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A bstructComponent-based development (CBD) has bec.ome a much talked-about subject today. While the technology of CBD--as exemplified by environments such as EJB and COM--has become increasingly mature, this has not been complemented by corresponding maturity on the merhodology front. Of the few published methodologies available for the design of components, most address the process of building systems from a set ofpre-built components. However, an important scenario that is left un-addressed is that of the design of custom applications. In such contexts, the CBD design question involves the creation of business components from a set of sofrware requirements. Currently there is no published prescription that addressed this need At best, practirioners rely on published collections of sofiare patterns or heuristic guidelines such as those advocaring correct component granularily. We ,propose a comprehensive design methodology for identibing two classes of business components based on an object-oriented specification of requirements. These are entity components and process components. The methodology is illustrated with an example, and a real-life case study of an auction site is also described.