Evaluation of Business Plan Models

Introduction

            Starting up a business and going through the process of managing it are two different entities that require professionalism and experience. In the process of setting up a business, an entrepreneur is needed to be equipped with adequate knowledge on how to run it, understand various market forces and possible dynamics, and also have an insight of what they need to achieve after some time (Muegge & Matthews, 2013). A business model is a necessary tool for every entrepreneur as it outlines what the operation plan entails. A model includes analysis of the nature of operations, and how profit will be generated in a specific timeframe. Business models indicate ways in which an organization is positioned in the value chain of an industry and also illustrate how the business organizes all factors to maximize profit margin. Various business plan models have been established to outline different aspects of business management right from the establishment up to expansion phases. Some of these models comprise of commissioning, advertising, subscription, production and accessories.

Analysis of business plan models

Production model

            This business plan model entails selling products or services produced by the same company. It is the most basic and viable. This model outlines that profit can be achieved if the business can make enough sales hence covering the production, distribution process, and the storage costs (Muegge & Matthews, 2013). Studying various market forces is the key to success in this model. This is considered the best plan compared to other models such as advertisement and commissions. The production of goods and services is, however, faced with the challenge of duplicates found in the market. This reduces the chances of meeting the target customers. Counterfeits reduce sales of original goods, and this leads to losses.   

Advertisement

            Several companies have developed their operations in selling spaces for their advertisement. Apart from billboards and other publications, internet marketing has gained grounds in the last fifteen years (Muegge & Matthews, 2013). The cost per thousand costs per click and cost per action are three models utilized to earn profit in internet marketing. The price per thousand (CPM), entails payment for 1000 impressions by the advertiser to the publisher.  The cost per clicks (CPC) includes payment of a fixed amount on every click to a specific ad. And finally, the cost per action (CPA) outlines that certain payments should be made after a particular act such as lead or sale. The high number of operations or sales translates to an increase in profit. However, this business is viable after a considerable investment is made in attracting the right audience (Henry, 2010). After establishing the company, huge profits are realized since operational costs are low compared with the production plan. 

Commission Model

            This type of business plan writing model is a contemporary bridge between a consumer and a seller. It requires a low amount of investments which translate to lower profit margins compared with advertisement or production (Henry, 2010). The intermediary obtains profit once the buyer accepts the product. In some instances, the commission can be fixed no matter the amount of product or services sold. Commissions are better when the salesperson has identified a good customer base; hence, they are very discouraging during the early stages, but once the base is established, the profit margin is high.

Subscription

            This is the only model where the company has an insight into the amount of revenue they will receive after a specific duration. The subscribers are the primary source of income, and the more they are, the high amount of income collected. However, the subscriber acquisition costs take a long time to be recovered; hence, at the beginning of the business, a discouraging low revenue generation is experienced.

Accessories

            This business plan model entails selling a particular product at a cost close to production cost with the sole aim of selling other associated items at considerably high prices (Gayo, 2008). For instance, companies which produce razors sell them at lower prices, but the main profit comes from selling razors blades which are expensive. The two items exist together; thus, a customer has to buy the razor blade to use the razor.  Similar to the production model, the accessories plan is achieved after the identification of a market opportunity of the products. However, the strategy is more profitable than models such as subscription and commissions. 

Business plans of Microsoft Project

            Microsoft project is software developed by Microsoft Company that is used in project management. Its main role is to assist project managers in developing schedules, allocation of resources to various tasks, keeping track of the progress, analysis, and management of budget, and also evaluation of workloads.

            The Microsoft project has integrated most of the business plan models, and this has increased on the profit margin. The software is developed or produced for the consumers where they get it through subscription. The production of this software and sale is facilitated through the development of other software accessories such as spreadsheets, windows, and PowerPoint, which are essential for the operation. The production model entails coming up with a unique product which will outdo other products such as Google docs. The process of production is an established one since the customer base has already been achieved. The regular update of this product makes the company always to be a top priority when a person is looking for project management software. 

            The business plan for this service is majorly subscription on the products made by Microsoft Company. This plan has outlined the life of subscription to enable the users for renewal hence continue using services such as cloud-based storage of data. However, the purchasing of new licenses is not required for the software. The company keeps on updating the software to different versions, and this has formed the basis of profit maximization. 

CLC Business plan selection

             Mammography is one of the new services that have been endorsed by different health organizations and ministries across the world. It helps in identifying breast cancer at early stages, thus assist in treatment (Harvey & Edward, 2016). This process entails running the patient through low-level x-rays exposure to identify the possibility of development of the tumor, which causes cancer.

            The project will utilize the commission form of a business plan. The screening process entails finding those affected by the cancer tumor. In this case, the screening procedure will involve identification of the disease, and after that, the patient is sent for further treatments and screening, which are costly in one of the modern health facilities. The specialist performing the task will refer the patients to the hospital and thus earn a commission. In a mobile unit that is well established, further services such as treatment and prescription of drugs might be available, thus maximizing the profit. This type of plan entails an accessory model; since the mammography services might be done at a lower cost but the main expenses would be incurred during treatment phase but at the same unit.

Conclusion

            Business plans and business models go hand in hand in the establishment and operation phase of any business. Business models illustrate strategies to be deployed in reaching target customers, enhancing competence, providing better management of business operations, and also providing ways of extending the network. There are numerous business plan models based on the nature of services. They include production, advertising, commission, subscription, and accessories. Identification of a business niche is the best way to determine which model will be utilized in the process of service delivery. The identification process is achieved after an intensive analysis of factors such as demand, taxation, inflation, the nlevel of technology, and capital.

References

Gayo, J. (2008). Doing Business by Selling Free Services. Web 2.0: The Business Model, Springer. 

George, G. & Bock, A. (2012). Models of Opportunities: How Entrepreneurs Design Firms  to Achieve the Unexpected. Cambridge University Press.    

Harvey, S. & Edward, M. (2016). “Systematic Review of 3D Mammography for Breast Cancer Screening.” The Breast. 27:52-61  

Henry, C. (2010). “Business Models: Opportunities and Barriers.” Long Range Planning. 43(2): 354-363.

Muegge, S. & Matthews, T. (2013). Business Models for Entrepreneurs. Best of TIM Review, Book 2, Talent First Network.             

Paige, A. (2019). “6 Types of Business Plans.” Business Planning and strategies. Entrepreneurs.

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