People are more passionate about to building the complete business module. I have seen people read books, articles, attends seminars and use a different method to understand How to Build a perfect business model for start-ups.
In this article, I will tell you the best learning method and building a Successful business model, I am sure you have not chosen a similar method until today.
Before building a successful business model, it is more important to know what is the reason for business failure for start-up companies. So, it will be easier for you to make a perfect Business model.
After years of training and analysis by the team of top industry expertise across the world, have come across with an actual reason, why the most startup business model is failed today.
If these points can be rectified, then you will be safe and the health of your business will be excellent, profitable and would be more potential.
According to experts, 90% of start-up business model fails in the first five years of their operations, and in the end, they close their company.
WHY? Because of the lack of needed Innovation.
If you actually want to make your business big and more growth in future, then set these 10-business model in your mind. Take a print out and place it in your cabin and stick everywhere in your office, because these 10-business model going to decide your success.
Let’s take the quick review of these points:
1) Customers money-making model
If you want to become successful in your business model, start thinking about your customers’ money-making model.
Everyone thinks about to become successful in his or her money-making model and calculating his own profit and success.
Does anybody really want to know, what is your own customers’ money-making model? And how your customer will get profit?
Just keep this in your mind, if your customer will get success, you will succeed.
Maybe your business model is unique and has potential to generate good revenue, but, you have to think about your own customers’ success and his: profit margin, growth, productivity, his retention, brand equity and his success.
Also, how you are solving your customers’ problem, which he could not do his own.
You should know “the innovation comes from the customers need and your greed is also depending on your customers need”.
if you understand you will succeed in your business model. This is the first point of this article.
2)Cash Flow / Working Capital
You cannot run the business without cash flow and negative working capital. This is the biggest reason for failure for a start-up business model.
You require cash flow to manage your working capital. Profit and cash both are equally important to run the smooth business, but both are different
Maybe your book of accounts must have profit entries, but your cash payments are getting delayed and you are not being able to recover the money from the market. Your recovery getting slow and that is called a negative cash flow.
You must have to get the margin on your invoice, but you would require working capital cash flow to run your business.
In this scenario 90% businessman knocking the investors or funding agencies door.
Once money funded and because of none recovery from the market, after a certain label, investor stops giving you fund.
That negative cash flow is enough to close your start-up business model. There is much well-known renowned organization have faced the same situation and closed their operations. Even they had funded well.
For example askme.com, Fashionara, talent pad, Auto Raja and name to few.
3)Expansion with Negative margin.
The last point we discussed was cash flow and working capital, now this point about margin. You should know from where to manage your margin.
As said, 90% of new start-ups business model fails in the first five years, WHY?
The reason is very simple. The easiest way to do market acquisition is:“PASI”.
- Preparing the loss-leading strategy.
- Acquire more customer.
- Selling products at less price.
- Increasing the valuation of a company.
And later find the investor who can cover the loss. This is what startup owners are doing.
Just pay your attention! You need be clearer from where and how to manage your profit margin? If you sell products at less price and compromise with your own profit margin, how you will run your business?
Maybe your business model is excellent but, you need a proper execution plan to make your business model success.
You cannot do the expansion with a negative margin.
4)Lack of Man Power
The most important part for a business to have the right employee.
Even if you have the great business model, your business will not be successful without the right employee.
You have to recruit high potential, high performance, highly skilled, high will and energetic manpower for your organization.
I have seen the startup owners, having the right manpower, but, they don’t know how to manage them properly. You need to check their competency mapping and competency assessment.
Do you have any employee who can execute your vision and your action plan? do you have anybody who is highly self-motivated and does all work for you?
If you have such talented people, sit with them, understand their potential, make proper strategy and engage them accordingly.
if you don’t have the right manpower then your good things turn to be bad.
5)Scalability with the recurring revenue model.
Scalability and recurring business are two different things.
There are new start-up companies who business model is very good and does an excellent job in an initial stage. But, later we see them down.
Many start-ups companies are generating good profit and managed their profit margin very well. While some of them are doing good in their own region.
But they don’t know how to retain that business and get growth.
Reason for being an unsuccessful businessman is not retaining the regular customer.
You need to learn how to retain your regular customer because they are the one whom you can generate recurring revenue.
The most important part of the business is to get recurring revenue, you will generate repetitive income from the same customer if you have retained them properly.
But, still, start-ups doing mistake at this point as well. How?
Generally, start-ups owner busy with acquiring a new customer and they simply forget to retain their old one.
if you can manage your existing customer and provide the same benefits as you give to the customer, then, believe me, your business will be skyrocket and you don’t have to worry about your business Model.
This is called building regular income method.
