business model is the main strategy of a company to get profit. A good business model will certainly bring big profits to a business. This is because apart from being liked by customers, there is a possibility that investors will be interested in providing funding. A business model can make your business superior to competitors, especially if the business model you apply seems unique. A good business model will automatically attract the attention of investors to provide funding for the business. Through a business model, a company can certainly make the right budget regarding the production process, the number of workers needed, ect.
Business Models Form
Business to Business (B2B) is a business model that occurs between business people and other business people. One example of B2B is advertising services. Companies that have a large scale must have big targets too. So, they need commercial advertising services to be able to reach consumers widely.
Business to Customer (B2C) is a business model between business people and consumers directly. An example of B2C is Bhinneka.com which is a fairly large online store in Indonesia, which provides various products related to electronic equipment, laptops, computers, hardware, software and so on. Which they have to try to be able to reach their consumers directly, either from their direct outlets or using the digital platforms they already need.
Customer to Customer (C2C) is a business model where sellers in an e-commerce sell products to buyers who use the same e-commerce. Examples of this business are very familiar, such as Bukalapak, Blibli, Shopee, and other marketplaces.
Customer to Business (C2B) is a business model in which consumers sell their products and services to companies. An example of a business like this is social media influencers who offer their services to companies to be able to take advertisement slots on the influencer’s platform.
Business Model framework
After we discuss the form of the Business Model, namely B2B, B2C, C2B, and C2C. Well, from the four Business Models, we will then discuss how the Business Model framework is.
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In creating a Business Model we can use several frameworks, such as the Business Model Canvas and Lean Canvas. Both of these business models have the same function to describe business strategies that can provide big profits in a simple way.
1. Business Model Canvas (BMC)
The Business Model Canvas is the most frequently used business model because it ties together all aspects of a business from production, distribution, to the hands of consumers.
The components of the Business Model Canvas include customer segments, customer relationships, channels, value propositions, and key activities. Key resources, ley partners, revenue streams, and cost structure.
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- Customer Segment is the target group that we will or are aiming to become our customers.
- Customer Relationship is a way that we can use to communicate with customer segments.
- Channel is our way to reach customer.
- Value Proposition is the value or value that we offer to customers.
- Key activities are to generate the value proposition offered.
- Key resources are important things that we must have so that key activities can be carried out and the value proposition can be given to customers.
- Key partners are parties we can collaborate.
- Revenue streams are various ways to make a profit from the value proposition.
- Cost structure is a breakdown of the largest costs that we have to spend to carry out key activities and produce a value proposition.
2. Lean Canvas
Lean canvas is a business plan template that can help break down ideas to make them easier to read and understand. The lean canvas method was developed by Ash Maurya which was adapted from the business model canvas (BMC) made by Alexander Osterwalder.
Each component in the lean canvas represents the main aspects required by the business, such as:
- Customer Segment, this component talks about what kind of segment to target. In searching for components, companies must conduct a demographic analysis of consumers, including trends in consumer behavior.
- Problem, this box must be filled with the three biggest problems faced by the business that must be resolved immediately. Product failure often occurs because businesses fail to apply effort, time, and resources. Some examples of problems that can be entered in this column can be seen in the image above.
- Solution, based on the details of the problems that have been identified, then more solutions can be found. The best way to find a solution is to ask the consumer directly. It’s true that there’s no 100% solution, but lean canvas can at least help get closer to that lift.
- Unique Value Proposition, this column is located in the center of the canvas because it forms the meeting point of what will be offered and what consumers are asking for. This value must reflect what the business has so it is necessary to think about what makes the product different from competitors who both aim to solve the same problem.
- Channels, what kind of way the company takes in marketing its products will be seen from which channels will be taken. In other words, the channel in question can be a company media to reach its customers.
- Revenue Stream, how will the product or service be priced? What factors must be considered when wanting to make a price tag? Price is an important part of the overall product offered, and its determination must be based on research and trials.
- Cost Structure, is the budget needed so that the business is able to run well in the market. The costs in question include all expenses needed for research, staff salaries, purchasing inventory tools, and so on.
- Key Activity, to find out whether the business is running as planned, there must be some kind of indicator or parameter as a measure of success. Parameters are usually in the form of activities aimed at helping business development, including monitoring progress.
- Unfair Advantage, this component talks about advantages that competitors don’t have. By having these advantages, the company is expected to be able to maximize opportunities to boost business popularity.
