Selecting an appropriate business model

The choice of assessment criteria for the best Business Model dpends on the purpose of the evaluation being made: Main purposes for evaluating a business model:

• Benchmarking with competitors
• Assessing alternative business models for possible adoption or adaptation
• Evaluating the risk in pursuing business model innovation
• Evaluating an innovative business model in terms of its feasibility and profitability

Factors that determine a business models value potential

• Efficiency
• Uniqueness
• Fit
• Profit booster

The assessment of economic feasibility of a business model can be based on different factors:

• Assessing the economic feasibility based on:
  • Its incoming and outgoing value
  • What-if scenarioes
  • Sensitivity analysis
  • Caution: it is difficult ot express intangible benefits in financial terms
• Three levels for measuring the performance of a business model
  • Measures of profitability
  • Profitability prediction
  • Business model component attributes
• Additional factors that can influence profitability and viability:
  • Level of ownership
  • Firm's access to key information
  • Conflicts

See also: Business Model Canvas