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Sunday, December 12, 2010

Successful Business Model

What are the characteristics of a successful business model? There are many complex and convoluted theories and theses on this subject. Management gurus and consultants make their money by advising Board Members and CEOs (or CXOs, to make it more inclusive) of business organizations on how to create and run a successful business.

In simple terms, stripped of all-too-arcane buzzwords and difficult-to-understand concepts, a successful business model is one which is both sustainable and scalable.

1. Sustainable:

The first primary need of any business is to have the ability to 'retain' its potential to earn revenue. Sustaining the revenue stream is of paramount importance for any business to remain around for years and decades.

Revenue is what the business gets every time it manages to sell its product or service. Making and selling products and services which the business's customers will keep on paying for is crucial for survival. The revenue stream thus must have certainty for the business model to be successful.

2. Scalable:

The second primary need of any business is to have the ability to 'enhance' its potential to earn 'higher and higher' revenue with each passing year. Augmenting and increasing the revenue stream ensures ongoing business growth.

Growth is what fuels further business growth. Being able to scale up the business operations makes it possible to make and sell more and more and more. Of course, continuous improvement and innovation in the products and services to discover new revenue streams is a part of scalability.

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