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Business Model

Position your SME for Success

Defining your business model is step one to getting your SME positioned for success.

Shawn Theunissen




To understand exactly how your business makes money and to grow the amount of money your business can potentially generate, you need to take the time to define your business model. This will ensure that you project the right growth trajectory for your SME – ensuring its success.

What is a business model?

Your business model defines the way your SME operates. A good business model outlines exactly how you’re going to make your business work and essentially explains how your business is going to make money.

Because your business model combines your vision for your SME (the why) with the means of achieving your vision (the how), it’s critical that you take the time to put one in place and work to refine this on an ongoing basis.

The difference between a business model and a business plan

Don’t confuse your business model with your business plan. Remember that your business plan is an operational document that’s usually in place for a three to five-year period. It outlines your plans to grow your SME and make it sustainable (i.e. expansion projections; how to drive sales; when to introduce new products etc).

Your business model on the other hand, defines how your business will make money. As such, it functions as the engine-room of your business plan, showing you how your business will actually operate.

How to develop your own business model

Develop your own business model by asking yourself the following questions:

  1. What is the flow of transaction within my business?
  2. Who are the key players involved in making these transactions?
  3. What is my value proposition to the market? (What makes my business unique?)

Take a look at how I’ve answered the above from the perspective of a small cleaning company. This will give you a good idea of the kind of answers you’re looking for – ones that describe the “nuts and bolts” of your business…

  1. What is the flow of transactions within my cleaning company?

If I examine how money flows in and out of my cleaning company, I can see that:

  • I employ people. (Money flows out of my business.)
  • My clients pay me for my services. (Money flows into my business.)
  • I may also have obtained start-up capital. (This is a reserve of money that I can use to make payments or to invest in my business.)

Once you’ve answered question 1 in this way, you then need to flesh-out your answers by listing all the other costs involved in providing your company’s services. This will include everything from office space to electricity and transport, to buying the products you need (e.g. cleaning materials) to deliver your services.

As you can see, by answering this question as comprehensively as possible, you’ll soon get a very clear idea of where money is coming from – and going to – in your business.

You will also have started to answer the second question:

  1. Who are the key players involved in making the transactions in my cleaning company?

By defining my basic flow of transactions, I have already identified the key players in my business, namely my workforce and my clients.

I also need to ask myself the following, however:

  • Who provides access to my markets and my clients? (Are there certain clients who are promoting my business? Am I on key supplier lists?)
  •  How do I source new clients? (Is this through direct advertising, word of mouth etc?)

While you’ll need access to the market to generate revenue in the first place, answering these questions will provide an even clearer picture of your flow of capital. This will help you identify the key partnerships essential for your business. These are partnerships that need to be nurtured.

By seeing where you’re making your money, you’ll then be able to consider your revenue in line with your value proposition:

  1. What is my value proposition to the market – what makes my business unique?

(Remember that your value proposition is what separates you from your competitors in the market. It’s that “magic ingredient” that ensures customers choose you!)

Here I need to separate my core business (i.e. cleaning) from any additional services that could be linked to the core business I provide (i.e. selling hygiene products to my customers). (Bear in mind that all additional services could help you increase your revenue.)

When you’ve separated your core business from your additional offerings, focus on what sets you apart from your competitors in both respects. Consider how you can use and market this value proposition even more effectively.

Implementing your business model

While developing your business model is critical for the success of your SME, it’s equally important to then take your business model to the market and test it with the key partners you’ve identified. This will help you to make necessary tweaks where required.

Also remember to share your business model with your team: ensure they understand how you see your business making money, and the important role they play in this process. If your business succeeds, they all win! Get their buy-in and additional ideas for refinement.

In conclusion, bear in mind that this is a process. Start with a basic business model that covers the basics outlined above – and then build from these.

Shawn Theunissen is head of Corporate Social Responsibility at Growthpoint Properties and the founder and manager of Property Point, Growthpoint Properties’ enterprise development programme. Shawn’s diverse enterprise development expertise includes designing and implementing business support services; creating market linkages between SMEs and large corporate entities; and providing capacity building support, and process and learning journey facilitation. For more information visit

1 Comment

1 Comment

  1. Lucky Sibanda Supreme Educator

    Aug 7, 2012 at 13:45

    Great insight, like it

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Business Model

Developing A Business Model That Works

Use these six tips to create the financial section of a business plan that will get your company off the ground.

