By Ed McLaughlin with Wyn Lydecker
Before you start your business, ask yourself: How will you make money? The business model explains how you will pull together and manage all the component parts of your business to create value for your customers and yourself. Your business model includes your value proposition, revenue generation plan, production and distribution details, and resource requirements.
Too often entrepreneurs fall in love with their idea but fail to have a business model worked out for how they will make a profit and generate sustainable cash flow. Having been in an entrepreneurial sales environment, I understood the impact of the value proposition on revenue generation, the cost of building and delivering the product, and the need for management controls to ensure a profit.
When my customer at Baxter International, Bill Agnello, and I developed the business engine to handle hundreds of transactions and construction projects at Baxter through an outsourcing model, the concept was completely innovative. Because I had worked so intimately on developing the business model, I knew the math involved and felt certain of the huge profit potential a similar model could generate for my startup, USI.
In future posts, I’ll explore all the component parts of the building your business model.
Ed McLaughlin, Wyn Lydecker, and Paul McLaughlin are co-writing the upcoming book, “The Purpose Is Profit: Secrets of a Successful Entrepreneur from Startup to Exit.”
Copyright © 2014 by Ed McLaughlin All rights reserved