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What is a Business Model (and Why is it Important)

2 min read In starting a new venture, most start by trying to write the business plan before the Business Model because everyone tells you how much you need one. So you sit down to write the business plan and you start through your checklist: “Management team…well so far, there’s only me, so I’ll just add two more positions to be determined later.” “Problem to be Solved…well, that’s an interesting question. I’m solving so many problems, I’ll just say, we’re going to save the customer time, and make it easier for him to do his job. That should cover it.“ If the above description sounds familiar, it should. Most entrepreneurs start by trying to write the business plan but there’s not enough information to carry it through at the early stage. There are too many decisions still to be made. There’s too much information not yet accumulated. Business Plans vs. Business Models Instead of working on the business plan from day one, work on the business model. Focus on how you are going to generate revenue and what will be your core costs. If you figure this out, then you have the key elements of a business plan. You can fill in the other pieces based on the business model. For example, the management team positions will become clear once you know the business model. The problem you are solving is much clearer and so it goes with the other elements of the plan. The Nine Models for Making Money The business model in short answers the question: how do you make money? Here are the nine business models as outlined in Managing the Digital Enterprise: Brokerage Model: bringing buyers/sellers together. Advertising Model: promoting products/services to an audience Infomediary Model: gathering information about an audience and monetizing it Merchant Model: selling goods/service either wholesale or retail Manufacturer (Direct) Model: selling goods/services directly to the user without an intermediary Affiliate Model: providing purchase opportunities wherever people may be Community Model: selling ancillary products/services in a community Subscription Model: charging for ongoing usage of a product/service Utility Model: charging based on how much of a product/service is used. In today’s web-based world, it’s common to use two or more of these models in the same business. Before fundraising, it’s important to identify the business model. The business doesn’t have to generate a great deal of revenue but it needs to have a clearly defined business model that is scalable. Feel free to try out our calculators and contact us if you would like to discuss your fundraise: http://staging.startupfundingespresso.com/calculators/ Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group.

Pivoting is Okay

1 min read Be prepared to pivot. The idea and the business you started with will almost never be the idea and business you end with. At some point, during the beginning of your startup, you’re going to find that your original vision doesn’t quite fit the market as you hoped it would. This doesn’t mean you’ve failed, it just means that adjustments need to be made. Don’t worry, nearly every new business faces this same dilemma. The good news is, it only takes 3 pivots to get to the growth phase of your startup. The Target Market Pivot This is when you find the right market. The Business-Model Pivot This is when you’ll find the right way to structure your business to fit the new market economics. Team Pivot This final pivot entails finding the right people to grow and run the new business model. After you’ve made these pivots, you should be on your way to growth. Through the lifespan of your business, try to remain as open and flexible as possible when it comes to pivoting. Try to keep in mind that, at any time, you may need to shift your business strategy to accommodate changes in: Customer needs Industry Unforeseen factors Being prepared to pivot can allow a business to move through changes with a graceful evolution. The more comfortable you get with allowing your business to change when it needs to change, the more likely you are to be successful in making those much-needed moves. Read more: http://staging.startupfundingespresso.com/education Hall T. Martin is the founder and CEO of the TEN Capital Network.TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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