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New avenues in business modelling [Business Models
Posted on February 18, 2013 @ 08:18:00 AM by Paul Meagher

On friday of last week, I thought I had posted my last blog on business modelling (A complete and profitable business model). I thought that I had a nice simple story all tied up in a bow. Further reflection, however, has suggested several new avenues to be explored.

One missing piece is the front end to the business model. How does a user interact with a business model in order to specify the parameters and parse the reports. To take this work any further requires that some front end work be done.

Another missing piece is the ability to select the type of business model that would be more appropriate to your business. So far, the business models I have posted have been for a Software as a Service (SaaS) type business model. There are other industries that adopt similiar billing practices so the monthly service fee business model has more generality than just a Software as a Service (SaaS) business model.

Nevertheless, there are business models that depend upon selling x number of product units a month in order to be profitable. The sale of these units is a one time event as far as the model is concerned. There is no carry-on source of revenue from the sale. Consequently, a products-based business model depends upon selling a larger number of units or a few units at a larger cost. The number of units should increase over time if the model is to be profitable or a growth-based business model.

Farm-based business models represent another potential twist in how business models are setup. One way in which a farm audits its operations is in terms of the amount of money that goes into an acre of land and how much money that acre makes in return. The state of California, for example, has recently released a manual called Organic Strawberry Production Manual for those wanting to get into the industry. The book includes an chapter in which the authors calculate the input costs, labor, rents, and income on a per-acre basis. They estimated the income per acre to be $41,250, the total costs per acre to be $26,342, and the net returns above operating costs (profit) to be $14,908. Given these figures, one could begin the process of developing a business model for Organic Stawberry Production. Keep in mind, however, that the estimated costs, revenues, and profits very much depend upon the particulars of the farmland, climate, markets, input and labor costs.

Organic Strawberry Production Manual

So stay tuned for another exiting week of experiments and ideas related to business models.

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