Every business is based on a business model. You can debate whether the model is well defined or undefined or whether it is realistic or crazy but every business has a business model. This model sets the high level direction for how the business functions and interacts with its stakeholders and, consequently, the business model determines the level of success that the business will achieve.
I was recently assisting a non-profit organization with some business related issues and uncovered that they had not spent any time defining their business model. They definitely had a model, or more accurately, they had a number of models all mashed together. To say that they were not operating very efficiently or effectively is an understatement. What they failed to realize is that their mashed up business model was a lid on their success.
As business owners and leaders it is critical for us to understand all components of our business model and how each component of the model interacts with and impacts the other components and the organization’s stakeholders.