Scott Duffy




The following excerpt is from Scott Duffy’s book Breakthrough.

What’s the first step in figuring out how to execute your big idea? Creating a working model for your business.

We’ve all been brainwashed into thinking that the best way to do this is to sit behind our desks and write a long, detailed business plan. You know the kind: It starts with a fancy cover and your mission statement, then describes your team, market, product, competition, and so on.

Most entrepreneurs spend a lot of time and resources writing their plan. Too often, they get feedback from all the wrong people. Their friends and family want to support them, but they’re telling the entrepreneurs only what they want to hear — that they have come up with the next Google or Apple or Tesla (keep in mind, none of this feedback is coming from customers).

By the time the entrepreneur gets to the last section in the business plan — the financials — he’s totally sold on the idea. Sometimes the financial section is left unfinished or dropped entirely as the business is launched.

And why not? We’re passionate. We’re committed. We know we can’t fail. So what are we waiting for? Let’s go!

Here’s the problem: Most entrepreneurs change their business model six times when working through the financial section of their plans. While running the numbers, they identify key distinctions with regard to income and expenses. They gain a deeper understanding of what it will take to break even and how to achieve free cash flow. As a result, they come up with better-informed strategies for attaining their desired financial outcomes.

The most important part of the initial business planning process, and the one people most often neglect, is getting your numbers to tell a story that makes sense for you and your investors. If you start at the beginning of the plan only to learn that your assumptions about the business don’t add up once you reach the end, you’ve lost valuable time and money.

Related: The Top Business Models For Your New Start-Up Business

Regardless of whether you’re in startup or growth mode or moving to the next stage of your business, mistakes can be costly, so here’s what I recommend:

1. Start with the last page first

Once I have a basic understanding of what I’d like to build, the market, my target customers, the busi­ness opportunity, and the product, I dig right into the numbers and create a simple one-page spreadsheet that clearly identifies how the money flows. Basically, I write business plans backward. I’ve learned that once the numbers tell the story you want, the rest of the plan will write itself.

2. Don’t wait

Don’t make this process more difficult than it needs to be. Limit your model to one page. Create the simplest, most basic spreadsheet you can that identifies income, expenses, breakeven, cash flow, and the capital required to achieve your outcome. Use conservative assumptions, and don’t rely on best-case scenarios.

3. Get out of the office

You’ll learn more about your business by getting into the market than you ever will sitting behind a desk. At least 50 percent of your time should be outside the office gathering information that can be applied to your plan. That means contacting industry insiders to learn more about the market, talking to prospective customers about their needs, and testing your competition’s products and services.

4. Be careful who you listen to

When we have an idea we passion­ately believe in, we’re convincing. It’s easy for our family and friends to tell us we have a winner on our hands because they want to be supportive.

But when you’re modeling your busi­ness, the people whose feedback matters most are current and potential customers. Listen to what they have to say and apply what you learn to your model. Let their feedback, and not your enthusiasm, sway your projections.

5. Don’t throw out negative feedback

Sometimes it can be difficult to absorb negative feedback in a constructive frame of mind because we’re so close to our projects and have so much on the line. We start rejecting and deflecting feedback that isn’t in line with what we believe.

But honest, educated feedback is like gold — use it to open your mind and ask tough questions about your assumptions. You must be obsessively committed to asking what you can learn from this feedback and how you can apply it.

This is especially important for people entering new markets where they don’t have prior experience. Getting feedback from others who’ve lived in the space will add to your perspective. Sometimes you’ll learn that there are things you don’t know as a newcomer that would significantly impact your financial results.

In fact, this holds true throughout your business’s lifetime. The entrepreneurs I know who’ve built the most successful and thriving businesses are obsessed with getting constant feedback from the marketplace and adapting their businesses based on evolving market needs.

Related: Developing a Stable Business Model

6. Be open to what the numbers tell you

The worst thing you can do is try to manipulate a model to match your assumptions. You need to approach your financial model with a completely open mind.

Recognise that it will probably take longer than you ini­tially thought to get to market, generate revenue, create profits, and accumulate the cash flow you need to operate and further invest in the business. By being open, you’ll be able to make distinctions, apply them to your business, and set yourself on a path to success.