6)Mixed Marketing &Wrong Positioning
This is major issues which every businessman’s face. I want you all to read this very carefully.
This happens for those who don’t have their own invention. Usually, people start coping with other business and they don’t have secrets of business and don’t know how to market their product.
You should know:
- What is your identity and who are you?
- Who is your perfect customer and who is imperfect?
- What is your perfect product or what is imperfect?
You have to plan properly before finalizing your product. Simultaneously you need to plan your segments and whom you are going to present your product.
You cannot sell to everyone.
You need to decide who is your customer. and present your product as per perfect market demography and perfect market psychography.
Also, you need to find out the single signal for your company which can show your identity.
What is your current identity?
- Are you new in the market?
- does your products solving problems?
- is your product best in the industry?
- Your product cheapest?
- gives the best value or most prestigious?
- Does your product have maximum featured?
- or you are most reliable?
Similar you can set positioning for your products.
When you come to know what position your product has on the market, accordingly you can choose branding, marketing, packaging. and after launch a good scheme and prepare the policy for your product.
The most important part of any business model is to set a single signal for your brand.
There are big players in the market who have used the single signal in the ad campaign to attract the customer.
For example, Thumps Up, they use “AajKuchToofaniKarte Hai”.
7)Releasing Product as a Laggard
Laggard, it means Late, the word is very scary.
Product launch is the big task for a businessman. It totally depends on your planning and execution. In the other part, this is called a seasonal planning.
If you cannot plan your product as per the market requirement then no use of running your business. If you prepare as per the market, you should launch it on time.
Otherwise, you won’t be able to sell your product. The biggest challenge you would face once your product will be late in the market is holding inventory.
Then to liquidate your inventory, you will start giving more discounts, launching different schemes, compromise with your margins and you start giving your product on credit basis, at last, you won’t be able to recover the money from the market on time.
Then you start thinking and blaming, the customer is not good, no one buying in this market or maybe my business model is not right etc….
Even, I get the similar questions from my clients.
Remember. “Timing is your actual margin” and business model is the only frame. If you plan and execute in the proper way then you will be succeeded.
8)Save yourself from getting out competed
“Competitor” when this word we heard, what comes to our mind that time?
No worries, you cannot stop someone from being your competitor.
If this is your own innovation then you are the king of your product. Others just copied your business model. Your competitor does not know about your innovation.
Don’t worry, It’s very simple logic.
But, you need to be more careful while setting up your business, you should be safer by making your legal documentation like intellectual property rights, brand license, proprietary technology.
Also, do something were your competitors cannot find out your secrets.
Manage your brand equity properly. Or find out a vendor who can provide the raw material at the cheap price.
If your raw material will be cheaper automatic your price will be less. Your competitor will be more confused, how you selling the same products such very less price.
9) Customer feedback
Generally, people ignore the customer feedback, comments, and reviews.
You should know the importance of customer feedback.
This is one of the processes where you will come to know the exact position of your product. How to improve the quality, what things are missing and what has to be added.
You cannot just ignore your customers’ feedback. You should react immediately the moment customer write feedback and try to solve your customers’ problem.
The complaint is a gift from your customer try to catch it.
Your customer always wants to be with you if you solve the problem. The only thing your customer is expecting is good quality on your product.
If your customer complains about your product that means, your customer wants to be with you.
There are customers do not say anything, they simply go and purchase products from your competitors. Those customers are very dangerous.
Always complaining customers are very good, maintain the long working relationship with them.
Remember, the first product is only for trial. After many feedback, comment and discussions, you will be able to do your product quality better.
Your first product never is your final product. Don’t worry focus on your customers’ feedback and welcome them.
10) Business Model of Building Complete Ecosystem
This is a very interesting point and adds more value to this article.
Meaning of business model of building a complete ecosystem is basically depending on each other. Alone you cannot solve the purpose.
Try to build an ecosystem in around you, your circle, society and your community.
If we talk about Facebook and Twitter is a big ecosystem.
Crossing the finger. If anyone of them stops their business what will happen?
All of sudden will be the huge boom in the market. similar Amazon, Alibaba, and many big players have created the big ecosystem in the market.
Google has invented a product called Android, is a big ecosystem.
Wherein all the application maker can upload their application for free. and it has become big tough for mobile handset maker companies. Because they have to manufacture android compatible mobile.
So, Google gets more benefit, also the users get the benefit of exploring new things.
Just Think. If all of sudden something goes wrong and suddenly Google stop their operation. What will happen?
Your product should solve the purpose of your customer, then your business model will be the success and you will become the successful businessman.
I hope, you like this article. If you have any queries write in comment session.
If you want an assistant in your business you can always contact me at mail@24X7vidya.com