Business Development

WHAT IS A BUSINESS MODEL?

In theory and practice, the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, target customers, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.

The literature has provided very diverse interpretations and definitions of a business model. A systematic review and analysis of manager responses to a survey define business models as the design of organizational structures to enact a commercial opportunity.[2] Further extensions to this design logic emphasize the use of narrative or coherence in business model descriptions as mechanisms by which entrepreneurs create extraordinarily successful growth firms.[3]

Business models are used to describe and classify businesses, especially in an entrepreneurial setting, but they are also used by managers inside companies to explore possibilities for future development. Well-known business models can operate as “recipes” for creative managers.[4] Business models are also referred to in some instances within the context of accounting for purposes of public reporting.

WHAT IS BUSINESS OPERATIONS?

The outcome of business operations is the harvesting of value from assets owned by a business. Assets can be either physical or intangible. An example of value derived from a physical asset, like a building, is rent. An example of value derived from an intangible asset, like an idea, is a royalty. The effort involved in “harvesting” this value is what constitutes business operations cycles.

A business operation encompasses three fundamental management imperatives that collectively aim to maximize value harvested from business assets (this has often been referred to as “sweating the assets”):

  • Generate recurring income
  • Increase the value of the business assets
  • Secure the income and value of the business

The three imperatives are interdependent. The following basic tenets illustrate this interdependency:

  • The more recurring income an asset generates the more valuable it becomes. For example, the products that sell at the highest volumes and prices are usually considered to be the most valuable products in a business’s product portfolio.
  • The more valuable a product becomes the more recurring income it generates. For example, a luxury car can be leased out at a higher rate than a normal car.
  • The intrinsic value and income-generating potential of an asset cannot be realized without a way to secure it. For example, petroleum deposits are worthless unless processes and equipment are developed and employed to extract, refine, and distribute it profitably.

The business model of a business describes the means by which the three management imperatives are achieved. In this sense, business operations are the execution of the business model.

WHAT IS A BUSINESS OBJECTIVE? SEE PPT

WHAT IS BUSINESS COMMERCIALITY? SEE PPT

WHAT IS BUSINESS PLAN?

A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.

Business plans may also target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5-year business plan is required since investors will look for their annual return in that timeframe.[1]

Audience

Business plans may be internally or externally focused. Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors and customers.[2] External stake-holders of non-profits include donors and the clients of the non-profit’s services.[3] For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the International Monetary Fund, the World Bank, various economic agencies of the United Nations, and development banks.

Internally focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization. An internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows the success of the plan to be measured using non-financial measures. Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans.

Operational plans describe the goals of an internal organization, working group or department.[4] Project plans, sometimes known as project frameworks, describe the goals of a particular project. They may also address the project’s place within the organization’s larger strategic goals.[5]

Content

Business plans are decision-making tools. There is no fixed content for a business plan. Rather, the content and format of the business plan are determined by the goals and audience. A business plan represents all aspects of the business planning process declaring vision and strategy alongside sub-plans to cover marketing, finance, operations, human resources as well as a legal plan when required. A business plan is a summary of those disciplinary plans.

For example, a business plan for a non-profit might discuss the fit between the business plan and the organization’s mission. Banks are quite concerned about defaults, so a business plan for a bank loan will build a convincing case for the organization’s ability to repay the loan. Venture capitalists are primarily concerned about initial investment, feasibility, and exit valuation. A business plan for a project requiring equity financing will need to explain why current resources, upcoming growth opportunities, and sustainable competitive advantage will lead to a high exit valuation.

Preparing a business plan draws on a wide range of knowledge from many different business disciplines: finance, human resource management, intellectual property management, supply chain management, operations management, and marketing, among others.[6] It can be helpful to view the business plan as a collection of sub-plans, one for each of the main business disciplines.[7]

“… a good business plan can help to make a good business credible, understandable, and attractive to someone who is unfamiliar with the business. Writing a good business plan can’t guarantee success, but it can go a long way toward reducing the odds of failure.” [7]

You are ready to be your own boss and you are very excited about the potential of your ideas. But you just need that extra $50,000 to make your dream a reality. Investors and financial institutions expect to see a business plan when you approach them. Or you are certain that your idea will succeed, but you are unsure of the process involved to achieve it. A business plan is paramount. Dmckinsey and Associates can help you develop a full business plan for your start-up and existing business. Whether you are looking for financing, entering into new markets, introducing new products, or restructuring, we can help you start achieving. Visit us Today at www.dmckinseyandassociates.com.ng or call us on +234 807 896 7259, +234 802 319 2104. Why wait when you can start succeeding today.

 

For more understanding on this topic please feel free to check out part 1 and 3 of this article @ www.dmckinseyandassociates.com.ng/blog

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