So, maybe you’ve got some nifty new idea for generating value for your customers, or your company. Why bother writing it down, outlining it in detail, or even trying to explain it?

1. Your investors and lenders
If you’re asking for money, you’d better be able to show how it will be used, how it will generate more money, and how your use of the money is better than other opportunities an investor has.

2. Your employees
Your employees are used to doing things one way. Introduce a new product, a new customer base, or even a new logo and you’ve got some explanation to do. Introduce a new business model – the underlying foundation of how your business operates – and you have a lot of re-education on your hands. You need to be able to talk about why you’re switching, how their roles are changing, and what success looks like for each of them.

3. Your customers
Every interaction a customer has with you or your brand is part of your marketing. Your customers should be able to understand how you give them something of great value, and how you get compensated for this, whether the message is implied in the phone manners of your sales staff, or spelled out in a license agreement.

4. You
You can’t understand your real competition or opportunities if you don’t fully understand your business model. A razor-and-razor-blades model creates a different kind of customer loyalty than a franchise model. A subscription model, like a newspaper, has different competition from substitutes than an affiliate model. Write it down. Spell it out. Poke holes in it, and invite others to do so. Rework, rethink, and keep planning as you test out what your business model can do for you and your customers.

Read more about how to use your business model at Bplans.co.uk

Tagged as: business model, Business Planning