The composition of a business model can be defined and described through six elements.Specifically, it includes positioning, business systems, key resource capabilities, profit models, cash flow structure, and enterprise value.
1. PositioningIn a business model, positioning refers to the way in which a company meets the needs of its stakeholders, that is, the transaction method.For example, to meet consumers' demand for soybean milk, chain stores can be opened to sell soybean milk, and soybean milk machines can be sold for consumers to operate at home. This is a difference in positioning.Positioning is the result of a company's strategic choice and also the starting point of a business model.
2. Business systemBusiness system refers to the configuration, roles, and relationships in the transaction structure, including the business activities that an enterprise needs to engage in, the roles played by various stakeholders, and the business transaction relationships of stakeholders.An efficient business system can identify relevant activities based on the positioning of the enterprise, integrate them into a system, and then allocate the roles of stakeholders based on the enterprise's resource capabilities, determining the relationship and structure of value chain activities related to the enterprise.
3. Key resource capabilitiesThe business system determines the business activities of an enterprise, and to complete these business activities, the enterprise must master and use a complete set of tangible and intangible assets, technology and capabilities, which are key resource capabilities.Key resource capability is an important resource capability that supports the transaction structure.To build a business model, it is necessary to clarify the required resource capabilities and how to acquire and establish these resource capabilities.
4. Profit modelThe profit model includes the sources of profits (revenue and expenditure sources) and pricing methods (revenue and expenditure methods), which refer to how enterprises obtain income, allocate costs, and earn profits.There are many ways to generate profits, such as transferring ownership of the same product and selling it directly, which is called sales; Only transferring the right to use the product, renting the product, and collecting rent, this is leasing; Wait a minute.There are also many pricing methods, such as pricing based on the quantity of products, leasing based on time, investment products based on actual income, and so on.The pricing method may vary depending on the source of profit.
5. Cash flow structureCash flow structure refers to the structure of cash inflows and outflows in a company, which refers to the cash income generated in the business process after deducting cash expenditures.Different cash flow structures reflect the different characteristics of business models and affect the speed of enterprise growth.A good cash flow structure can achieve minimal early investment and sustained high returns in the later stages.The same profit model can correspond to different cash flow structures.For example, for the same phone recharge, it can be pre deposited or settled on a monthly basis.Purchasing products and services can be done in one lump sum, installment payments, or through financial leasing.Advance payments can alleviate the early cash flow pressure of a company when customers invest less and frequently repeat their purchases.
6. Enterprise valueEnterprise value is the endpoint of a business model, and the level of enterprise value is the ultimate criterion for evaluating the quality of a business model.
