A few days ago, Liu Run, the founder of Runmi Consulting, made a wonderful sharing around the business model for the students who participated in the first class of CANPLUS Delicious China Innovation Camp.
"Entrepreneurs who can understand some of the bottom business logic before or early in the business will help every decision they make in the future, and the business model is one of the most important bottom logics."
The following is the content of the sharing, I hope it is useful to you.
What is a business model? The business model is the transaction structure of the stakeholders.
If you want to do business model innovation, you have to find something called "global incrementality." The so-called global increment is the resource that was originally wasted by society, and by introducing the global increment, stakeholders can earn more money than the original, thus leading the transaction structure to obtain greater benefits. The biggest difference between a good business model and a traditional business model is whether there is a global incremental increase for the platform.
The emergence of global increments often stems from the emergence of new technologies. One of the most important theories is called the "mount theory", which means that every major business innovation usually has the rise of a new technology, which must be accompanied by major changes in the structure of transactions.
A complete business model includes three aspects: customer value, resource capabilities, and profitability.
1
Customer Value: What we provide to our customers
First of all, who are your customers? In a transaction structure, we first need to understand who your clients are. Users are your resources, but you have to make money from your customers.
For example, in a simplified transaction structure, there are usually three stakeholders: the brand, the agent and the consumer. In this transaction, the brand's customers can only be consumers, and can never be agents. The brand owner makes the consumer's money, and the agent is just one channel for him.
For the agent, the brand owner is his customer, the consumer is the agent's resource, and he has to keep the consumer to earn the agent's money.
Second, how do you find customers? One of the most basic ways is to segment your customers. There are many strategies for segmentation, and the most common approach is to segment through intrinsic attributes, extrinsic attributes, and purchasing power.
2
Resource Capabilities: How Is the Value Proposition Formed?
Business usually has cycles. Cyclical fluctuations often stem from changes in technology. Technological change brings something entirely new, creating scarcity. The state encourages innovation by protecting scarcity, and innovators can enjoy high profits for a period of time.
From a financial point of view, this is called profit, but from a business point of view, this is not called profit, it is called dividend. The so-called dividend is a short-term imbalance between supply and demand. If a company wants to operate for a long time, the dividend is unreliable. Only with pricing power, only higher than the average social profit, what the enterprise earns can be called profit.
When we study business models, the core of which is to study how to keep profits. But where there is competition, there is no profit, and the profit must come from where there is no competition. Therefore, enterprises must create a field without competition in order to have profits.
The only way to ensure that you are not competing is to have a unique resource and ability on your hands. There is a difference between resources and capabilities, only resources can bring capabilities, and there is no ability that is not based on resources. All the abilities you want to acquire are exchanged for resources, and the process of starting a business is to constantly replace the ability with the most basic resources.
Each industry requires different core competencies, and there is more than one. As long as you can do it and do it irreplaceably in the core competencies that the industry needs most, you have no competition and you can have real profits.
3
Profit model: Why business models create profits
What is the monetization method? Profit = Revenue - Cost.
Let's start with revenue. We get our income from our customers in about five ways: entrance fees, tolls, parking fees, fuel fees, and sharing fees.
The entry fee is a one-time fee, which includes two trading modes, one model is called buying, and the other mode is called renting.
Tolls are pay-per-use charges, such as gyms and coin-operated laundry machines.
Parking fees, that is, charging by time, such as lawyers, psychologists, shared bicycles, etc. are charged according to time.
Oil costs, that is, calculated according to units, the essence of catering charges is oil costs.
Sharing fees, charged according to value-added, chain franchises essentially earn sharing fees.
The five basic income models are the basic elements. You can innovate and design your own revenue model.
From the cost point of view, there are also several allocation methods: one is to bear the cost by the enterprise itself; One is that the enterprise and the partner share the cost; One is to let a third party bear the cost; There is also zero-cost variable, and the world's most profitable businesses are always those with zero marginal costs, which is usually a revenue model that only Internet companies have.
To make money is to create an inequality: income > cost.
We have always said that catering is the ancestor of all industries, and the business model innovation of this industry is actually not as developed as the Internet, but there are still a lot of opportunities for rethinking. I wish you all an edge from your products, as well as your business model, ride a white horse and run to your castle.