The Element of a Winning Business Model


Building a sound business model requires the determination of specific elements which are considered the building blocks the business model structure.


Determining Drivers


The first element is the determination of   the business drivers.

In order to understand this core element, new business start-ups should ask themselves a couple of simple yet substantial questions.

What are the real motives behind the business?

And what is the business main mission?

Answering these questions properly will help the company to set the appropriate path and trajectories based on the direction and goals the business chooses to pursue.


Business Identity


The second element is determining the business identity.

Many people may use the two terms business drivers and business identity interchangeably, but in fact they don’t refer to the same thing.

Business identity is a very fundamental element of setting the company values goals, and characteristics.

To determine the business identity means to determine the way in which the company wants to be perceived by customers, where the business come from, and business ultimate message.

Identifying Target Customers

The third element is customers; in this area also some questions needed to be answered.

For example, the management must identify the customers this business is established for. Therefore, the management needs to identify the core customer segments in the market, the company’s target market, and the company’s focused customer groups.


In the light of that it is utterly essential the importance of understanding customers, because any business enterprise exists in the market do one of the following: produce a product or provide a service.

Thus, in order to satisfy customer needs you must understand these needs and on the top of that you must know the characteristics of today’s customers.

Today’s customers are very knowledgeable, demanding, sophisticated and price sensitive.

Therefore, the businesses who are not ready to adapt their business style and practices in attempt to meet customer demands will not survive in today’s extremely competitive business environment.


Marketing Research

In order to efficiently identify its target customers, the business needs to invest proper amount of time and financial resources on marketing research.

Marketing research can be defined as a group of activities which are developed to pinpoint customer needs.

Marketing research involves collecting and analyzing detailed data and information about the market and the customers.


One of the earliest tasks of new business company is to define the instrumental aspects of its activities as to specify what the business needs in term of various types of resources in order to efficiently perform its business functions.

Furthermore, adequate financial planning is a must for a sound functional business model.

Financial planning means the forecast of financial requirements and finding the source of finance that the business will use.

Adequate financial planning involves the forecast of anticipated cash flows, costs and revenue streams.

It also involves the determination of when the business could reach breakeven and when it starts to make profit.

Customer Value

One of the radical elements of a strong business model is customer value assumptions; providing a superior customer value is the one thing that sets a business apart from the competition.

Customer value can be defined as the combination of the company’s product quality, service quality, price, innovation and image.

Combined, these elements form what is known as customer perceived value.

Therefore, in order to reach maximum customer satisfaction and enhance customer value the management needs to ensure the highest standards in each of the mentioned aspects.

The prime objective of learning about customers’ needs is to gain a competitive advantage which is a key element in setting your business apart for your competitors.


Analyzing Competition


The management needs to define competition; the management must precisely identify its major competitors, their competitive advantage, and their market share.

A focal point in this area is identifying the brand loyalty; which means to identify customer’s commitment to specific brand or product.

The business also needs to establish the networks or the channels by which it supposed to reach and connect with both suppliers and customers.

To accomplish that the business must build its distribution strategy, build its distribution channels and determine the role of marketing intermediaries.


Building a strong sound business model has many significant outcomes that can be concluded as follow:

The primary objective of building the business model is to map out the core strategy of the business.

To do that, the management is required to develop clear vision or attainable view of what it can accomplish in both short run and long run.

After developing the vision the company needs to transform this vision into a written mission statement, action strategies, tactical plans, and operational plans.

It also outlines product scope, potential market share, the marketing mix, competitive positioning, and superior customer value proposition.

A comprehensive and well planned business model could turn up to be a major source of assurance for the stakeholders and various sources of finance because it verily reflects professionalism and management competency, and this consequently will allow the management to gain the trust of interested parties.

The business model could be the perfect tool to predict some of the issues that might rise and figure out how to solve them.

Moreover, the business model embodies a formal structure and a set of procedures that provide the basis to communicate the business plan, structure and policies to different parties.

The business model is the cornerstone of the business organization’s executional and operational plans because it provides the structure and the basis used to establish objectives and goals and develop plans to achieve them.



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