I use the following worksheet for initial conversations with clients, especially startups. If the company is at a very early stage, then defining the business model can take a few iterations. If the business is more defined then the output of the worksheet is the beginning of a serious conversation. If you only have a general idea of what your business is going to be, then you will benefit from completing this worksheet.
General Business Model Worksheet
At this point our goal is to create a back of the envelope description, an outline for a five minute discssion where we answer the question: how does your business idea make money?
It’s not meant to be a pitch, you’re not selling anything. You’re trying to communicate (to your business partners, to a consultant, or even to yourself) what you do and why it is valuable, perhaps even sustainably valuable.
If you can illustrate some of it – do it.
Okay let’s start.
Define the product
Describe your product in two sentences. Something along the lines of:
my product is a ______ (software/gadget/piece of clothing/service/etc.) that takes ____ (what’s your input?) and generates ____ (and your output?).
What is the value proposition of your business?
- Customer – Who’s your customer? (focus on the ideal type, the ideal customer)
- Customer Problem – What customer problem are you solving? (or define it in terms of what customer needs are relevant?)
- Proposed Solution – How does your product/service solve the problem?(or how are you satisfying customer needs?)
- Added Value – What value is created to the customer because the product/service exists?
Do you have a competitive advantage? Is it sustainable?
- Competitive Advantage – What are the advantages of your product/service over existing solutions?
- Is it sustainable? Is it inimitable to a level that will maintain profitability over time? How so?
Okay, you create value. But how do you capture value for profit?
- How do you collect payment?
- What are the distribution channels?
- How do you compensate suppliers?
Image for this post on homepage slider “Choices” by Akuppa John Wigham. Used under creative commons license.