Understanding the Business Model of the Entrepreneur
Michael H. Morris, Ph.D. Oklahoma State University There is a need for a standard framework for characterizing an entrepreneur’s business model. Without a relatively consistent approach, it will be difficult to determine whether standard model types exist, the conditions that make a particular model appropriate, the ways in which models interact with organizational variables (e.g., management styles, structures, cultures), and other critical questions. To be of value, such a framework should have certain qualities. Chief among these are the need for it to be reasonably simple, logical and measurable, while at the same time being comprehensive and operationally meaningful. If the purpose is to model a viable business, then what is the essence of a viable business? For simplicity, let us assume that it is an entity that makes available a product or service to a customer in a manner that allows it to charge more than its expenses while distinguishing itself from others who sell the same thing, in the process generating an acceptable return on investment. Inputs are translated into outputs, and this is accomplished in a way that makes economic sense and is sustainable. It would appear that, in seeking generalizability, most of the extant perspectives attempt to oversimplify a firm’s business model. The challenge is to produce a framework that is applicable to firms in general, but that serves the needs of the individual entrepreneur and the unique combinations behind his/her venture that make it sustainable. Accordingly, a framework is proposed that consists of three levels, or sets of decisions, and these are termed the ‘foundation’, ‘proprietary’, and ‘rules’ levels. Further, at each level, six basic components are considered. The Foundation Level: Defining the Basic Components At its essence, a well-formulated