Modelling good business behaviour

Our latest spotlight shines on the business model: one of the critical elements of the strategic report, if not the most critical one.

When done well, it is a vital component of a company’s value creation story. We regularly run workshops with clients to articulate their business model and value creation story.

Below, we detail the key elements investors and other stakeholders tell us they want from a business model.

How to achieve best practice

– The model should describe what the business does and why it does it, and how the business is structured.

– Disclose how economic value is generated, the key revenue drivers and, where applicable, multiple revenue streams.

– Articulate the qualities that help your business stand out from the crowd; this should offer more than simply high-level platitudes, it should allow investors to understand what makes your business unique.

– It should be specific to the sector your business operates in and be jargon free.

– Provide disclosure of the stakeholder groups the business creates value for.

– Identify resources and relationships and how these are optimised.

– Articulate how the business model will help deliver the strategy.

The Luminous view

The business model is vital in telling your story.

Our clients Dialight and National Express are leading the pack with detailed business models.

– The Dialight business model outlines the key inputs and how these are enhanced. The model clearly describes what the business does, its purpose and the value chain, along with how Dialight adds value at each stage. The model also transparently outlines the revenue streams, how profits convert to cash and the value shared with stakeholders.

National Express uses the business model upfront to communicate a number of key factors that may be important to investors, including revenue by region, areas of operation and various revenue lines. There is detailed disclosure around value creation, competitive advantage and sustainability.

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Connor Lundy

As Investor Insight Executive, Connor works closely with Stephen Butler, Luminous' Investor Engagement Director to research the latest best practice regulations and trends across narrative reporting, digital, investor events, sustainability and integrated reporting.