You have heard about Google and Facebook and you probably don’t want me to talk about them either lightly or derogatorily. You love them. You love them so much you no longer search for anything online- you just Google. The most annoying “Verbfication” of a company’s name is “Facebooking”. What the fried chicken is Facebooking? Yet that’s the power that Facebook and Google have managed to wield with their copycat game. I know I promised not to talk about Google or Facebook in derogatory terms. Copycat is as far as I can go I promise. Hope it doesn’t sound too bad to get me hanged. But before you hang me for slandering your favourite online friends, let me assure you that the statement that Google and Facebook are copycats is actually true. Google copied Yahoo. Facebook copied Myspace. And they were good at that.

This conversation is about business models, sorry to open it with cats; not that cats are any bad except those that shed of course.

For a long time I have wanted to write about business models and how to craft your own but I have been hindered by the madness I have been seeing in the market today. Traditionally (and Wikipedia will confirm this) a business model has been known as the rationale of how an organization creates, delivers, and captures value. To be honest, I don’t like this rather formal description. The Munyaneza description of a business model is:  “How the pumpkin pie are you going to make money doing that?” A business model in my opinion is how you make money, nothing less nothing more. If you can’t be paid you have no business. If you are running a nonprofit you better have some buyers a.k.a donors. If you are in the business of giving out free stuff like say, the Red Cross, you better have some big government behind you.  Cash flow, cash flow. You need cash flow. You need to be paid.

If you are planning to start a new business and you are wondering how you are going to make money, there are two things you can do. One, you can copy what other people are doing. Two, you can come up with your own new and original business model. This article is about new business models but first let me entertain you with this copycat philosophy. Some people think that copying someone else’s business model is a bad idea. I don’t think so. I think that every business model can be improved by the next gul/guy. If you can find a way of improving an existing business model go ahead and do it. If you asked me I would tell you that yes, we needed a better search engine than yahoo. Yes, we needed a better social networking site than Myspace. Oh, and, we need a better business than yours. So if you are not innovating, someone else is going to come and eat your cake from right under you. Innovate or die.

I already gave you my definition of a business model. It simply asks how you will get paid for your products or services. That’s your business model. I don’t care about the lingo from your business professor. I am sure your college professor spent enough time going through all the lingo of business modeling including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, operational processes and policies, yad yad yad. But if your professor never told you that you will actually need to make money to stay in business, then you should probably go get your tuition reimbursed.

So how do you craft an original business model?

First of all, every business is created to meet a need. But if all you are doing is meeting a need you don’t have a business. So to have a business you must meet a need at a profit. A good example here is the richest woman in mainland China, Zhang Yin. Yin saw a need for paper recycling. She wanted to make sure that waste paper can be reused to save the environment. But how was she going to be paid in this environment-saving business? Buy scrap paper from the United States, import it into China, turn it into cardboard boxes, and sell them to companies exporting products back to the United States. That was her business model. Talk about business recycling. Literally. And Yin has build a billion dollar company from that simple model. Buy crap, make cardboard, and sell boxes. Buy-Add Value-Sell. A business model may have lots of pieces in the middle but in the end it’s all about how you are going to be paid.

There are two ways to earn revenue in your business: Immediate Revenue and Long Term Revenue.

The Immediate Revenue model is about generating regular income or cash flow. This model is also referred to as the self-sufficient model.

The Long Term Revenue model is a strategic model that focuses on investment for long term reward. Costs are incurred now for bigger pay-off later.

Each of the above models can be divided into 25 sub models and I am sure from these 25 sub models you can create any business in the world.  I won’t be able to write about all the 25 business models here but I am certainly open to discussing these models with you any time. Just buzz me at amon@amonmunyaneza.com and I will be more than glad to share with you depending on your business idea.