KEY QUESTIONS ABOUT YOUR BUSINESS MODEL THAT ENTREPRENEURS NEED TO KNOW HOW TO ANSWER

Accelerate your business "Key questions of your business model that you must know how to answer as an entrepreneur". Analyse and discover this TIP!

Designing a new business model is fascinating, as it means giving shape to that idea that has been lurking in the back of your mind for a long time... but it is not the most important thing Creating your perfect business model on a blackboard is not going to make it more real, the key is to execute it, but of course... How do you decide if you are on the right track? What should you trust?

There is a pattern, a series of factors that are key to designing a good business model and which are of course based on common sense.

Some key questions an entrepreneur should know how to answer about his or her business model are:

1. Who are your customers or customer segments? What is their demographic and psychographic profile?
2. What REAL problem or need do your customers have that your product or service solves? DO YOU SOLVE A REAL PROBLEM?

To be successful in your venture, you must ensure that your product or service actually solves a need or problem in the market. If you don't, your business may not have a real demand and therefore may not generate the revenue needed to stay afloat. Although it may sound like a truism, it is far from it. In my opinion, a real need is one that solves a customer problem, whether explicit or tacit (I need a car vs. I need to travel longer distances faster). It is a response to a situation in which the customer needs to solve a job. Unfortunately, often, We base our entire model on intuition, or worse, on "creating a new market" of customers who do not yet know what they need. Whether you are convinced that the problem you are solving is real or you just have an intuition, the important thing is to understand that the answer to this question has to be given by the customer and not by you... and he will do it in a very clear way: by buying your product or service.

What is the unique value proposition you offer your customers? Why should they choose your product or service over your competitors'? WHAT DO YOU DO THAT IS DIFFERENT? WHAT IS YOUR "MOJO"?

We are often obsessed with differentiation, and we focus on generating a product that is clearly different from those of the competition... without realising that your product is not what you manufacture, but your entire business model. This means that perhaps you don't have to consider being different in the product but in, for example, how you deliver it to the customer, how you charge them or even what kind of support you give them. But what is really important is that you don't try to be better than the competition, but different. As we have said before it is great that there is competition, what you have to do is try to get out of the rat race and find another way of doing things that your customer values and needs.

What is your revenue strategy? How are you going to generate revenue and what is the price of your products or services? DO YOU MAKE MONEY SELLING? HOW DO YOU MONETIZE?

One of the most important points of any business model and where we show the least imagination is in the revenue streams. As well as considering that there are dozens of ways to make money in your business model, we must also take into account its importance. I always say that a business model that starts with a lot of revenue streams only indicates that you have no idea how you are going to make money... which in itself is not a problem, but it implies that you will have to have money and time to explore. Moreover, we only consider (or imagine) how much money we are going to earn, but not how much it is going to cost us to earn it... which is closely linked to the previous point. If in your business model you spend more money on a stable basis on attracting customers (customer acquisition cost) that the margin you get from them (customer lifetime value) you have a problem... obvious? No doubt about it. But do you really know how much money it costs you to attract each customer?

What is your marketing and sales strategy, how do you plan to promote and sell your products or services, i.e. HOW ARE YOU GOING TO GET CUSTOMERS?

Possibly the most important aspect of the business model, as we tend to focus too much on making a great product and not enough on attracting customers to expose them to it. We have been told that if you make a great product the customers will come on their own... but in my experience this is not true for two reasons: on the one hand you think the product is great (not your customers), and nowadays you have to compete to the death for the attention of your customers. So think very seriously about how you are going to attract customers, but not in a generic way by saying "I will spend advertising on Google" but by getting "wet", i.e. by planning well and realistically the channel, i.e. the path that takes you to the heart (and wallet) of your customer. And that always means spending money, often more than you expect... so be prepared.

1. What is your cost structure? What are the main costs associated with your business model and how will you reduce or control them?
2. What are the main resources and activities needed to start up and maintain your business model?
3. What are the main partners and suppliers needed for your business model?
4. What are the main key metrics you will use to measure the success of your business model?
5. How do you plan to scale and grow your business model in the future? WHAT WILL DRIVE YOUR GROWTH?

Finally, and although at the design stage it may seem like a long way off, we need to understand how the growth engine of our business model works... something that has profound implications for the decisions you will have to make regarding product and marketing strategy (for example, a model that aims to base its growth on viral strategies has nothing to do with one with a sticky growth engine). And this is important, because if you get the wrong factor to focus on (for example, in a "sticky" model you have to focus a lot on retention and activation, and maybe not so much on acquisition) you will have spent a lot of money on something that is not important to your model... and you know:

"The worst sin a startup can commit is to squander its resources on building something that no one will use".

In my opinion, the key is not only to have thought long and hard about the above points, which are key to designing a good business model... but to leave the blackboard aside and get to market as soon as possible, going out into the street and validating it early in the real world (because, just like in The X° Files, the truth is out there and not in your business plan). These questions will help an entrepreneur to define and understand their business model in a clear and concise manner, which in turn will enable them to make informed and strategic decisions for the success of their business.