What Is a Business Model? Business Models Explained

Up and Running

Airbnb is a well-known example of the marketplace business model. Understanding the problem you are solving for your customers is undoubtedly the biggest challenge you’ll face when you’re starting a business. This is where your business model comes into play.

Subscription Business Models Are Startup Favorites

Startup Professionals Musings

Every new business quickly realizes that revenue coming in every period on a committed basis is the Holy Grail to survival and growth. According to many experts , getting new customers is five to ten times harder than getting additional revenue from existing customers.

A Valid Business Model Requires Real Customer Sales

Startup Professionals Musings

The real milestone, proving the business model, is that first product sold for full price to a total stranger, leaving him happy. There is no substitute for good market research, talking to experts, analyzing the competition, and listening to potential customers from day one.

6 Keys To Proving A Viable Startup Business Model

Startup Professionals Musings

How do you convince investors that your business model will really work, before you have a revenue stream that exceeds your expenses? Even if you are bootstrapping your business, and you are the only investor, you should be asking yourself the same question.

The Business Model Canvas Can Get Your Startup Funded

Startup Professionals Musings

An effective tool I see used more and more, as a prelude to a more detailed business plan, is the Business Model Canvas , first introduced by Alexander Osterwalder back in 2008. A business without well-defined customers is never fundable. Revenue.

Entrepreneurs Need Focus on Their Business Model

Startup Professionals Musings

Many entrepreneurs work hard on the proof of concept (technical), but skip any proof of the business model (revenue flow). In other words, once they are convinced that the product works, they assume their price, sales channel, and marketing will bring in the customers.

It Takes a Customer Sale to Prove a Business Model

Startup Professionals Musings

The real milestone, proving the business model, is that first product sold for full price to a total stranger, leaving him happy. There is no substitute for good market research, talking to experts, analyzing the competition, and listening to potential customers from day one.

Entrepreneurship as a Science – The Business Model/Customer Development Stack

Steve Blank

It’s the combination of Business Model Design and Customer Development. Business Model Design. Today every business organization from startup to large company uses the words “business model.” Business Model Canvas.

The Mission Model Canvas – An Adapted Business Model Canvas for Mission-Driven Organizations

Steve Blank

As we prepared for the new Hacking for Defense class at Stanford, we had to stop and ask ourselves: How do we use the Business Model Canvas if the primary goal is not to earn money, but to fulfill a mission? From Revenue Streams to Mission Achievement.

6 Ways Startups Are Fooled By Prior Business Models

Startup Professionals Musings

Many are just not facing the reality that their passion had a critical business flaw. Every business, young or old, needs to avoid the following six mistakes that he outlines: Anticipating success based on the recent past. Extrapolating you as the target customer.

10 Top Revenue Models Drive Viable Businesses Today

Startup Professionals Musings

I’m certainly not a fan of customer rip-offs, but even non-profits have to be cash-flow positive, or have deep pockets, to help anyone for long. Every business needs to develop a revenue model even before a product. Freemium model – people pay for upgrade.

Technical Product Elegance is Not a Business Model

Startup Professionals Musings

Many entrepreneurs work hard on the proof of concept (technical), but skip any proof of the business model (revenue flow). In other words, once they are convinced that the product works, they assume their price, sales channel, and marketing will bring in the customers.

Who Dares Wins – The 2nd Annual International Business Model Competition

Steve Blank

Alexander Osterwalder and I spent last week in Salt Lake City, Utah as judges at the 2 nd Annual International Business Model Competition , hosted by Professor Nathan Furr , and his team at the BYU Center for Entrepreneurship. The Business Plan ?-

Test Your Business Model Against These 10 Elements

Startup Professionals Musings

You can’t succeed in business without an operational model that delivers value to customers at a reasonable price, with an underlying cost that allows you to make a profit. How will you reach your customers? Revenue model. Customers always have alternatives.

Investors Reject Plans With No Clear Business Model

Startup Professionals Musings

For survival, the objective of every business should be to bring in revenues which exceed their costs. Yet I continue to see business plans, or even talk to founders, and can’t find the specifics of the business model anywhere. eCommerce model.

