Teaching entrepreneurship and working with clients has taught me that the concept of a business model is challenging for many to understand.

When I ask someone, “What’s your business model?” I get a lot of blinking and stammering.

I get it. I couldn’t have told you my business model for the first several years of my business.

If asked, I would have answered, “Making enough money to live comfortably on an ongoing basis?” (Note the question mark.)

While that’s a worthy goal, it’s definitely not a business model.

So, what is a business model, then?

I love this simplified definition from one of my favorite authors, Michael Lewis of Moneyball and The Big Short fame:

At its core, this is absolutely true.

But, of course, what sounds simple is anything but.

How you plan to make money (or do, in fact, make money) often includes many parts. Here are a few components of a business model:

• Value Proposition​
  ​Why are people going to buy from us?
• Customer Segments​
  ​Which groups of people or companies are we targeting?
• Key Partners​
  ​Who do we need to work with to deliver our value successfully?
• Cost Structure​
  ​Which things cost the most money and are integral to our success?
• Channels​
  ​How will we attract prospects and then convert them to paying customers?
• Revenue Streams​
  ​What are the different ways we will earn money?

The truth is there are as many business models as there are businesses.

If you’ve been through a course like the Kaufmann Foundation’s FastTrac, which I’ve been teaching for the past half decade, or some other boot camp, or you’ve read a business start-up or development book, then you’ve probably created a business plan or business model canvas.

You’re ahead of many entrepreneurs on that front.

If you haven’t, I’d say start with a business model canvas, which is a one-page document designed to help you define pretty much all of the above-mentioned aspects of your business, and then some.

But even if you’ve got a plan or model all worked out, it’s important to recognize that your model will change as your business develops.

It’s not a static, set-it-and-forget-it kind of thing.

In fact, most, if not all, successful start-ups do not achieve success by pursuing their initial business model.

Beneath almost every successful company there’s a dead business model or two or three.

Often, opportunity or necessity (or both) drive entrepreneurs to innovate, pivot, or reinvent some or all of their model, which unlocks unprecedented growth.

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I believe our economy is at an inflexion point, which makes it a great time to reconsider and evaluate so many of the key aspects of our business models and how we drive profitability now and in the future.

Over the next few weeks, I’m going to dive into various business model components, including cost structure, revenue models, channels, and pricing models.

If you’d like to learn more about a specific aspect of business planning or strategy, please let me know and I’ll be sure to include it.
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Until next week, remember, growth only happens if and when we let it. So, open yourself up to it.
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PS - Last week, I said Cheers to You and encouraged you to Be Your Own Cheerleader.

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Want some help with some or all of your business model? ​ ​ ​ Schedule a session today.

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