Do you understand your company's business model and why should you care?

Understanding and caring about your company's business model

What is a business model?

Everyone has heard of the phrase "Business Model" but what does it actually mean? At its very basic level it refers to way in which your organisation intends to operate. This could include how it intends to generate customers, provide a service, what products to sell or how it plans to make a profit. It could be viewed as a business’s plan on how to do business. All companies will have a business model whether this is formally stated on the company website or if it’s only in the mind of the business owner. Often an organisation will have a "business model" (how it will operate) and a "business plan" (what it will do and what results it expects).

Why do companies have one?

Most businesses start from an idea for a product or service and the business model refers to how that idea can be brought to life as a viable enterprise. Therefore, all businesses will have one if they know it or not. For many companies their business model is a fundamental tool which is created in the early days of its existence and which is maintained throughout the organisations life. For some companies the business model can remain largely the same over its life, but for others it can morph and evolve as the business adapts to a changing economic, social and political environment.

Why should I care about my company’s business model?

In today’s age of the corporate scandals where zero hours contracts, poor employee conditions, tax evasion etc seem to be in the daily headlines, there is little room for an organisation to have a business model that is not legally, ethically and morally acceptable. In fact many companies (including First Response Finance) have made their business model part of their unique selling point. Ours is to put customers and employees before profit which can be read on our vision page. Unfortunately, many companies don’t take these responsibilities seriously enough and in doing so take advantage of their stakeholders.

What should I do about it?

Never has the market place been so easy for customers to shop around, for employees to find alternative work or for consumers to change suppliers. There is a growing weight of pressure for the behaviours of organisations to be more transparent and for them to be accountable for their actions. Society has been empowered to determine the fate and future of organisations. Companies such as Amazon, Sports Direct and Deliveroo will testify to this. We now have a real choice to engage or not with organisations whose business models do not match our own ethical and moral standards. Only though acting on our conscience can we make a difference.

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