Startup 101s: The Business Model

0 60

Strategy is Dead! Long live the Business Model. Well, the reality may not be this extreme, but management theory and practice have in the last decade or so (especially in the aftermath of the bubble), paid more attention to the models designed to deliver the objectives of a strategy.

The need to exploit the opportunities in developing countries, the increasing proliferation of technology and changing tastes and needs of customers is forcing organizations to create new business models and continually modify existing ones. Well-thought out business models set the pace for organizational growth and above average returns. Developing the right product is hard, but even harder is building a good business model. Management writer, Joan Magretta defines a business model as “the story that explains how an enterprise works”. A business model shows how your business is going to generate revenues and profits. It details your long term strategy and day-to-day operations.

Here are six components to take into consideration when developing a business model:

  1. Reaching Customers: It is not enough to develop a world-class product or service, you also have to sell them to real people, who can back their demand with cash or some kind of mutually agreed value. You are going to have to develop a strategy to find your customers, figure out how to reach them and convince them to buy your product.
  2. Product/Service Differentiation: Differentiation is a key concept to take into consideration when developing your model. How does your value proposition (product or service) stand out as being innovative and why should your customers buy from you instead of the competition? You need to thoroughly understand the competition and effectively communicate the unique advantages of your product.
  3. Costs: Your business model must take into consideration your fixed and variable costs. Not all businesses start raking in revenue from the onset, so your business should indicate the upfront costs you expect to incur, the funds you intend to use to cover those costs and when you expect revenues to start pouring into the business. You may also need to also understand your breakeven periods.
  4. Pricing: The price of your product must be greater than its overall costs (fixed and direct), or your business would not survive. In developing your business model, you’ll have to develop a pricing system that’s not only profitable but one that customers are willingly to pay. This is usually difficult, especially in a saturated market with a lot of suppliers.
  5. Delivery/Distribution: You will also have to consider the delivery/distribution system that will suit your value proposition and customers. Some products become exposed to spoilage in certain conditions and that is a critical factor to consider.
  6. Customer Support & Satisfaction: It is not enough to have customers, you customers have to be happy and satisfied with your sales and after-sales service or they become vulnerable to your competitors. In developing a business model you need to map out the modalities for delivering this customer support and ensuring customer satisfaction.

In developing your business model, be sure to take into account the business models of the other players in the industry. The real test of a good model is not in how it performs in isolation but how it performs when it is put up in the context of competing models in the industry.


Photo credit:

The Boardroom

Boardroom is a knowledge management platform for management insights, breaking news analysis, industry analysis, emerging intelligence, cutting-edge strategies, business innovation, venture financing, executive spotlights and breakthrough ideas. Boardroom is an initiative of Sawubona Advisory Services. (

View all contributions by The Boardroom


Leave a reply

Your email address will not be published. Required fields are marked *

About us

Boardroom is a knowledge management platform for management insights, breaking news analysis, industry analysis, emerging intelligence, cutting-edge strategies, business innovation, venture financing, executive spotlights and breakthrough ideas. Boardroom is an initiative of Sawubona Advisory Services Ltd.Website

Got news?

Please contact us if you have an event you will want our reporters to cover. You can also send us news items, insights and news analysis you would want us to publish on the Boardroom website. Please send all information to or call us on +234 8106 397 244.
  • black dahlia pc download
  • asus wl 167g driver download xp
  • apocalyptica i don't care download ulub
  • bluetooth control panel download
  • ben saunders download mp3
  • chessmaster grandmaster edition download free
  • barbra streisand song download mp3
  • blackberry pearl 9100 manual download
  • bounen no xamdou opening download
  • 16 baras ki mp3 download
  • cinema 4d maxon v.11 download
  • cannabis corpse the wedding download
  • badal baul mp3 download
  • barbra streisand concert download
  • 009 sound system download
  • chromatic tuner download for nokia
  • canon eos utility exe download
  • archexteriors vol 6 free download
  • bartpe download for windows 7
  • class 10 cbse english workbook download
  • choplifter 3 download snes
  • backdrop download for mac
  • close 2 me songs download
  • automatically download csv file
  • assam bodo song download
  • caso 39 filme download dublado
  • area no kishi download free
  • alcohol 120 download vollversion
  • book of mormon download for ipod
  • arriba la vida download
  • bird song to download free
  • check download speed of my broadband
  • aurelio dicionario download windows 7
  • cf root xxjvt 2.3.6 download
  • ain't i yung l.a. download
  • beth carvalho download vou festejar
  • bitmesin gAkhan tA?rkmen free download
  • children collide loveless video download
  • cinergy xs treiber download mac
  • amplitube x gear mac download
  • barnes noble desktop reader download
  • canon mp550 cd download
  • chevrolet beat video download
  • boss me 70 manual portugues download
  • chris benoit theme download link
  • chillstep dreams vol 2 download
  • alles kann besser werden download mp3
  • bram stokeras dracula download free movie
  • casal selvagem discovery channel download
  • challenges 3 test book download
  • boney m rasputin ringtone download
  • apostila cefet rj download
  • automaton mat hack 2011 download
  • ben 10 pictures to download
  • blackberry 9100 os download
  • break even album download
  • belinda carlisle la luna download zippy
  • a4tech model pk 7mar driver download
  • 4shared download judika aku yang tersakiti
  • as2 video player download
  • asus motherboard p4bgv mx driver download
  • battleship 2012 english download
  • canon pixma mx870 manual download
  • arnalds another happy day download
  • carito carlos vives download mp3
  • caprica download legendado avi
  • allexinno & starchild yasera download zippy
  • beck's music download gratis
  • can you download newgrounds videos
  • beastie boys glasgow 1999 download
  • blue bubblin download mp3
  • becker navigation cd download
  • automatically download tv shows lifehacker
  • a estrada hd download
  • cele 2 cuvinte download
  • aviso mortal download rmvb
  • casamento de muriel download legendado
  • 2ne1 follow me mp3 download free
  • citrix thinprint client download
  • adventure of tad game download
  • chicken invader 4 download free
  • apa guna berjanji mp3 download
  • chiraiya swanand kirkire song download
  • ayyappa gaanangal vol 6 download
  • ben l'oncle soul download album free