THE words “feasibility study” or “business plan” may be one sure way of assessing whether a person is bent on succeeding in business or just toying with an idea of starting one.

Sure there are entrepreneurs who made it big without those two things, but I’m certain they will tell you that if only they draw up a system, they would have been able to avoid a lot of costs not just in terms of money but also in the time spent learning from trial and error and from opportunities lost because of lack of planning.

A business plan is a roadmap to where you want to take your business. It entails touching on all aspects from the essence of your product or service, target market, marketing plan, sales strategies, standard operating procedures, to the bottom line of finance.

But before we get overwhelmed by all that needs to be done in a business plan, let’s first focus on the starting point of any business plan— the business model.

The business model is an area where start-up entrepreneurs can feel comfortable with. It encourages the concretizing of an idea and laying it down as a foundation from which other areas of business can build upon.

Business model is also known as value proposition or business concept, it is a summary of what the product or service is all about, the market it intends to serve, and the competitive edge it has over others. It aims to answer the question, “Why should customers patronize this product or service?”

In an article published by Entrepreneur Philippines, Business Coach Inc. President Ruben Anlacan Jr. cited the following format for a business concept:

1. The first part of the business concept should state the main idea.

2. Then explain why it is better than your competitors.

3. Discuss the target market of the product or service.

4. The location of the venture should then be pinpointed, at least in principle.

5. Show the business model that will make the business profitable.

6. Finally, project the profitability prospects of the business concept.

In a separate article published in businesstrainingph.com, Anlacan stated that having a business model will enable you to discern the strengths and weaknesses of certain aspects of the business concept before you spend too much time or capital.

You can have an overview of the heart of the business without the peripheral parts that are not as significant. A business model is not just a small business plan but it is also an initial test of viability.

By drawing up even the simplest business model, one can have a guide on how to proceed in business, whether to continue with the original product or service, make essential changes, or scrap a project altogether and move on to another more viable idea.