Jim Muehlhausen

Designing or updating your business model becomes easier when you think through your offering, monetization, and sustainability. As you work on your business model, keep important tips in mind, ask questions to stay on track, and browse different pricing models to determine what's best for your business.

A business model plan combines the components of a business plan with business model analysis. This document augments or substitutes for the traditional business plan and has the following basic layout: Background: Follow the traditional structure of the business plan for this section. Breakdown of the business model into the crucial areas: Market attractiveness Unique value proposition Profit model Sales performance Ongoing competitive advantage Innovation factor Avoidance of pitfalls Graceful exit from the business Operational overview: Follow the traditional structure of the business plan for this section.

Competitive advantage enables a firm to perform at a higher level than others in the same industry or market — or with anyone competing for the customer’s limited budget. Competitive advantage can serve as a powerful catalyst for your business. Competitive advantage enables you to outsell, outprofit, and outperform others in the same industry or market.

A business model that says, essentially, "I used to work for a company that did the same thing," is not something investors want to hear. This plan has a good and a bad aspect — the bad part is a successful company is already using this business model. Without significant change to the model, why bother? The good part is a proven business model and management that understands the model.

The concept of a business model may be new, but the underlying business dynamics aren’t. The East India Trading Company and Henry Ford had good business models, whether they were called business models or not. For many years, businesspeople have asked themselves two key questions: Is this a unique concept? Can I make money selling it?

The unique value proposition (UVP) extends the concept of the unique selling proposition (USP) to include the benefits derived by the customer. Customers ask themselves, “Are the unique features of this product worth the price?” Customers engage in this features–value weighing for all purchases. Augmenting your USP with a strong value proposition creates customers’ desires to trade their hard-earned dollars for your product.

Great business models command better margins than the competition. Sometimes, a business model can be improved simply by clever pricing strategies. The list below offers some methods to potentially raise prices and corresponding margins. Premium pricing: You can't help but think that expensive products are better.

If your current business model is no longer effective, it's time to make some changes. When you're designing or re-designing your business model, keep these questions in mind: Does the model generate margins superior to the competition? How easily can your idea be copied? What can you do to slow down the competition?

When designing a business model, you have a lot to remember. Refer to this handy list of business-model reminders to make sure you stay on track: Different is always better than better. The better mousetrap plan rarely works. No margin, no mission. Great business models have great margins. If it's not easy to sell, it's not worth doing.