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The seven factors you must consider before choosing your business model

Some Sizes Fit All || Akhil Gupta

The success of a business depends on many factors, the most important of which is the decision regarding what industry it would like to pursue. In management terms, the blueprint for any business as to which niche it would like to operate in is called a ‘business model’. It is imperative to have a business model in place for it provides focus and direction to the management. Without such a structured approach, a business is likely to falter.

In Some Sizes Fit All, Akhil Gupta explains how the most important pillar for the success of any business is clarity on its business model. There are seven main issues which need to be considered and agreed upon for setting up a solid business model.

 

1. The line of activity

Almost all industries have multiple segments, referred to as ‘lines of activity’, which the management needs to carefully consider and choose from. In most cases, one would have to choose one or some of them as it may be neither necessary nor possible to pursue all possible lines.

2. Geography

It is important to identify the region in which the management would like to operate. The choice of geography would depend on the resources and ambitions of the management.

3. Target Customer

Companies need to carefully choose the segments of customers they wish to serve since the business strategy and required actions will depend upon this.

4. Sequencing and pacing of expansion

If multiple choices exist in any of the parameters above, it would be prudent to decide on sequencing and priorities and the milestones/time period for the introduction of specific products/services or specific geographies.

5. Revenue and profitability model and timing

It is important to have a clear revenue model, that is, a proper understanding of how and from where the revenue will come in, and also to have a time frame within which the revenue will start coming in. Companies that cannot demonstrate a revenue and profitability model do go out of favour sooner or later.

6. Clarity of objective

Every business needs to be clear as to what its main goal is—is it philanthropy or running a profitable business? Ideally, the objective should be to run a successful and profitable business with rapid scale-up using ethical means.

7. Revisit the business model at regular intervals

It is important for every company to revisit and review all aspects of its business model at regular intervals. These intervals can be time-based, say, annually, or can depend on specific events, such as regulatory changes, new technological innovations, the emergence of new markets, etc.

 

Some Sizes Fit All is an attempt to explain the fundamental pillars for any kind of business. An authentic and lucid presentation of management concepts and practices-which Akhil Gupta has tried and tested first hand through his illustrious career-this is a must-read for anyone trying to build a robust and financially sound business.

   

   

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