A business model tells the story of your company. It is a snapshot of:
- Who your customers are;
- Why you are in business;
- How you reach and relate to your customers;
- How you make money;
- The things you do to make sure that you are achieving your reason for being in business;
- Who your strategic partners are;
- The resources that you need to execute your business;
- And your overall cost structure.
My preferred method of crafting a business model is to use the business model canvas. It is a one page snapshot of your business model at any given time that makes it very easy to visualize all the aspects of your business.
Your business model can change from one period to the next to adapt to changing conditions in the market and in your company. Every company should have a business model, and it needs to be flexible enough to allow it to change as the company grows. There several situations where your business model might need some changes: when it doesn’t prove profitable and you are spending more money than you make, or when it doesn’t help you achieve the goals of the company with respect to the customer and the company’s overall evolution. The one thing on your business model that I would say might not change is the underlying reason why you are in business. An example, the business model for Gig Theory is always open to changing except for the underlying reason that this organization exists, to empower you with the information, tools, and access where possible to achieve your goals of creating whatever your dream job may be. This core reason for existence is summarized as “empowering you to create your dream job” and is at the forefront of every innovation, product, or feature decision that is made. The source of this was the answer to the underlying questions:
Why do we exist?
There are several places within yourself that you can search to come up with the answer for your organization; these include the problem that prompted you to start this journey, your personal values, and the things you are passionate about.
The book “Built to Last” by Jim Collins and Jerry I. Porras does a great job of explaining the idea of an underlying core purpose.