how to create a business model
there is no one size fits all when making a business model different professionals may suggest taking different steps when creating a business and planning your business model here are some broad steps someone can take to create a plan instead of reinventing the wheel consider what competing companies are doing and how you can position yourself in the market you may be able to easily spot gaps in the business model of others criticism of business modelsjoan magretta the former editor of the harvard business review suggests there are two critical factors in sizing up business models when business models don t work she states it s because the story doesn t make sense and or the numbers just don t add up to profits 2complicated business models can put off investors and hinder a company s growth people are less eager to invest in a company they don t understand moreover some business models can be less profitable and at risk of being compromised what works one year isn t guaranteed to continue doing so in the future take the airline industry for years major carriers such as american airlines delta and continental built their businesses around a hub and spoke structure in which all flights were routed through a handful of major airports by ensuring that most seats were filled most of the time the business model produced big profits however a competing business model arose that made the strength of the major carriers a burden carriers like southwest and jetblue shuttled planes between smaller airports at a lower cost they avoided some of the operational inefficiencies of the hub and spoke model while forcing labor costs down that allowed them to cut prices increasing demand for short flights between cities as these newer competitors drew more customers away the old carriers were left to support their large extended networks with fewer passengers the problem became even worse when traffic fell sharply following the september 11 terrorist attacks in 2001 3 to fill seats these airlines had to offer more discounts at even deeper levels the hub and spoke business model no longer made sense example of business modelsconsider the vast portfolio of microsoft over the past several decades the company has expanded its product line across digital services software gaming and more various business models all within microsoft include but are not limited to 