What is your business model?
As Mr Strategy, this is the first question I ask when I am invited to speak to top managers about growth.
If you can tell me your business model, it shows you understand your business.
Let me ask this question differently.
- How does your business make money?
- Is your business model to sell many products to the mass market? That many to many?
- Is it to sell a few products, to the mass market?
- Or to sell a few products to select few customers?
For example, if you are an innovator or a developer of mobile apps. And you have invested in a health app, for example, an app that reminds you to take your prescription drugs or to go for exercises, such a product is one too many – because your target market is anyone who is health-conscious. If you make your app available on, for example, Google play store, you have it accessible to the whole world.
The next thing is how do you monetize the app? To make money out of it, first and foremost, you need people to download it and use it at least for one month. If your app can remain active on one’s phone for more than a month, you have won.
You could sell advertising through your app. Or ask users to upgrade to better features at a small fee.
Since you are delivering your app via technology, your business model of subscription-based one (product) to many (customers) can work.
However, some services like advisory and medical support, require personal care. In this case, the model is a few products to a few customers.
If you accept every other customer, chances of managing them very well to meet your needs will be difficult. Better get the best customers and serve them well. This entails charging a premium.
So, what is your business model?
Copyright Mustapha B Mugisa, 2020. All rights reserved.