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This paper describes business modeling-a simple, yet powerful, approach to model and evaluate alternative business opportunities. A compelling argument can be made that employing this approach can accelerate the concept development and assessment process and increase the quality of business propositions carried forward to the business planning stage. Moreover, business modeling is broadly applicable, being relevant to entrepreneurs, investors, business advisors and non-profit organizations, as well as existing firms considering new lines of business.
INTRODUCTION
"You don't have a business, unless you have a business plan!"
How many times have we heard (or said) this statement? Preparing a business plan seems to have taken on the aura of a "rite of passage" along the path to launching a new venture. But what does an aspiring entrepreneur still exploring the world of possibilities do?
Does it make sense to invest the time and effort to develop a business plan for every option? Of course, not; nor does it make sense to make an educated guess which direction to pursue without a thorough examination of the alternatives and their implications. There must be something in between.
For those caught in this dilemma, an answer can be found in Business Modeling-a process of documenting the key assumptions of a particular business approach across a broad set of strategic and tactical components. The resulting Business Model1 should be sufficient to compare and contrast competing opportunities and make a determination as to which alternative is best to carry forward to the Business Planning stage. With a little practice, a number of very comprehensive Business Models can be developed over the course of several hours, instead of the several weeks or months required to develop a detailed Business Plan.
Formal Business Modeling methods are relatively new. This paper introduces Business Model Mapping. This method allows even novice entrepreneurs to quickly grasp the wide range of business opportunities and, within a very short period of time, assess a number of them to determine which (if any) is worthy of further development. Despite its simplicity, however, it is equally appropriate for experienced entrepreneurs, seasoned investors, and existing firms considering new lines of business.
BUSINESS MODELING
The purpose of a business model is to describe efficiently, yet comprehensively, "the rationale of how an...