There are many ways to describe business models. One of my favorite from the book is that “A business model is a description of how your company intends to create value in the marketplace. It includes that unique combination of products, services, image, and distribution that your company carries forward. It also includes the underlying organization of people, and the operational infrastructure that they use to accomplish their work.” This description is in plain and easy to understand language yet very thorough and insightful. It carries out the full concept of business model.

The five component model and the business model canvas are both very useful tools for entrepreneurs to think about their business models. They both help start-ups to get a cleaner picture of all the components and touch down on very important points such as market segment, customers, value and strategy.

Five component model is highly condensed and each of component consists lot of questions to ask and to make clear. In the other hand, the business model canvas already help us to accelerate the process by asking questions and all we need to do is to answer those questions.

Greif Packaging changes their business focus from a commodity supplier of metal drums to a value-added service provider of “trip leasing” company. They listen carefully to their customers and provide full-service that other companies didn’t realized and capture the extra value. The extra value comes from helping their key customers to solve their problems. They take over the problems that their customers don’ t want to deal with at all and gain a big competitive advantage on this.

There differences between Franchising and Licensing,

1. Franchising – Franchiser will help to support and train Franchisee and its employees / Licensing – Licenser will not provide that
2. F – It is governed by securities law / L – It is governed by contract law
3. F – Franchiser have control over Franchisee / L – Licenser have no control of Licensee

Three similarities between Franchising and Licensing,

1. both grant receivers certain rights
2. both require royalty payments
3. both are exclusive intellectual property

Innovation is one of the most important key for a successful business. It is important because it may brings many competitive advantages as following,

1. Build a brand new market that no one to compete yet

2. Compete with other businesses in a new way

3. Mobilize a business and make it easier to access by other potential customers

4.  Increase productivity tremendously

5. Attract capital to help business to grow

It becomes more and more important nowadays because the internet is changing the entire world. The world is becoming more and more flat, so people that across the ocean can come in to your hometown to compete with you easily without you noticing that. The flat world requires that your businesses have to have more competitive advantages to survive.

Dell was successful because it well solves points of pain compares to many other similar companies. They keenly noticed what the market really wants instead of what they thought the market wants at that time and help their clients to solve their problems by providing the customized low-cost but fully functional computer to corporates and small businesses. They hit the points of pain and win the game.

I like this question because I never compare the meaning behind these two terms. Entrepreneur and small business have many similar characteristics, yet they are still different.

Here is list of characteristics that help us to see the differences between them,

1. Risk – Small business tends to have known and established product and services which means less risk, Entrepreneur tends to have higher risk product and services because they are brand new and not established before

2. Return – Higher risk means higher return, entrepreneur tends to attract venture capital and expect to have massive return, small business usually starts within family and friends and expect to have certain growth and return

3. Innovation – Entrepreneur tends to sell more innovative products or services, small business tends to sell products and services that already exist in the market

4. Way of problem solving – small business sells things that you need, entrepreneur sells things that you want

If I start another company, I won’t expect to be in full control, I would definitely choose to delegate my work and duty to people that I trust. A wonderful team makes a company perfect instead of one person.

The most important growth issues entrepreneurial companies will face are these two,

1. Productivity – A company has to be willing to keep making big changes in order to increase their productivity, and it is not easy at all to make these changes

2. Management – Managers determine whether the company will grow and grow in the right way

In general, entrepreneurs sell innovative products and services, face unknown risk and aim for rapid growth and huge return, they sell things that you want in the near future or now that didn’t have a strong present in the market yet and take the world to next level.