Entrepreneurs come up with ideas for products and services every day. Whether the ideas are good or not, many of them never see the light of day. Why? That’s because the person with the idea does not have a competent model to show that the product or service will be successful and in how the company functions. A business model is an important element in creating a successful company, small or large.
A model is not the same thing as a plan. The model is actually one of the first things you need to complete before a comprehensive company plan can be created. The model is essential a blueprint of how the company will work in order to be successful. The model will include the overall concept of the company—what problem you are solving and how you plan to solve that problem with an original service or product for consumers. The model also includes the choices you will need to make when it comes to creating value for the customer, how the product or service will be delivered to customers and how the company will be able to stay competitive, particularly in an industry where the consumer need may already be met by an existing product or service.
Creating The Model
A brainstorming session about your company idea is the first step in getting together a comprehensive model. These ideas may include locations for the store, pricing for products and what type of customers your expect to draw into your store. These are all good places to start, but research is the key to a great model. Take the information you have compiled and put it to work. If you want to know if your price is too high or low, check the current market for similar products to see how well those are selling. When picking a location, make sure to survey a variety of storefronts in different parts of town to gauge consumer interest. Research different demographics to see what specific type of customer you will attract, and how you can best advertise to them.
Proper research on all aspects of your new company will help you avoid costly overestimates. It will also help you avoid underestimating the need for your product or service in the market. If the customers are not there to buy, the company will not succeed.
Know the Potential Setbacks
Creating a company is more than just putting a product together and putting it on the market. Things go wrong on occasion, and you company needs to be ready for whatever may come. A good model will include the solutions for some of the most common problems in your company, such as how product distribution will work, how you will handle patents on product development or how the company will handle consumer dissatisfaction.
Knowing what it takes to run a company and how that can be implemented will all be included in your business model to prove to investors you can succeed.
This guest post was provided on behalf of Town of Ajax, offering business resources and economic development service team to help business thrive in Ontario’s fastest growing region in Ajax. Visit http://www.ajaxfirstforbusiness.ca/en/ajax/welcometoajax.asp for more information.