Business Model Generation

If you’re already a business guru then you won’t need this book.

But if you work in some other field and you’re trying to figure out how online business works then this book is a great place to start.

Likewise, if you have an idea for a business, and you don’t know what to do next, I can recommend this book.

The concepts here also work for businesses that are not e-Commerce. But… it’s pretty hard to create a business these days that doesn’t have an online aspect of some kind when it comes to the business plan.

If you’d asked me a few years ago what my “business model” was I’d have given some pithy answer that sounded like I knew what I was talking about.

But actually, I would have had no idea what I was talking about.

Business Model Generation opened my eyes to what a business model really is.

Here’s a definition:

A business model describes the rationale of how an organization creates, delivers, and captures value

Business Model Generation, p.14

In other words, a business model describes how your business makes money. This sounds simple, but it’s more complicated than you might think.

Especially, if you work in a weird field like I do. Education, if you didn’t already know.

And in case you’re wondering, you can have a great idea for a business, but unless you have a business model then you ain’t gonna make any money.

This seems to be a gift of mine, actually… Coming up with great ideas that are totally impractical when it comes to making money.

Not that there’s anything wrong with that. But it’s the difference between having a hobby versus having a business. Here’s the difference:

• A hobby costs you money.
• A business makes you money.

Back to the book…

Business Model Generation walks you through the nine building blocks you need to have in place if you intend to make money through your business or new idea.

These are:

1. Customer segments
2. Value propositions
3. Channels
4. Customer relationships
5. Revenue streams
6. Key resources
7. Key activities
8. Key partnerships
9. Cost structure

This then leads to the real innovation of the Business Model Generation book.

This is the Business Model Canvas, which looks like this below:

Or you can get it in a handy chart like this:

Using the chart is another conversation for another day.

But make sure you check out the book here if you’re interested in learning more about how to generate business models for your ideas.