Can your business model impress investors?

For entrepreneurs, if you can't bring value to the user at a reasonable price, the business is hard to succeed. In other words, if only the latest technology is available, or simply based on the goal of reducing global famine, the enterprise cannot develop. To do this, entrepreneurs need to define their business models in business plans.

All entrepreneurs know this, but based on the experience of venture capitalists, it may be difficult for most entrepreneurs to take full account of all the business model elements. The most common reason for failure is that startups offer solutions to target the problem, but launch products without a clear market.

Venture capitalist Elizabeth Edwards a proposal to design a business model in a new book titled "Startup". On this basis, entrepreneurs and investors should keep in mind the following 10 points of business model elements:

1. Value Theme

What needs or problems have you met? The value theme must clearly define the target user, the user's problem, your unique solution, and the advantages of the solution from the user's perspective.

2. Target Market

Who is the user you are targeting? The target market is a user group, and your business will attract this user base by marketing and selling products. This user group should have specific group characteristics and be willing to buy your product.

3. Sales and Marketing

How will you overwrite the user? Word-of-mouth Marketing and viral marketing have been hot in recent years, but not suitable for new business. Please define sales channels and marketing methods clearly.

4. Production

How do you make products and services? General choices include independent manufacturing and outsourcing. The key issue here is the time and cost to market.

5. Publish

How do you release products and services? Some products and services can be sold and distributed through online channels, while others require multi-level distributors, partners, and value-added resellers. It is necessary to determine whether your product is oriented to the local market or the international market.

6. Revenue model

How do you make money? The key point here is to explain to yourself and your investors how your price and revenue streams cover all the costs, including recurring and support costs, while still getting good returns.

7. Cost structure

What are your costs? New entrepreneurs tend to focus on the direct cost of their products, while underestimating marketing and sales costs, recurrent costs, and support costs. In this regard, it is necessary to compare the published reports of similar companies.

8. Market Competition

How many competitors do you have? No competitor may mean no market, and more than 10 competitors mean the market is saturated. Need to think from a larger scope, and users always have their own choice.

9. Unique Selling point

How do you make a difference in your product or service? Investors need a sustainable competitive advantage. Short-term discounts and promotions are not unique selling points.

10. Market size, growth rate and share

How big is your total market size? Growing or shrinking? How much share can you get from it? Venture capitalists favor markets with double-digit growth rates, which should be more than $1 billion trillion, and companies should have a double-digit share of the market.

In short, investors want to understand your business model better and earlier. They don't need you to brag, for example, when talking about how much money you want to make and how many users you want to get. That would only disappoint investors and yourself.

In the business plan, it is the first step to propose a business model with competitive and investment potential. Without a business model, your business can only be paradise.

Source: Sina Science and technology