The better your business model, the more likely you are to succeed. This is make or break for many startups – so it’s worth getting it right. A well-thought-out and planned business model will define how you generate revenue and make a profit, laying the foundations for future success and longevity. Here’s Innovate UK’s essential advice for defining your startup business model.
Cover All Areas of Your Business
“A shared vision will strengthen your company and inspire your team. But make sure they have the resources they need to thrive in their roles” – Richard Bradshaw, Head of Operations at Foodit.
You should already have a USP, your business model will focus on how to create, deliver and capture value from the USP. It should also paint a clear definition of your market.
Here’s what you need to include/consider:
- Value propositions
- Target customer segments
- Distribution channels
- Customer relationships
- Value configuration
- Revenue model
- Core capabilities
- Commercial network
- Partner network
“Look for strategic frameworks and guiding templates. They ask you fundamental questions about your business goals and brand vision. Most importantly, they help you get started” – Asli Sonceley, Co-Founder of Xtensio.
If you’ve not written a business plan before, using a template could be a great way of ensuring you’re covering all the vital information. There are plenty of online resources that can help you with this. Templates will give you a structured walk-through of your business to help you refine your model. Don’t overlook the importance of online advice on business plans – there’s plenty of vital information that can help.
“Offer your product to an impartial group of target users before going to market to spare guesswork and discover common pain points” – Thomas Smale, Founder of FE International.
It’s vitally important to validate your business early. Before you reach the stage of the launch, get your product in front of target consumers and get their opinion. Use genuine consumers at this stage – market research on friends and family isn’t effective. Ask your target consumers whether they’d actually buy your product/service, what their biggest issue or obstacle is, and of course how much they’d pay for it.
Once you launch your product, build milestones into your business plan, these should include:
- User base
Continuously Refine Your Model
“Reviewing and adapting your business model is crucial to surviving and thriving as a company” – David Bennison, Director at HBD Associates Ltd.
Your business model is never finished. You should always see it as a work in progress. Continually work on it and refine it using the knowledge you’ve gained. There are a few factors that are likely to affect your business plan:
- Cost pressure
- Price pressure
Your business plan should be as strong as possible to give you the best opportunity for success. Don’t skip over this.
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