Assessing a Business Model

Guest post by: Jim Muehlhausen
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Competitive Advantage vs. Your Business Model - By Jim Muehlhausen

Traditionally,business models have been assessed in a subjective manner by entrepreneurs, venture capitalists, bankers, and academics. No one really understood or studied what made a great business model great. Like good art, they simply knew it when they saw it. Many times, these wise business people were correct in their assessment of a business model. However, we figured there had to a more scientific method to decide whether a business model was strong or weak.

After studying thousands of entrepreneurs, we created an objective methodology to score a business model. We discovered that every business model has eight key areas. These eight areas of the business model are:

#1: Excellent Margin
#2: Easy to sell
#3: The Four Capitals©: Intellectual Capital, Financial Capital, Human Capital and Brand Capital
#4: Ongoing competitive advantage
#5: Quality Customers
#6: Longevity of business/industry
#7: Graceful Exit
#8: Avoidance of Pitfalls

Some areas carry greater weighting than others. For instance, Excellent Margins represents 20% more score weight than Easy to Sell. The business model assessment system has 1040 total points available. Scores range from 0 to 1040. We have found that a score of 750 or more is above average, but scores of 900 or more indicate a strong business model.

If you would like to assess your business model look on the web for some of the free Business Model Evaluators.

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Competitive Advantage vs. Your Business Model - By Jim Muehlhausen

About the Author: Jim Muehlhausen

RSS for Jim's articles - Visit Jim's website

Jim graduated from Valparaiso University with a B.S. in Accounting, passing the CPA exam while still in college. While subsequently attending the Indiana University School of Law, he became the youngest franchisee in Meineke Discount Muffler history (1987-1991). After successfully selling that business, Jim founded an automotive aftermarket manufacturing concern. During his 9-year tenure, the company achieved recognition from Michael Porter of the Harvard Business School and Inc. Magazine in the IC 100 Fastest Growing Businesses.

Mr. Muehlhausen licenses his materials worldwide and is a nationally known business speaker. Over the past eight years, Jim has personally coached hundreds of business owners in more than 3,500 face-to-face coaching sessions and has clients in North America, Europe, Asia, Africa, and the Middle East.

The recognition and awards Mr. Muehlhausen's clients have won are too numerous to list, but include: Indiana Blue Chip Award, Ernest & Young Entrepreneur of the Year Finalists, and NAWBO Businesswoman of the Year. He currently serves on the Board of Directors of Now Courier, Inc as well as the Advisory Board of Indiana Business & Modernization Technology Corporation, and Urban Mission YMCA. For several years, Mr. Muehlhausen has served as an adjunct professor of business at the University of Indianapolis teaching Organizational Behavior, Management & Sales Management.

Aside from his book "The 51 Fatal Business Errors and How to Avoid Them", Mr. Muehlhausen has been published in various publications including Inc., The Small Business Report, Entrepreneur, the Indianapolis Business Journal, Undercar Digest, Digitrends, http://ceofocus.com and NAICC Journal.

Click here to visit Jim's website.

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