Knowing Your Business Model

How well do you know your business model? As an Entrepreneur have you thought about this question?

One has a successful company as the end result of having a consistently well-functioning business model. An Entrepreneur needs to know exactly how his/her business model works.

What are the key Revenue drivers? Is there a competitive advantage? Are there any barriers to entry? Do you have proprietary technology?

What are the key cost components? Are they well controllable? What costs are fixed and which ones are variable? Is your model labor sensitive or capital-intensive?

What are the other variables that have a significant influence on your model? Distribution? Customer service? Rapid response times?

An entrepreneur has to not only to know answers to the above questions and more, but more importantly he/she needs to determine the sensitivity of each of the components to the whole model. What are the few variables, that have a tremendous impact on the model, if tweaked even slightly could make the model better?

Only when you can fully understand your business model, you can make it better! Do the Right Things!

Ravi Patel

www.patelCFOservices.com

 

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Published in: on January 23, 2012 at 5:59 am  Leave a Comment  
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