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How to build a sustainable business model

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How to build a sustainable business model is the first step toward business success. The business model is how you make money and every business has a business model. It is important to examine your business model’s strength periodically. Often times external factors can change whether your model maintains its sustainability or not. For example, a down economy can change how well your business performs if your price point has become too expensive. As a result of a down economy, you are selling less products and services than you did prior to an economic downturn. The entire world experienced this scenario during the subprime mortgage crisis as we watched the U.S. economy crash in 2007. The crash impacted the world market. It became evident to small business owners and large established corporations that a severe economic downturn could, in fact, force your company doors to close.

What does this have to do with building a sustainable business model? Your model has to be flexible enough to withstand economic downturns and external change agents. Building a sustainable business model means you have to pay attention to everything that can impact your business. What is a business model? It is a mix of key ingredients that work together that creates strength.

• Do customers want your product or service? Is your product or service fulfilling a need? Are you selling the right product or service? These are some of the questions that you should be asking about your product or service.
• Can you monetize your product or service? How can you monetize your product or service?
• Is your product or service sustainable? Will it create revenue sustainability over time? How well does a customer purchase at the current price point? Do customers purchase in ebbs and flows? If so, why? Will your product fizzle out?
• What, radically, differentiates your product or service from your competitors? Warren Buffet said to his top managers in a letter, “If everyone is doing it, then it is not good enough.” What makes your product or service special?

If your business model is weak; it is weak because one or more ingredient needs adjusting. Do a comprehensive analysis of your business model and make the changes to support your long-term growth and sustainability.

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