Business Model (IV)

Business Model (IV)

As you start creating your startup one of the things that you will notice is that, many times your advantage is not about the software you have but rather about your business model and your brand.

If you are in this situation something that can help a lot is to try to build your brand and position yourself as an expert in the field.

This is important because we can divide the sale cycle into 5 elements: Awareness, Evaluation, Purchase, Delivery and After Sales.

Evaluation

How do we help customers evaluate our organization’s value proposition?

This step is really important because even if for us the value we are providing is clear as day that doesn’t mean that it is the same for our customers.

We are always competing with other products and unless we make it really easy for our customers to understand why they should use us it might be really hard to convince them.

Why Simplifying Matters

One thing that I never understood until recently is that for all our customers our product is a risk.

A risk in the sense that they have never tried it, they don’t know if it will work and they don’t know who we are.

It is the same as giving your money to someone you just met just because what they said sounded nice, of course, you wouldn’t do it.

Well, for our customers we are the same as that person they don’t know that is asking them for money.

So we have to understand which are the things that they care about which are the things that they need in order to be able to provide them with the answers that can give them peace of mind.

To give them the answers that they need to start trusting us and never ever take that trust for granted because you have to get it by showing up and being there when they need you.

Purchase

How do we allow customers to purchase specific products or services?

For many startups this is the thing we forget to focus on the most.

I mean, we are building the product, the solutions, something that will solve all their problems and once it’s out they will love it and money will come flying to us, but the reality is quite different.

Unless we really think about who is going to pay and why it is really hard to go from product to company.

A business model can involve two different types of Revenue Streams:

  • Transaction revenues resulting from one-time customer payments
  • Recurring revenues resulting from ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support

Start considering the likeliness that your customers are willing to pay for your product/service and find ways to test those assumptions.

Because that is the only way in which you will be able to be prepared when you get it out to the market.

For what value is each Customer Segment truly willing to pay?

For what do they currently pay?

How are they currently paying?

How would they prefer to pay?

How much does each revenue stream contribute to overall revenues?

Don’t create your company until you have someone that is already prepared to buy from you because in countries like Spain creating a company can be a huge pain.

From the start you have to invest 3000 and investing it from the get-go when you still don’t have any customer can mean your doom in a few month’s time.

Figure out how to calculate the costs so that we can know what we need exactly how much we need out of each revenue stream in order to be able to make the pass.

Figure out who is going to pay and what are they willing to pay for that you can get ready in the shortest amount of time because only then will you be able to get the leisure to figure out your next steps without feeling like you are constantly about to drown.

Read the third part on the elements of the sales cycle.

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