Business models are the foundation of any successful business, and understanding how to use them to their fullest potential is essential for growth. Market penetration is the most basic growth strategy, but few executives realize that they can design business models to generate winner-takes-all effects, similar to the network externalities created by high-tech companies such as Microsoft, eBay and Facebook. Companies can create virtuous cycles that, over time, translate into competitive advantage by strengthening their own cycles and weakening those of their rivals. The LivePlan platform is a great example of a business model that allows companies to gain performance information and grow through secure financing. It has more than 850,000 small business customers and allows users to create business plans, budgets and forecasts, and connect to QuickBooks or manual accounting information.
Ben Murray's Excel spreadsheet model for start-ups is another example of a business model that articulates financial forecasts. The revenue model is a key component of any business model, as it identifies what source of revenue to look for. Your revenue model is a function of customer acquisition cost and pricing model, but it also depends on your marketing strategy. It can go beyond the scope of a one-time sale and include recurring sales, rent, leasing and the “sharing economy model”.Innovation in revenue models has driven the transformation of old school industries into the newer business model. Strategy has been the main pillar of competitiveness for the past three decades, but in the future, the search for sustainable advantage could well begin with the business model.
The second group, for service-based businesses, includes some of the systems needed, the people who provide the service, and the travel costs to provide the service. A growth model is a process that makes your efforts toward growth measurable at every step of the marketing funnel. To compete with rivals that have similar business models, companies must quickly establish rigid consequences in order to create and capture more value than their rivals. Steps one and two help you develop some of the most important assumptions of any business or proforma construction model. However, the success or failure of a company's business model depends largely on how it interacts with the models of other players in the industry. You need a solid and reliable model that will help you achieve this strategically and achieve growth by leveraging the “right” marketing channels at the “right time”.
These are tactics, the residual options before a company by virtue of the business model it employs. It's easy to infuse virtuosity into cycles when there are no competitors, but few business models work in a vacuum, at least not for long. At first, Airbus' business model fell short because Boeing could reinvest the profits of its 747, which enjoyed a monopoly on the huge commercial transport segment. These jobs and resources are created through virtuous cycles, so executives must develop business models that activate those cycles. The purpose of a growth model is to allow you to understand where you are going and what is needed to achieve it. It helps you make your efforts toward growth measurable at every step of the marketing funnel so you can identify areas where you need to focus your efforts. Innovation in revenue models has driven transformation in old school industries into newer business models.
Companies must quickly establish rigid consequences in order to create and capture more value than their rivals if they want to compete with those who have similar business models. The success or failure of a company's business model depends largely on how it interacts with other players in its industry. A solid and reliable growth model will help you achieve strategic growth by leveraging the right marketing channels at the right time. Executives must develop business models that activate virtuous cycles if they want their companies to succeed in this era of Uber and SaaS models. Growth models are essential for businesses looking to maximize their potential. By understanding how these models work and how they interact with other players in an industry, executives can create strategies that will give them an edge over their competitors.
With careful planning and execution, businesses can unlock limitless possibilities for growth.