10 Top Business Models for New Ventures Today

Startup Professionals Musings

The implications of the decision you make are huge, defining your brand image, your funding requirements, and your long-term business viability. The revenue model you select is basically the implementation of your business strategy, and the key to attaining your financial objectives.

How Do You Select A Revenue Model For Your Startup?

Startup Professionals Musings

The implications of the decision you make are huge, defining your brand image, your funding requirements, and your long-term business viability. The revenue model you select is basically the implementation of your business strategy, and the key to attaining your financial objectives.

The unprofitable SaaS business model trap

A Smart Bear: Startups and Marketing for Geeks

Marketo filed for IPO with impressive 80% year-over-year growth in 2012, with almost $60m in revenue. of revenue, force-feeding sales pipelines with an unprofitable product. So no, this upside-down business model isn’t what a SaaS business should construct.

Fermi estimation for startup business models

A Smart Bear: Startups and Marketing for Geeks

Often your best estimate of any metric or market behavior or business model component is at best accurate within a power of ten, for example “expected conversion rate between 0.5% Their product has a few usage tiers; on average a customer spends $50/mo.

Ten Questions to Ensure a Viable Business Model

Startup Professionals Musings

You can’t succeed in business without an operational model that delivers value to customers at a reasonable price, with an underlying cost that allows you to make a profit. How will you reach your customers? Revenue model. Customers always have alternatives.

Some Startups Forget to Validate a Business Model

Startup Professionals Musings

Many entrepreneurs work hard on the proof of concept (technical), but skip any proof of the business model (revenue flow). In other words, once they are convinced that the product works, they assume their price, sales channel, and marketing will bring in the customers.

TheLuxeNomad.com Pivots Business Model, Moves Away From Flash Sales

YoungUpstarts

If there’s a sure sign that shows how interest in online flash sales have waned, it’s how many daily deal sites have either deadpooled or pivoted away from that particular business model.

Flash 185

Why Startups are Agile and Opportunistic – Pivoting the Business Model

Steve Blank

Each sale requires us to handhold the customer and takes way too long to close. The Search for the Business Model. A startup is an organization formed to search for a repeatable and scalable business model. Pivoting the Business Model.

Agile 338

What’s the right business model for your marketplace?

Version One Ventures

I recently came across a good story about pivoting and how hard it can be to find the right monetization model for your marketplace. My friend (and Thumbtack CEO) Marco Zappacosta described how the company first tried transaction fees, then a subscription fee, before finally settling on a lead-based model. It’s the fairest monetization model for suppliers and vendors, as they only pay a fee if and when they sell something.

4 Tips For Diversifying Your Company’s Revenue Stream

YoungUpstarts

At some point, there’s a need to diversify the stream of revenue. Whether or not it’s immediately obvious, there are ways for your company to diversify its revenue stream moving forward – and you need to make it happen. For some businesses, there’s an opportunity to sell knowledge.

No Plan Survives First Contact With Customers – Business Plans versus Business Models

Steve Blank

He said, “After we graduated we took our great idea, holed up in my apartment and spent months researching and writing a business plan. We even entered it in the business plan competition. He replied, “Well the customers are not acting like we predicted in our plan!

SayAhh’s Revenue Projections

Feld Thoughts

Since last checking in with the SayAhh team, they have spent a few months consumed with building an early version of the product and speaking to potential customers, all the while watching their cash balance steadily diminish. The co-founders decided to divide-and-conquer, with Dick tackling expense projections and Jane tackling revenue projections. I am glad to see that you are forecasting revenues based on business drivers.

Should Entrepreneurs Grow Revenue Or User Count?

Startup Professionals Musings

Some analysts argue that revenue drives growth, while others say user growth drives revenue. Both have worked.Google reached $1 billion in revenue within five years of incorporation, and now has a market capitalization of over $400 billion.

Seven Tips for Proving Your Business Model

Startup Professionals Musings

Many entrepreneurs work hard on the proof of concept (technical), but skip any proof of the business model (revenue flow). In other words, once they are convinced that the product works, they assume their price, sales channel, and marketing will bring in the customers.

