I have had number of business ideas in my career, and I have heard and seen many more from others in my life. If you spend a month in an IT incubator or a week at a Startup event, you will witness tens of ideas which some may make you excited, some other may not interest you and some may even delight you!
I will go further… don’t need to go anywhere! Google something like this: small profitable business ideas
And it’s a fact, whatever is in great supply, worth less and whatever is scarce and limited in supply, attracts more attention and value; So how much an Idea worth?
Ideas are worth nothing
Yes! That’s right. Idea itself doesn’t worth anything. I am not even a fan of execution value! What worth and brings value to an idea is Business Model
What is Business Model?
Simple: How you are going to monetize your idea, is your business model.
A business model includes 9 segments, which I put them in below order, from the most important to the least. And I really believe the first two will fulfil 60% of the total value, the third one is 15% and the rest are 25%:
- Value Proposition (what Value you add to your clients’ life?)
- Customer Segments (who are your customers?)
- Revenue Streams (where the money comes from?)
- Partners
- activities
- Costs
- Resources
- Customer relationship
- Channels
Business Model Canvas
Let’s have an example:
There was a small group of university graduates, in Electrical engineering, software and hardware engineering, from university of Tehran and Sharif. They started a very simple RFID project to:
- Serve a client who has a lot of users, needed to be identified physically
- Need to collect their information
The idea was simple. The solution was selected among different technologies like NFC, magnetic stripe cards etc. and it was meant to be monetized through value added services to clients, from the analysis on the collected information from them.
I was the company’s CEO’s “Market development Advisor” and we had tremendous problems. We thought though the idea may be good, we lack in a good business model. So we changed our focus from offering our service to clients who have clients, to clients who want big number of clients!
Complicated? No!
We could serve a client who needed the service for free (like a cinema complex) and sell the Consumer Base to someone who was interested in Personal Identities (like a bank).
It means we changed our Value Proposition from being a technology provider, to a consumer base provider;
We changed our customer segment from organization who have a lot of clients, to corporate who like consumer bases;
We changed our revenue streams from collecting pennies out of each transaction to selling the whole platform to someone who is interested in the CB.
This case was a very clear example of PIVOTING which is worth to talk about in a separate post, but the change in business model was very important, which made the value of the company from a bankruptcy with 500.000 USD debt, in to a company worth 1.5 Million USD and sold to a private bank; everybody was happy!
The point is, the idea was simple, frequent and not unique; and yet not working! how we managed to solve the problem, was by looking through the Business Model glass.
you have to ask yourself:
- How this business can make money?
- How can I monetize my idea?
In the first Business Model:
Why the client should choose us? would bring us a competition challenge
In the 2nd BM:
Why the cinema would choose us? because we were free!
Why the Bank would choose us? because Banks like to put their names and chips on a card many already hold! (to make it a payment card)
Please feel free to drop me a line, share your thoughts and experiences and let me learn from you.
We often use the BMC in our intervention work with #entrepreneurs to develop #innovation capacity. It's a great tool to organize your thoughts -- simple to use, easy to understand. More importantly, it's designed to encourage iteration and experimentation (hence "canvas"). You can try/test out different models/ hypothesis. One of the important things we stress when engaging with this tool is that BMC, alone, doesn't make you an entrepreneur. In fact, all the tools in the world won't make you successful if the #mindset does not support or allow it. I wrote about this in one of my blogs (side note: would love your feedback!). The real value of BMC is what you do with it. Do you test your model to validate or to learn something new?
thanks my friend
i will consider it as an option 👍
Hi, Emad. I'm new on the platform and I got to your blog by an other post but by looking at it I found this entry and really hit on the spot.
Right now I'm starting my first company, it's a fashion trademark focused on organic eyewear products (you can follow us on instragam as: @monz.ve) and reading your article made me wonder something.
How can I define a business model without even trying to build it first? We have started on my country (Venezuela) with the vision of building our brand bases here because right now as a country we are having a really rough time and the thing we are selling is actually inspiration to our own people, making then see that we can build whatever we want and that the government can't stop our will, but, right now we want to go off shore and get to the international market. How can I build a business model on something that I actually don't now nothing about it? (other than what you find on google).
Either way, great post and blog!
hi Jose
nice to have you here on Steemit
a business model should form in your mind, exactly as you are thinking about the idea! it cannot be postponed to execution of the idea
you can pivot as many times as you need or like later, but you cannot start developing something before you have a clear BM
I believe you shouldn't be worried about the terms. your entrepreneurial mindset and mentality works automatically and you have a BM already. but you should once or many other times see it, review it, modify it and improve it.
good luck with your fashion business. keep your blog posted with your job :)
Thanks, Emad! I totally understand what you're saying. I'll begin posting soon about what it is to develop a business on a third world country, stay tunned to see how it goes! Thanks a lot!