Coinciding with the growth of interest in business model, companies are investing lot of money and time in designing and operating effective and efficient models. Even though many companies have internal resources to get a business model fixed discretion dictates that they opt for the services of external, neutral and confidential business advisers. These advisers have in their portfolio nine advisory services, details of which are sketched below:
1. Design: Typically, designing business model covers the understanding components suitable for a particular business and arranging these to function in logical manner. After all a business model is concerned with the logic of practising a business. Arrangement of elements necessary for the smooth functioning of a business is the primary focus in design, where logical flow and leading those who operate the business model to arrive at right conclusion and decision are chief aims. Design advisory service is recommended for new businesses.
2. Review: As the focus of any business model is to operate business in effective and efficient manner, a review must be ordered to examine and report on these two factors. A review as the title suggests is more of breath rather than on depth yet it must address the question whether business model is properly aligned with the plan and strategy of a business. Periodic review is like doing annual medical check-up; you just get a bill of good health. According to a study carried out by KPMG/EIU in 2006, it was found that 46.7% of businesses surveyed conduct a review every year and 23.4% of businesses do so between 1 to 2 years to determine the efficacy of business model and to find out whether any change is warranted. Review advisory service is recommended for existing businesses.
3. Evaluate: In contrast to review, evaluation of business model has both breadth and depth in that it examines elements, assesses their use and passes judgements as regards to their contribution in making business success. An evaluation focuses on validation of the business logic of a company and must be comprehensive. Evaluation advisory must take place in several circumstances. When a company is not doing well in terms of corporate objectives or when it is proposed to go for an IPO or private placement an evaluation must be on the wheels. Before purchasing a business or investing heavily in its equity or debt it is advisable to get an evaluation going.
4. Modify: Generally modification of business model takes place after a periodic review. In line with the gist and meaning of the word modify, an exercise of this nature tends to make few changes that are minor or partial. Modifications could be effected in elements, arrangements of the components and perhaps in business model structure to ensure operations go through seamlessly and with the purpose intended in both value network and value architecture so that cost and revenue systems get an added boost. Businesses should undertake modification advisory service on periodic basis or as and when necessary.
5. Re-design: Unlike in the case of modification, re-designing business model is like handling an over-haul of your vehicle. Revising business model components along with re-arranging them to function differently is the fundamental focus in re-design. Such a complete re-hap should cover two areas: how the business logic can be improved and how elements in value creation, delivery and capture are co-ordinated for better results. It is advisable to go for re-design when things are falling apart.
6. Innovate: Business model innovation (BMI) basically means that you drop the old one to opt for new one. Beginning from structural changes BMI does a complete turnaround; call it 360 degree revolution of everything connected with business model. Innovation does not necessarily mean new idea or new product. It means lot of other things; new mode of doing business, new use of products, new markets for products and so on. Like a fine comb shaping hair evenly BMI refines customer value proposition, trowels value architecture and smoothens cost and revenue flow. Innovate when you are faced with the other alternative: shuttering of your business.
7. Describe: When it comes to put matters in writing, businesses shudder a lot. So far I have not seen a single business had the gumption to publicize its business model in any form intelligible. You have got to describe your business model by giving an account of it in words and/or diagram elaborating structure, features, characteristics, qualities in a simple yet substantive manner. Moreover, such a description must be short and inviting as mini-skirt and impressive and elegant as a flowing dress. Description of business model could appear in annual reports, company profiles and in other areas of corporate communication.
8. Analyse Risk: Identifying and assessing factors that have potential to de-rail operations or jeopardise business objectives is the subject of risk analysis in business model. As a matter of caution it is advisable to analyse risk in business model annually or when quantum change takes place in internal and external environment. Risk analysis advisory is a definite must when a business changes hands or substantial stakeholders shed their holdings.
9. Appraise Value: One of the key advisory services is to estimate and appraise monetary worth of a business model. Valuing a business by its business model is a sure-fire way of getting at the exact price in which a business could be bought or sold. Furthermore, an appraisal is recommended in times of urgency when major decision is round the corner.
Muthu Ashraff
Business Adviser
Mobile: +94 777 265677
E-mail: cosmicgems@gmail.com
Web: http://www.cosmicgemslanka.com
Blog: http://cosmicgemslanka.com/blog/
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