Adopt a Clear Business Model to Survive

Startup Professionals Musings

For survival, the objective of every business should be to garner revenues which exceed their costs. Yet I continue to see business plans, or even talk to founders, and can’t find a clear business model. eCommerce model. Shopkeeper model.

SaaS Business Models – Slide Deck

For Entrepreneurs

I presented the following set of slides to the Mass TLC group as the keynote for the “SaaS Business Model Update — Creating and Managing Revenues&# event. The slides should be useful for anyone interested in learning about the key drivers for a SaaS business, including the SaaS cash flow trough, cost of customer acquisition, [.].

5 Reasons Startups Need Revenue As Well As Users

Startup Professionals Musings

Some analysts argue that revenue drives growth, while others say user growth drives revenue. Google reached $1B in revenue within five years of incorporation, and now has a market capitalization of over $400B. A business only achieved critical mass by becoming cash-flow positive.

5 Keys Steps For Every Startup Roadmap To Revenue

Startup Professionals Musings

But the reality is that sellers are no longer in charge of the customer buying process. Kristin Zhivago, in her book “ Roadmap to Revenue ,” makes the point that the selling system is broken, since sellers no longer sell the way customers are buying.

Open Source Business Model

SoCal CTO

skip to main | skip to sidebar SoCal CTO Monday, March 5, 2007 Open Source Business Model A recent spate of posts on the challenges of running an open source business is interesting ( Tosh , Siemens , Downes , Tosh 2 ) and quite heated as one of the founders of elgg - a social networking platform aimed at the educational space - Dave Tosh laments - Elgg is the most popular white label social networking platform in the world powering over 2000 networks.

Deep dive: Cancellation rate in SaaS business models

A Smart Bear: Startups and Marketing for Geeks

make sense in your case: Percentage of current customers who canceled in a given day/week/month. ” Percentage of new customers in a given month which end up canceling at any later date. Percentage of all customers who’ve cancelled over the lifetime of the company to-date.

COC: A new metric for thinking about cancellations in SaaS business models

A Smart Bear: Startups and Marketing for Geeks

This is the second article in a series on novel ideas for SaaS metrics, which started with The unprofitable SaaS business model trap. The cost to earn a dollar of MRR What does it cost a SaaS company to add $1 of new monthly recurring revenue?

Revenue = Product Market Fit

Agile VC

This is a logical thing to do… when we started LinkedIn, my mentor Reid Hoffman instilled a mantra of Growth –> Usage –> Revenue which still holds for many consumer companies. This is especially true for those with a media / ad based business model (e.g.

Website Ads are Not a Revenue Stream for Startups

Startup Professionals Musings

One of the biggest red flags I see in many Internet-related business plans today is advertising as the initial revenue stream, or a key part of it. Until you get a million page-views per month, your revenue will be negligible, and advertisers won’t be interested in your site.

Killing Your Startup By Listening to Customers

Steve Blank

The art of entrepreneurship and the science of Customer Development is not just getting out of the building and listening to prospective customers. He got my attention when he said, “following your customer development stuff is making my company fail.” What’s your business model?

Lean LaunchPad for Life Sciences – Revenue Streams

Steve Blank

The class has talked to 2,056 customers to date. Part 5: Value proposition and customer segments in Life Sciences. This post is an update of what we learned about life science revenue models. Life Science/Health Care revenue streams differ by Category.

The LeanLaunch Pad at Stanford – Class 7: Revenue Model

Steve Blank

The Stanford Lean LaunchPad class was an experiment in a new model of teaching startup entrepreneurship. its product or service) to its customers. This week they were testing their hypotheses about Revenue Models: what are customers really willing to pay for?

When Customers Make You Smarter

Steve Blank

We talk a lot about Customer Development, but there’s nothing like seeing it in action to understand its power. Here’s what happened when an extraordinary Digital Health team gained several critical insights about their business model. the Customer Life Time (CLT)).

Strategy Roundtable For Entrepreneurs: Free is Not a Business Model

ReadWriteStart

for the app and has 30,000 customers. He asked me if he should offer the app for free to get more customers. It is much better to grow organically with revenue. Please remember, free is not a business model.