You need to be clear on where you want to go and put a simple and adaptable plan in place to help you get there. The clearer your vision is upfront, the easier it will be to back a plan to help you get there. Being obsessed with customer feedback will enable you to tweak strategy in a way that evolves with the market and helps keep you on top of the competition.

This article was originally posted here on

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Business Model

4 Types Of Business Models To Suit Your Business Concept

There are four main types of business models, see which one suits your business concept.

Alison Job



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Different types of business models suit different types of businesses. A business model is the way that a company sells products to its customers. It describes how a business creates, delivers, and captures value.

What type of business model should you adopt?

A business model defines how the enterprise delivers value to customers, gets them to pay for that value, and converts those payments to profit.

There are four basic types of business model that any for-profit business will fall into:

  1. Manufacturer
  2. Distributor
  3. Retailer
  4. Franchise.
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Business Model

How To Pick The Business Model That Works For You

So, you’ve picked your lane.  You’ve decided what you want to do and why you want to do it.  You’ve picked something you’re good at.  You’re convinced the world needs and values it.  You now need to decide how to make money.  That’s where business model design comes in. 

Anthony Miller




There are plenty of business model options for the same idea.  For example, let’s say your idea is to offer historic tours of Cape Town.  You could either do it yourself or hire professional guides to do it.  Or you could use mobile technology to provide DIY walking tours.  You could charge per tour or you could charge a membership fee.  There are so many options.  How do you pick the model that works for you?

The Lean Canvas is a great tool for entrepreneurs who are faced with this question. Adapted from The Business Model Canvas, it provides a simple, one page framework for brainstorming possible business models, prioritising where to start, and tracking ongoing learning.  It walks the entrepreneur through the business model process logically and ensures the key elements of a successful business are considered.

Related: Business Model Design – Picking The Business Model That Works For You

My co-founders and I have used the Canvas extensively at Simply – for designing our business model, and for communicating it to partners and investors. The only thing you know with certainty when you start a business is that it’s not going to turn out as you expect it to.  The Canvas evolves as you go – it was, and continues to be, a very useful guide in our journey.

Recognising an opportunity for disruption

We figured there was an opportunity to do something disruptive in the SA life insurance space.  It was clear to us that lots of people were either not covered or getting a rough deal.  Guided by the Canvas, we defined our first Customer Segment as adult South Africans, aged between 25 and 45 and earning between R5k and R30k monthly.

We then identified the 3 big Problems – specific to that segment – that needed solving:

  1. Most of the people in our segment have some form of funeral cover, but very few have life or disability cover.
  2. The cover they do have is often expensive relative to the benefits provided (i.e. a very small % of the premium goes towards the risk costs).
  3. There is no simple, intuitive way to buy good value life, disability and funeral cover online.

Developing a value proposition

Next came the Value Proposition.  We believed we could use technology, digital marketing and human-centred product design to deliver simple, online life, disability and funeral insurance at a great price.  We felt we could be for life insurance in South Africa what Takealot has been for retail.

We thought the world was moving far faster than incumbents realised; that millennials were ready to buy life insurance online; that we could build for the digital world and be in the right place at the right time.

And the rest flowed from there.  I don’t have the time or the space to walk you through the other elements of the Canvas here, but you can probably fill in the blanks.  Suffice to say, the process was invaluable and enabled us to build our business around a clearly considered business model.  It’s early days, but the signs are good – we’re making a positive impact, having fun and keeping our investors happy.

Creating a Lean Canvas

So, how should you go about sketching your own Lean Canvas?  The team at suggest the following approach:

  1. Sketch a canvas in one sitting. While a business plan can take weeks or months to write, your initial canvas should be sketched quickly.
  2. It’s okay to leave sections blank. Rather than trying to research or debate the “right” answers, put something down quickly or leave it blank and come back to it later.
  3. Think in the present. Business plans try too hard to predict the future which is impossible. Instead, write your canvas with a ‘getting things done’ attitude.
  4. Use a customer-centric approach.  You may need to sketch one Canvas per customer segment.  Start with the Customer Segment and go in sequence.

The Canvas has brought clarity and a common language to our business model design process.  It’s enabled us to agree upon and communicate our business model effectively – both internally and externally.  It’s also allowed us to tune and adjust our model as our story has unfolded – an inevitability for entrepreneurs.  I highly recommend the Lean Canvas as a tool for designing your business model.  Give it a try – I think you’ll like it.

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