Over 1000 businesses start-up every day, all starting from the same point, but their long term success is determined by their ability to evolve their business and stay ahead of their competitors, and a successful business model can be a key tool in driving that. This article will illustrate how a smart business model can help differentiate your business from your competitors and the positive impact it can have.
So what is a business model? In simple words a business model is a company’s plan for making a profit. It identifies the products or services the business will sell, the target market it has identified, and the expenses it anticipates.
Creating a smart business model takes time and resources, and therefore is not something that happens overnight. Simply having a good idea for a new product or service is not enough if you cannot answer some key questions about how to take it forward. A properly planned business model helps you figure out elements such as, your business concept – what problem are you solving and for whom; how you will create customer value; how your product or service will get to customers and how you can stay competitive in the market.
One of the keys to a successful business model is allowing it to evolve and leaving space for innovation. Successful companies are constantly trying to adapt their business models to ensure that they stay competitive and differentiate themselves from other businesses. For example, Amazon started in 1994 as a simple bookstore but today it is the market leader for e-commerce technology. Due to the culture instilled by the CEO, Jeff Bezos, Amazon have been focused on growth and expansion over short term profitability. The latest example of innovation in their business model is the launch of Amazon Go, a new kind of store with no checkout required. They have also recently entered the football streaming market. These are just some examples of how Amazon have adapted and diversified their business model by introducing new innovative ideas.
Large corporations spend millions of pounds trying to improve their business through research and development where as small companies don’t have the capital to do this. However, there are several other ways for small and medium size companies can improve their business models to stay competitive in the market.
How to improve your business model:
Compare – what are your competitors doing that is different to you? Sometimes your competitor will have tried something but not perfected it and this is where you as a business can take advantage and take it to the next level. For example, suppose you own a convenience store and you visit a competitors store, visualise and take note what they are doing that is different from you.
Up your technological investment – you don’t need to spend thousands of pounds to become more technical even as something as simple as introducing new payment methods such as contactless or apple pay can improve your business and make you look more appealing to customers.
Connect with your customers – have an online presence and be up to date with social media. A lot of advertising is done on social media and it is mainly how customers stay up to date with businesses, it is a great platform to introduce customers to new products or deals the business are promoting.
Leave space for growth – a solid business model that incorporates the future into its plan will be successful in meetings its demand now and in the future.
The benefits of improving your business model:
- Competitor advantage;
- Improves financial stability;
- Enables the company to grow;
- Opens the option to enter new markets/services provided.
There are several government grants available for small companies to help invest in their businesses helping them diverse their portfolio. For example, Innovate UK is part of UK Research and Innovation, a non-departmental public body funded by a grant-in-aid from the UK government. It provides funding to support R&D and innovation activity to organisations across the UK. Innovate UK also offers a Knowledge Transfer Network to provide business owners with markets and finance to improve their companies.
The scheme supports research, development and demonstration projects through four broad sector-based programmes:
- Emerging and Enabling Technologies
- Health and Life Sciences
- Infrastructure Systems
- Manufacturing and Materials