Opening a business in Illinois is a complex process that involves many different steps. One of these steps is creating a business model.
You have probably heard the term “business model” but may wonder exactly what it means. A business model is a plan for how your business is going to make money.
The purpose of a business model is to outline the different pieces of your business and show how they will work together to allow you to serve customers and turn a profit.
Starting your business model
As you begin to create your business model, it can help to break things up into two groups, your business ideas and business resources. The business ideas group involves the products you sell or services you will provide, your target customers, advertising concepts and potential competition.
The business resources group is where you lay out how you are going to make your business ideas work. This group involves things like your financial plan, ownership structure, funding and staffing.
Common types of business models
There are different types of business models. The business model you choose will depend on your role. Some common roles are retailer, franchisor, distributor and manufacturer.
Many entrepreneurs go into business as retailers, where you purchase products from distributors or manufacturers and sell them to the public. Alternatively, you may have purchased a franchise, which means you must likely use the already existing business model.
As a distributor, since you are purchasing products from a manufacturer and distributing them to customers or other businesses, your business model should specifically address pricing. You want to offer low pricing to entice manufacturers to sell to you, but still distribute the products at a high enough price to turn a profit.
Your business plan as a manufacturer will depend on whether you are selling to other businesses or direct to customers.
