Intro to Business Model Development:
So now after the value proposition design module, you have a great product idea that is going to bring value to customers. That’s great! But I have a few questions for you…
How do they become aware of your product?
How do you make and collect money?
What is the cost of providing and delivering this value?
These are just some of the questions we want to answer while turning your ‘product idea’ into a profitable ‘BUSINESS MODEL‘.
A business model is the strategy behind not only creating value but monetizing that value creation in a profitable way. The process is guided by the famous business model canvas, but things don’t always happen in such a linear manner. Each element has enormous potential to influence other elements in the business model canvas which is why entrepreneurs often use sticky notes to maintain a flexible mindset.
An entire sidestartupclub module could be dedicated to each element of the canvas, but don’t worry, we want to proceed in a very agile way. This means starting at a high level and completing the first iteration of your business model canvas quite rapidly to get a ballpark feel for how financially attractive the opportunity is.
Each iteration of business model development will conclude with a cost to revenue analysis. If the numbers are suitable for you, then dive back into the canvas to further research and refine the plan. Hopefully, each iteration increases your confidence in the reality of the plan and each profit project becomes more and more precise.
This process of research, due diligence, and detailing out each element can go on forever, but at some point, the risk mitigated is no longer justified by the time invested into this strategizing activity.
When you feel your plan is relatively feasible and complete, its time to move on to the validation phase where we test some of your strategies and assumptions within this business model canvas.
Revenue Model Objectives:
1) List ALL possible revenue streams
2) Identify immediate primary revenue streams, as well as mid-term and long-term additional revenue streams if applicable
3) Estimate some price points for revenue streams
4) Create 2x2 ballpark revenue projection matrix
*Competitor Websites – Determine the different ways your competitors are monetizing their value creation. What do they charge?
Watch these videos (especially **) to help you learn and complete your REVENUE MODEL action steps.
**This video shows the revenue model development principles being applied to a real-life travel platform startup. It’s a bit lengthy so it’s automatically played at 2x speed. You can watch at