James Pinter
The world of venture capitalism is treacherous for start-up businesses. If you do not have a sound business plan, investors will not show their confidence in your enterprise by lending you capital. Without that capital, you have no business. Any investor worth the capital they invest will want to look at your initial outlay and spending models. In this recession, the substandard economic conditions will put even more pressure on your and your model to turn a profit and give investors a return on their money.
But does anyone really understand what a business model actually is? Entrepreneurs hear this phrase bandied about as though it was a component of the elixir of life, but few seem to know what makes a successful business plan. On the simplest of levels, a business model tells investors what the business will do, how it plans to do it, and how it will make money. Let’s take a look at three ways that a business model can be improved.
1) Customer Value Proposition
This translates to providing a solid method for providing a service or beneficial product. A customer value proposition has to be more than a simple service, like free voice over Internet Protocol communications or dedicated database organisation. These are great services to offer, but that’s the point: that is all that those models offer. There is a strong temptation for companies to mention as many benefits as they possible can. The downside is that this clouds the point of the business and confuses investors as to what the purpose is.
2) Establish a foothold
No matter how well-done your customer value proposition is, it is worthless unless you can get some actual customers! This is an expensive process, even more so if your target customers are already mainstreamed. A popular and profitable approach is to locate a customer niche of early adopters. Early adopters usually are the first to try new things and this makes them invaluable for spreading the word about your business. In addition, these niche customers can provide feedback to help perfect your model. Niche adopters can also create a lot of hype about your product or service, which is great because it is basically free, effective marketing.
3) Distinguish yourself
In the 1990s hundreds of technology-related companies entered the mainstream in America. The 2000 bursting of the tech stocks bubble ended that rather quickly. Innovative companies are the ones that survived the crash and prospered. What can your business do to distinguish itself from competitors in the same industry or customer niche?
4) Effective Pricing Methods
The best way to undercut the competition is to try new pricing methods. You can even disrupt an entire industry by changing the way your business prices its products and services.
James Pinter writes guides to help small businesses; he enjoys giving advice on working from home. He regularly keeps in touch with business advice news.
James also helps with business plans and business finance advice for your business.