A sound business model is imperative for the success of any business. It maps out your plan to create value for your target market. A business model is also useful if you want to borrow money from venture capitalists.
Here we have highlighted five critical elements that make a business model appealing to investors.
Identify Your Target Market
The first element of a business model is to define your target market in order to create a strong customer base, whose needs are satisfied by what your business is offering. You have to segment your market according to demographics so that you are better aware of their characteristics.
Identify Your Value Chain
In order to have a complete understanding of your business processes, you need to identify your business’s core competency. This would help you in fulfilling value proposition and in making your business model pragmatic. Once you recognize this, you can then identify your potential expansion strategies for strengthening your value chain.
Mobilize Your Resources
Four resources that make your business up and running are: physical assets, human resource, financial resource and the most important being, the intellectual property which gives your business a unique edge.
Identify Your Business Partners
Establishing and forming your business alliances before the business starts operating is imperative in accomplishment of your short term goals and objectives. These strategic alliances should be bound by legal contracts in order to avoid any uncertainty in the external environment of your business.
Keep Your Business Model Flexible
Innovation is a continuous process so you must leave sufficient room for innovation in your business model. Your business model must not keep you stagnant; rather it should assist you in adapting to the changing market environment.
These five elements would ensure that your business model is attractive enough to grasp the attention of potential investors.