Everyone has heard of a “business model”. The term refers to the basic model or methods of how a given business will make money. Of course, whether the business model is formalized or not, it’s the critical foundation of a business plan. It makes no sense to be in business if you don’t know how you’re going to actually make money (see failures of the dot-com boom).

However, there is much more about a business that can be modeled beyond the basics of how the business will profit. Business modeling can be applied to any aspect of a business; its management structure, ownership structure, operations, finances, employee productivity, legal risk and much more. In fact there is an industry dedicated to business process modeling. A common language for modeling these processes is BPML (Business Process Modeling Language).

A business as a system to model is a different sort of system than, say, scientific-oriented systems such as climate and weather. In the case of weather, there are thousands of instruments taking digital readings that can be easily fed into huge computer models to produce fairly accurate predictions. In the case is a business, most of the relevant factors are often harder to digitally quantify and more difficult to get that data into the computer model. However, as more and more aspects of business do become high tech, more data is available to build a model to improve profitability.

Business modeling is often used for visualization, as opposed to computation, as a weather model might do. Simple things like text-based and graph reports are basic methods of business visualization, but more advanced software can model and display diagrams of your company structure or business processes. Some business modeling can also compute values and supply guidance for decisions and we are developing software to do that.

Whether your business is very small or very large, proper modeling can improve profitability, and in some cases, dramatically. Contact us or check back periodically to learn more!