A business model is defined as a formal or informal representation of the core aspects of a business. Along with the business plan (which is a formal statement of business goals of a profit oriented organisation, the assumptions under which these goals are thought to be attainable and the plan for reaching these goals) business model helps in understanding a business and its true value and potential.
As a part of my current job in an investment banking company, I have come across many a business model and plan. A careful study of the business model and plan often tells you about the philosophy of the promoters of the business. They could be conservative, defensive, aggressive, innovative, path breaking and more, depending upon the attitude and risk appetite of the promoters.
It is often very interesting to know the ingenuity with which the entrepreneurs convert a seemingly bad business into a profitable venture. This is achieved through innovative business models. They often introduce various by products or other sub-processes into the main plan and thereby make the entire process financially more attractive.
While I have often wondered about the origin of ideas that have attained the shape of these business models, the most impressive business model that I have ever come across was not found by me in any Excel sheet or Power point presentation but in the real life!
The other day while on my way back to home, after my holiday lunch in a Kerala style restaurant at Mahim, Mumbai, I was passing in front of the famous Sheetala Devi temple. Right outside the temple gate, I saw an aged lady sitting there with a basket of green grass and a cow standing next to her. The scene caught my interest and I wanted to know what is happening. Then I saw a man walking up to the lady and paying her money for buying little of that grass. The man then fed the grass to the cow and walked into the temple for a darshan.
Then I realised as to what was happening there!!
The lady was selling grass to the devotees so that they can feed the ‘holy cow’ before they visit the temple deity. What struck me in all these happenings is the excellent business model that aged lady has devised. The cow belongs to her and being from Mumbai city, she has no choice but to purchase grass to feed the cow. May be there are hundreds of old women who rear a cow and buy grass for feeding it. But for our lady it also offered an excellent business opportunity. She buys the grass from the market and then sells it to the devotees who in turn feed it to the cow. I am sure she must be earning more money by selling the grass than what she herself had to shell out to buy it from the market.
Her business model is very simple. She just route the grass for the cow through the devotees and makes more money than what she has invested. Her benefits are twofold; (i) she can feed the cow free of cost, and (ii) she gets some extra money to keep in the process. Wouldn’t you agree with me that it is an excellent business model? Well... if you have found a better one you can share it with me.