How did you define your business model?
I suppose all startup founders have experience in creating their business model including purpose, target customers, offerings, strategies, infrastructure, sourcing, trading practices, etc. How did you handle it? Did you use some canvas/tool for help? Do you change/update your business vision?
Founder & CEO, Hustle Crew
My business model has changed a lot. I launched as b2c SAAS then pivoted to b2b services. Right now I'm a b2b company selling consultation and education products but I have a b2c channel, too wrt my community and a occasionally some products, too. My business model has been static for the last 18 months (after changing a lot in the first 18 months) so I think it will be constant now. At least for this specific business!
@abadesi Thanks a lot for the answer and your experience. As a person who used to work with risks too much, I'm used to the practice of doing constant analysis. And I'm glad to know that we're not the only one who changed our business vision several times. From the start, we had a clear vision of the product without a clear understanding of its revenue streams. Now we made a big step forward and became a little more confidence in this matter. If it's not secret what the exactly pushed you to change the business model? Revenue analyses? Feedback?
Founder & CEO @ Recal
I'm still in the process of doing this, but I've been going through it in a few steps: First, I did customer research (surveys, interviews, demos, etc.) to understand the users I wanted to serve. My product could theoretically be targeted at either individuals or at businesses, and needed to determine the market to create the monetization strategy and how I'd want to structure a team around the customer. Second, I had an idea of what areas to cover in my business model, but wanted to prioritize which areas to focus the most research and effort on. So I looked at a lot of pitch decks that companies have used to raise money. I particularly looked out for what areas they highlighted as key aspects of their business model. When doing research, I organized it in a combo of Google Sheets (for modeling / opportunity assessment) and a slide deck (with lots of appendices for the nitty gritty things). Third, once I had a draft I talked to as many people about it as I could so that they could poke holes in it.
Venture Capital Research
The business model canvas provided by Bharat below is a handy tool to cover all angles while defining your business model. Moreover, I want to provide some more perspectives to help founders define their business model keeping it in line with how angel investors and VCs evaluate it- 1. Investors want to see whether you can make money, so you have to show them how "big" of a problem are you solving i.e. what is your target market size, growth rate (shrinking market is obviously a red flag). 2. How do you make money and how you make "more money"? Here the investors want to see your revenue streams and how do you grow it. Tip: Look at the current trends in your market and try to show how the trends are conducive to your growth (Tip: Avoid focusing on temporary/cyclical trends). 3. a) Why are you so special? The focus here is on value proposition provided by you and how it is in line with the needs of your target customer base. Define your customer segment and describe their characteristics ( you can use demographic, geographic, psychographic, and behavioral data for segmentation). Tip: A good thought process is to always make this connection- This is the problem of our target customer segment and this is how we solve it. b) Your key resources and especially your team strength. First time entrepreneurs should show their competency to make the venture successful by focusing on their previous industry experience or key skills and leadership skills. Overall, how does the team, by working together create a unique value catering to the target customer segment. 4) What does it cost for you grow? Provide a detail description and justification of your costs. Decreasing costs are favorable, however, strong justification is required for increasing costs. Bonus tip: When you are talking to Angel investors or VCs, always have a Due diligence docket ready. In the preliminary phase when investors ask for due diligence documents and you send them the docket, it shows that as the manager you are proactive and well organized.