Entrepreneur Portal for Virginia's Growth Alliance Region

5 Entrepreneurial Business Models

5 Entrepreneurial Business Models

There are innumerable business models, but a few are more common options for people who are interested in starting their own business.

These include E-Commerce, Franchise, Network Marketing (or MLM), Consulting, and a Home-Based Business. Read on for more information about each.

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What is a Business Model?

What is a Business Model?

When you're thinking of starting a business, you'll inevitably be asked "What's your business model?" This may sound formal and scary, but it's not a trick question or one that requires you to have an advanced degree.

When someone asks you what your business model is, they're basically just asking how you plan to make a profit. There are many factors that go into that question, though. The following are a few questions you should consider:

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A simplified look at budgets

A simplified look at budgets

All businesses are built on a simple profit model. Revenues (money made from sales of services and goods) minus Fixed and Variable costs = Profits.

Revenues come from the sales of products and/or services and the receipt of this money is critical in the cash flow of any business. Incoming cashflow from loans helps cashflow, but is not included in Revenues when you calculate your profit. We'll

Fixed costs consist of items such as rent, insurance, mortgage and equipment lease; if you have salaried employees, these costs would also be fixed. These costs stay constant month to month so are easy to budget for.

Variable costs include items such as utilities, office supplies, automobile expenses, hourly labor, materials used in producing your products, and miscellaneous expenses. These costs can vary each month depending on the work load of the business and, in the case of items like utilities, the season of the year.

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Accepting credit cards is good business

Accepting credit cards is good business

I wish I had known how important (and easy) it is to take credit cards as payment before I started my business.

When I started my business I did not take credit cards. I didn't want to pay any of the fees associated with accepting credit cards as payment. I got paid with checks, money orders and cash. My payment policy changed only about a month after I opened my business.

All it took was one bad check for me to rethink how I got paid. I contacted a company that allowed me to process credit cards over a mobile phone app and I was able to accept credit and debit cards as payment before the end of the week. I started taking credit cards. I stopped taking checks.

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Trying to save money on professional services can cost you

Trying to save money on professional services can cost you

If you need help with something that should be done by a professional, you should get help from a professional.

Many people think that they can save money by doing the work of an attorney and accountant by themselves they will save money. If you have never been a lawyer or an accountant then acting as a lawyer and accountant will save your business money only if your time is worth nothing.

If you had a toothache you wouldn't go to the hardware store and buy a power drill. You would go to the dentist and get help from a professional with training, experience, tools and medicine.

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How to Write a Business Plan

How to Write a Business Plan

"He who fails to plan is planning to fail"... Benjamin Franklin

Your business plan will serve as the road map you'll follow as you build your business. The plan isn't fixed in stone and can be adapted as circumstances change, but having a plan to work within will help you stay focused on your goals. Any possible investor or loan source will also want to see your business plan to help determine whether your business is a good risk for them.

Some items that should be covered in your business plan include:

  • a description of your company, its mission, and its business model.
  • a description of the product or service you will sell, your target market, and how you will reach that market.
  • competitor analysis and strategies to provide you with an advantage.
  • information about the key team members who will be building the business. Many times it will only be you, but you may have other partners or possibly an important hire lined up.
  • cashflow projections for at least a year, including possible sources of funding, problems that may arise and how you will deal with them.
  • a damage control plan for how you would deal with possible negative scenarios such as product obsolesence or a large decrease in sales.

There's no need to go it alone when creating your business plan, though. You can use the Small Business Administration's online Business Plan Tool to help.

 

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