Principle 6: Find Your Supermodel
How do I develop the right business model?
Why is this principle important?
You don’t need to invent a new business model. You simply need a logical path to commercial viability based on what your target demographic is likely to pay for. You want to obsess about reaching, acquiring and keeping customers – the closer you are to your customers, the clearer you’ll get on the right monetisation strategy for your business.
What should you focus on at this stage?
- Explore different business models and revenue streams.
- Identify the strengths and weaknesses of your execution plan.
- Conduct a commercial sanity test on your proposed execution plan.
- Write a one-page summary business plan / proposition.
“A startup is a temporary organisation designed to search for a repeatable business model.”
– Steve Blank, Creator of Customer Development
Understand business model best practice
Choose a vision and mission
Be clear from day 1 why you’re doing it and how you’re going to make it a success. Simon Sinek’s ‘Start With Why’ is TED gold for getting this right.
Build a great product
No one will use it more than once if it’s average. This doesn’t mean it has to be perfect. It means it needs to be valuable to whoever you target.
Forget the grand business plan
Keep things simple – first customers, improve product, get to revenue. Repeat. The business model will emerge eventually.
Keep costs low and margins high
If you start with a cashflow positive business you’ll find it much harder to fail.
Create a realistic revenue plan
Have a plan for how you intend to make money
Even if it is not the masterplan, start with some kind of revenue model. The best kind of revenue for a startup is to ‘pre-sell’ your idea. If people are prepared to pay for something before it even exists then you can be confident that it will work.
Write the story of your business on one page
Not a plan, but a story – ‘this is my experience of the world and why I want to make it better.’ This helps communicate authentically why you are doing this and engage people (your future customers) in your motivations.
Conduct a commercial sanity check
Do the numbers add up? Don’t start unless they do. There is no point making something people love that loses money from day one. Decide what a good margin of profit looks like for you at the beginning.
Figure out your main delivery channel
How am I going to get my product or service out into the world in the simplest and easiest way? This could be through a facebook group, a meetup page, an event, a popup space or via email. You don’t have the time to chase multiple channels. Pick one or two and start testing them.
Join The Tribe Forum for Q&A on the Business Models principle.
- What different types of business models are there?
- How can I create a business with passive income?
- How do you work out costs & margins?
- How do I launch a service business (i.e. a consultancy)?
- What are good examples of online business models?
Have a question that hasn’t been answered yet?
Jump into the forum and ask away (just click “New Topic” in the top-right of the screen. Write your question as the Topic title, with your context / explanation as the Description).