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Essential Advice for Creating Your Startup Business Model

Tue, 31 October 2017

A blog post contributed by Innovate UK
​The business model is make or break for a startup. The stronger your model, the more likely it is to be successful. Not only will it actually outline how you’ll make money but also how your business plans to scale up and grow. Here are some essential tips from Innovate UK on creating your startup business model.
 

 
Cover All Aspects of Your Business
“A shared vision will strengthen your company and inspire your team. But make sure they have the resources they need to thrive in their roles” – Richard Bradshaw, Head of Operations at Foodit.
 
The concept of your business should be based on the simple foundation of resolving a problem. Your business model should explain how you plan to create, deliver and see a return for resolving that problem.
 
Make sure you cover all areas of your business – even include costs for renting your premises or paying staff.
 
Here are some of the most important areas to cover in your business model:
  • Value proposition
  • Target customer segments
  • Distribution channels
  • Customer relationships
  • Value configuration
  • Revenue model
  • Core capabilities
  • Commercial network
  • Partner network
 
Use Templates
“Look for strategic frameworks and guiding templates. They ask you fundamental questions about your business goals and brand vision. Most importantly, they help you get started” – Asli Sonceley, Co-Founder of Xtensio.
 
If you’re new to business plans, templates are a great place to start. There are numerous options online which will be able to help. These templates will offer you a structured walk-through of all areas of your business. This will help you refine your ideas and present them in a clear and concise format.
 
There’s plenty of resources online which can offer advice to startups creating a business plan. The Prince’s Trust also offers a range of business planning tools and advice for young entrepreneurs.
 
Validate Your Proposition Early
 “Offer your product to an impartial group of target users before going to market to spare guesswork and discover common pain points” – Thomas Smale, Founder of FE International.
 
It’s hugely important to validate your business and test your ideas. Before you take your business to market, do a bit of research and see what people actually think. Don’t just ask friends and family, they won’t give you an objective opinion. You should be asking a few vital questions:
  • Do your potential customers find it valuable?
  • Would they be willing to pay for it?
  • Why would they buy your product or service?
  • What’s the biggest issue or obstacle they encounter?
  • How much would they be willing to pay?
 
Once you’ve begun trading, add milestones to your business plan. These can include:
  • User base
  • Registrations
  • Installs/downloads/integrations
  • Conversions
  • Revenue
 
Keep Refining Your Model
“Reviewing and adapting your business model is crucial to surviving and thriving as a company” – David Bennison, Director at HBD Associates Ltd.
 
Your business model is never complete. View it as a work in progress and continually refine it. Learn from the day-to-day running of your company and adapt it to meet the ever-changing market conditions. Here are a few variables which could affect your business model:
  • Cost pressure
  • Price pressure
  • Competition
  • Innovation
  • Environment
  • Legislation
     

About Innovate UK

Innovate UK is the UK's innovation agency. They work with people, companies and partner organisations to find and drive the science and technology innovations that will grow the UK economy. It is an executive non-departmental public body, sponsored by the Department for Business, Energy & Industrial Strategy. 
 
You can subscribe to the Innovate UK's YouTube channel here, or you can also follow them on Twitter at @innovateuk
 

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