How To Make A Business Model?

Contents

• What is a business model?
• Case study research about that business
• Where does your business stand in the Maslow’s hierarchy of needs?
• What are the key terms you need to know while making a business model
• Business Model sheet (Naturals Ice-cream)

What is a business model?

• The term business model refers to a company's plan for making a?profit It identifies the products or services the business plans to sell, its identified?target market, and any anticipated?expenses. Business models are important for both new and established businesses.

Case study research about that business

For a new business

• Name your business, research about which sector it belongs to or you wan tot start in and what is the scope of it. Acquire basic and general knowledge for a head star:- Next big sectors in india are Deeptech- Spacetech AI, Fintech, E-Commerce, Edtech.
• What is the problem you are trying to solve and why there is need to solve the problem (try to solve a problem which you relate to).
• Get into the depth and root of the problem by asking Why’s method, For example:- The car battery is frequently getting damaged. (Problem statement)

1. Why is the car battery frequently getting damaged?

The battery is not holding a charge.

2. Why is the battery not holding a charge?

The alternator is not charging the battery properly.

3. Why is the alternator not charging the battery properly?

The alternator belt is worn out and slipping.

4. Why is the alternator belt worn out and slipping?

The belt has not been replaced in a long time and has exceeded its service life.

5. Why has the belt not been replaced in a long time?

There is no maintenance schedule for regular inspection and replacement of the alternator belt.

Root Cause:

The root cause of the car battery damage is the lack of a regular maintenance schedule for inspecting and replacing the alternator belt.

• Who is the target audience?:- What is the user persona, who all are the prime audience to use the product. Below is the example of how to know the target audience of any product

• What is the perceived value of the people:- Perceived value is the value of a brand for which people are willing to pay more than its original value as people desire to pay according to its worth. The gap between the original value/ manufacturing cost of a product and the perceived value of that product is called as brand creation. For example: the original/manufacturing cost of macbook m2 is 70,000 but it is sold at 1,29,000 as it is the perceived value of it and people are wiling to pay more for it as they think it is worth because of quality, standard apple has in the eyes of people.
• How much value is a person ready to spend:- how much can people save or are ready to spend or that product/service or in that business, how much need for it is there in the market.

For a established business

• Who is the founder
• why he thought that the problem he is solving is a problem (why is he soling?)
• Who is the target audience
• What is the perceived value of the people
• how much value is a person ready to spend.

Where does your business stand in the Maslow’s hierarchy of needs?

What are the key terms you need to know while making a business model?

OPEX (Operating Expenditures)

• Definition: Ongoing costs for running a business day-to-day.
• Examples: Salaries, rent, utilities, office supplies.
• Purpose: Necessary for the continuous operation of the business.

2. CAPEX (Capital Expenditures)

• Definition: Funds used by a business to acquire, upgrade, and maintain physical assets. Investments on long term assets such for 1 or more than 1 year.
• Examples: Purchasing machinery, buildings, or equipment.
• Purpose: Investments in long-term assets to improve or expand the business.

3. Revenue

• Definition: Total income generated from normal business operations.
• Examples: Sales of goods, services provided.
• Purpose: Measure of the business's primary income source before any expenses are deducted.

4. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)

• Definition: A measure of a company's overall financial performance.
• Calculation: Revenue - Operating Expenses (excluding interest, taxes, depreciation, and amortization).
• Purpose: Provides a clear view of operational profitability by excluding non-operational expenses.

Example Calculation for Clarity

• Revenue: ?80,00,000
• OPEX: ?48,00,000
• CAPEX: ?16,00,000

Calculations:

1. EBITDA: EBITDA=Revenue?OPEX=?80,00,000??48,00,000=?32,00,000 (Profit before taxes)

With the above terms make your business model sheet. Find a reference sheet link below which showcases business model of Natural’s Ice-cream

Business model sheet (Naturals Ice-cream)

Link to spreadsheet:-

https://docs.google.com/spreadsheets/d/1Y-0XwnI690Z1R_wJlHnJEX_gE-kjUGOGJIlBTsdn5KA/edit?gid=0#gid=0

I hope this article was helpful to get started with making of a business model, Comment if you like it or you feel my articles need improvement. Shares and likes and appreciated. Follow Manmeet Singh for more tech and entrepreneurship tips. :)