Starting a business in Nigeria is not always that easy. If you are not struggling to raise capital, you are battling with lack of public infrastructures. Sometimes, it’s even not having a clear idea of a business model to follow.
I have held several startup seminars for Nigerian aspiring entrepreneurs, but one question that is usually asked during some of these seminars is how profitable is the business ideas I share with them?
They are not just asking the question to know if the idea would be profitable. They simply want to know if it has been done before, and what’s the success proof. That means the guy is actually asking for a successful business model to copy.
Having a business model is not only important for big and established businesses. It’s also good for new and small businesses. Your business needs a successful model to thrive in the marketplace.
What’s A Business Model?
If you ask me, my definition would be simply a way of doing business that provides better operational and customer service efficiency, with a simplified revenue model. Of course, that’s not the usual textbook definition for a business model.
Let’s look at how Investopedia describe a business model: it refers to it as a company’s plan for making profit. This definition is so simple and very easy that it makes it so simple to copy any successful business model.
All you need to know is the company’s plan for making profit. If they are, that means their business model is working. Then, you simply replicate it to start making profit as well.
How Business Model Works
If you simply run off with the idea that a business model only consist of how the company is making profit, because you discovered a business that’s making profit, you would be jumping the ship.
You need to understand the products or services the company is selling, the market it targeted, and the cost of operating that model. These are what makes a successful business model.
The model most not just be a way of doing business more efficiently for profit. It must also have the right product or service that matches the model. The right customers identified for the product or service, who also accepts the model. And at the right cost they consider appropriate to pay for the product or service.
Business Model Generation
How do you generate business models? You can’t even begin to use successful models if you don’t know how to generate one. It must be clear to you the plans and steps you have to take at the beginning.
It starts with identifying how to match your target customers needs with your product offering, including the funds available for it, and every other steps outline in your business model canvas.
Another way to define business model generation is to compare it with business idea generation. It’s a way of making your business idea to work in a real life business. You generate a real working plan to guide you on not just the feasibility of your business idea, but on a practical application of the idea in a real world.
Creating A Business Model Canvas
After you have identified a successful business model, you also need to document how that model will work for you, especially if you are going to convince venture capitalists to invest in your company.
Here’s what to document in your canvas:
- The business should have a defined purpose
- Explain the target customers and the value you are proposing
- What’s your channels and customer retention plan?
- What are your key resources, activities and partnerships?
- Evaluate the cost structure and possible income streams
- How best do you define the workable business model?
- How do you justify promises and claims you are making to the customer?
- Do you have a real world test of your model application?
Until you have tested a model yourself, you cannot be 100% certain the model is best for your business. A business canvas helps you put your model into a document that proves the model is both feasible and workable.
Types of Business Models
If you are going to apply a business model in your company, you should identify the type of model you are adopting. There are definitely so many different business models out there. But the essence of this article is not to give all the different types but to drive the point on how you can copy any successful model for your business.
Here are my selected list:
- Freemium model
- Subscription model
- Drop shipping model
- Bundling model
- Leasing model
- Franchise model
- Crowdsourcing model
- Distribution model
One of the models I personally like so much is the subscription model. It has been proven as the most successful business model ever. But only a few models have had the capacity to change the world.
The kind of models that did that includes, crowdsourcing, drop shipping and leasing models.
Business Model Examples
You cant talk about business models without mentioning a few successful models in the world today. And I have selected 3 examples of successful models. No matter where you are in the world, these three examples are touching your life and business.
- Amazon model
- Uber model
- YouTube model
Amazon uses a drop shipping model. It doesn’t own the products it sells. The eCommerce store provides the platform, while merchants provides the products on its platform.
Uber is another successful business model example. The company uses other people’s cars for its transportation business, on a lease. The company brings the customers and fix them in cars nearby to transport them to their destination. But it doesn’t own the cars nor the drivers.
The third example on my list is YouTube. This is a crowdsourcing model. A broadcasting channel that only uses other people’s videos and efforts without creating its own content or running the channels itself.
If you are thinking of copying successful business models, this is what I mean by that. There are models that have proven to work beyond reasonable doubt. All it needs is someone to tweak it to its advantage, with the right platform, product, audience and proposition.
Nigerian still has much of its market potentials untapped. There’s much room to create successful business models. Just follow the steps outline in this post and you will be just fine.
However, you need to understand fully how to Start a business before you can even copy one. I have picked an article here for you to read: How To Start A Business for further study.