Determining the right business model takes the same amount of effort as creating the right product, but the approach and skills required are different. Investors recognise that two co-founders, with one focusing on the technical solution and the other on defining and building the business model, are frequently the preferred ones rather than just one founder. These two requirements must be fulfilled first.
On top of that, there are a few other things you must establish to increase your chances of success:
- A thorough comprehension of the issue that you are attempting to resolve for your clients.
- A market where customers actually have the option to pay for what you have to offer.
- A business strategy that actually brings in money for your company.
These are the 6 points to ponder and assist you while finding a suitable business model for your company.
- Calculate Your Costs and Compare To The Markets and Competitors. Existing approaches are frequently criticised by customers for not being intuitive or well-integrated, but old solutions may also be ingrained and familiar. As a lower bound on a price, estimate your costs, taking into account a 50 per cent gross margin. Products that are too expensive for the market will not be successful, and prices that are too low will expose you. Match the demographics of the market and the prices of rivals.
- Must ensure that your products or services could solve the current problems. If you have a prototype or alpha version, you should show it to real customers to see if they feel the same joy and excitement as you do. Search for criticism on the most proficient method to make it a superior fit. You won’t be saved by any business model if it doesn’t help or work.
- Test your support strategy and channel. Present the entire business model to a select group of customers or a focus group at this time. This must include all aspects of your pricing, marketing, distribution, and maintenance—not just a product pitch. Once more, you have the chance to make pivots for almost nothing.
- Engage investors and industry professionals and get them involved with ideas and suggestions. Get the SME (Subject Matter Expert) opinions. You can get the objective feedback you need and connections for establishing distribution and sales channels from a small advisory board of outsiders with experience in your field. Even if you are bootstrapping the project, it is still beneficial to inquire about the opinions of potential investors.
- Execute a pilot or local rollout as planned. A business model is well-validated when it achieves good traction during a limited rollout. You can test prices, quality, and costs in a few stores or a single city with the least amount of risk and the fastest possible recovery and correction time. Keep your big inventory buildup and viral campaign for later.
- Must focus to obtain data, feedback and info from potential clients and get the sampling group. Ask for publishable testimonials and word-of-mouth support from those first few customers and give them extra attention. Take it as a sign that the company will probably not expand at the rate you anticipated if you are unable to gain their support, even with your own efforts.
Your business model can either be your biggest risk exposure or a more sustainable competitive advantage than your product features. Too many of the business plans I see focus too much on features of competing products but not enough on business model details and new ideas.
