Six Steps to Building a Successful Business Model

Frissora-Six Steps November 2, 2021 By: Mark Frissora

A business model is a blueprint for success. Knowing who your target audience is, what they want, and what your value proposition is are essential. Here are six tips to turn a business model into reality.

Now more than ever, leaders are looking for ways to succeed and they’re looking at business models for guidance. However, many leaders mistakenly believe business models are meant to serve as a one-size-fits-all template. Based on my professional experience, I know that a business model is nothing more than a fancier way of saying “business strategy.”

There are hundreds of different business model approaches and strategies. A successful business model will often include a detailed description of the audiences you are targeting; what goods, services, or products you are offering; and the cost of production of those goods and services.

The following factors are important to consider when developing an appropriate business model and strategy.

Focus on the Consumer (or Member) Base

Before committing to any business model, it is critical for leaders to evaluate their target audience. The overall goal is to spawn innovation within an organization by adding value to the consumer experience while boosting or changing the consumer’s purchasing patterns.

To better understand a consumer (or member) base or a target audience, leaders must decide who their target audience is—and then separate those individuals based on demographic, geographic, or psychographic characteristics and purchasing behaviors. Next, business leaders must ask themselves what this audience needs, and how their product or service will solve this problem.

For instance, a company may recognize a specific audience that they can target with a sub-company dedicated specifically to that demographic. For example, there was a rising trend among millennials and Gen Z members who were showing interest in food-delivery services. Companies that noticed this assessed problems that prevented consumers from selecting dine-in options over delivery and to-go options. Companies that were already in the ride-sharing space combined their ride-share ideas with the ability to allow consumers to place mobile pickup or delivery orders from their favorite local restaurants.

A value proposition tells your stakeholders why they should do business with your organization, instead of going to your competitors.

Develop a Foundation in Company Culture

Regardless of how big or small an association is, showing employees that upper management cares about their employees is key to creating a great organizational culture. Taking the time to stop in various locations to speak with managers and employees of all levels makes them feel heard and supported.

Take note of the association’s needs and get a feel for the current culture. If there is a lack of communication, then make that an area to improve by increasing reviews and include time to talk about employees’ concerns in their role, or what they believe could use improvement.

When employees see high-level executives taking the time to develop the association across all aspects, it inspires a better organizational culture and encourages employees to work together to overcome challenges. Addressing the culture generates a feeling of togetherness and cultivates a strong organizational foundation.

Conduct Market Research

If your target consumer or member base seems interested in buying your potential product or service, your next move should be to study the competitors within the marketplace. Take note of your competitors’ past implementation of strategies and tactics they have used to remain competitive and relevant. Next, brainstorm different strategies your organization could execute to compete against, or even outperform, the competitor.

Determine Value Proposition

A value proposition tells your stakeholders why they should do business with your organization, instead of going to your competitors, and clearly highlights the benefits of your product or service compared to other groups.

It is important for value propositions to be flexible and allow for future innovations. For example, search engines initially aimed to create value for their customers by creating a free space for the public to research topics using coded information placed in software to make the endless stream of data and information found on the internet more accessible.

Two decades later, these same search engine companies have made endless innovations and improvements to their value proposition by adding advertising, marketing, business tools, operating systems, internet browsers, and technological gadgets.

It’s critical for leaders to decide whether or not their business model will focus entirely on creating more revenue from its organization’s value proposition, and whether or not the products, ideas, or services will benefit consumers in the long run.

Approach Expenses and Costs Realistically

Expenses are usually related to costs, which can be monetary or nonmonetary depending on a business strategy. Popular subscription services are an expensive offering, but these companies also recognized that younger people who did not have disposable income were still attracted to the services they were offering.

That allowed the subscription companies to offer members the option to pay for membership in smaller, monthly installments. Moreover, they also provide certain eligible members with discounted memberships and services to make their company’s various services available to multiple consumer bases.

Maintain a Relationship With Consumer Base

Any business, regardless of its size or purpose, relies on the satisfaction of its customers, stakeholders, and members. That means it’s essential to keep conducting market research to better understand future growth opportunities, such as maintaining retention rates, positive experiences, and new acquisition strategies.

While approaching members with transparency and empathy may help improve these relationships, it is also crucial to implement post-sale tactics such as membership rewards, discounts, and perks—or exclusive benefits to keep them satisfied, or to recruit future members.

Overall, a business model serves many different purposes depending on an organizations’ size, purpose, and niche. Ensuring that your association has an accurate and up-to-date business model will create the maximum potential for long-term, tangible success. 

Mark Frissora

Mark Frissora is a Fortune 500 business executive with more than 40 years of experience in senior corporate leadership for both public and private companies with a global footprint.