Every venture, whether big or small, requires a sustainable business model to succeed in the long run. Basically, a business model outlines how your company will be profitable, the products or services it will offer, the consumer segment it will cater to, and essentially its functioning on the whole. A flawed model is the reason behind most ventures winding up affairs within the first few years of being launched.
Here are 5 steps to build a sustainable business model:
Adopt a client-oriented perspective
Assess the needs of your clients, tailor your product/service to effectively solve their problems, and emphasize on offering them the best possible value. A viable business needs a strong base of loyal customers to remain profitable in the long run. As an example, clothing retailer Zappos has adopted a business model that maintains excellent client relationships through personalized recommendations, social media engagement, and generous benefits like free shipping and year-long return policies.
Establish robust business processes
Carefully design your key internal processes and maintain scope for constant improvement. Keep strategies in place to deal with possible risks that can affect these processes and the overall business. As your business grows in the future, your processes must be scalable without affecting efficiency, and without bringing in unnecessary expenditure. For instance, Walmart is known for its efficient internal processes that have allowed it to scale globally and offer cost-effective products.
Ensure adaptability to changing times
A key consideration while developing a sustainable business model is the ever-evolving market trends, technologies, and consumer demands. Your business model must be adaptable to these factors and stay afloat even with these rapid changes. Bear in mind that this adaptability must not come at the cost of business profits and client needs. Netflix is a classic example of one such business that adapted to the changing media landscape and evolved from a DVD rental service to a digital streaming service.
Secure financial stability
Make sure your business model is one that withstands unstable economic conditions, unexpected losses, or any other expenses incurred. Costco Wholesale, a leading retail player has a membership-based scheme that offers bulk products at warehouse prices. As such, the business will have a minimal impact even during bad economic conditions, as consumers will look to save and visit the stores for affordable products.
Focus on Brand Identity
Brand identity is key to popularizing your business in the market, and also for maintaining this popularity over time. Focus on creating a brand identity that helps your business stand out amongst the competition, attract new clients, and keep the existing ones satisfied. As a perfect example, Apple stands tall amongst the numerous tech companies thanks to its technological and design excellence. Apple’s dedication to top-notch quality and user experience continues to bring new customers while maintaining a strong base of loyal customers who eagerly await the launch of their latest products.
In conclusion, the above strategies will help you build a business model that is viable and propels your business toward long-term success. If you are looking to set up a business in the UAE, look no further than
Frequently Asked Questions
What is a sustainable business model?
Basically, it is a plan that defines every aspect of operating a venture, ensuring that it works and remains profitable in the long run. The aspects covered within this plan include the product/service, the unique selling proposition (USP), pricing strategy, revenue generation, target market, operational expenses, and so on.
What are the common types of business models?
Here are four (4) types of business models:
A manufacturing business produces goods from raw materials, and makes a profit by selling these through distributors or wholesalers.
Example – Steel Manufacturing
A retailer is the final business entity in the supply chain of a product and sells the product directly to the end customer.
Example – Shoe store
These business models offer services to consumers that can be availed at a fixed or variable fee.
Examples – Legal services
With a subscription model, customers can avail a product or service on an ongoing basis by paying a fee at regular intervals.
Example – Movie streaming service
What are the 4 key elements of a sustainable business model?
- Value proposition
- Profit strategy
- Resource management
- Operational practices
What is an example of a business model that is sustainable?
A video streaming service like Amazon Prime Video can be considered as a viable business model. The streaming platform offers high value to subscribers through cost-effective plans, discounted/free deliveries through Amazon’s e-commerce platform, and personalized recommendations. Also, the streaming platform has been in the business for quite a few years, and will surely continue to be in the long run, thanks to the never-ending popularity of digital entertainment.