In our last blog we read about what is a business model and understood how it helps an entrepreneur to define the unique value proposition for his startup. We also read about the essentials building blocks for a business model (Read: Business Model: Do I Need One For My Startup or Idea). Let us now see the various techniques an entrepreneur can use to do the business model analysis for his startup
Techniques for Business Model Analysis
Brainstorming Sessions: The core team, as well as any strategists or consultants, must engage in detailed brainstorming sessions. The team should discuss, debate and fight over all aspects of the Model.
Customer Insights: The best way to know if your business has potential is to know the customer. The team must engage in Market Research that is attuned to knowing the customer better. Research tools like Surveying, Personal Interviews and Group Discussions are very effective in generating the initial data required to make decisions. It is also wise to involve an expert in this process, to help you effectively capture as well as mine this data to get the best results.
Scenario Analysis and Storytelling: Constructing various scenarios and cases is a very powerful tool. Try to come up with as many stories as possible, which describe your product or service being used, as well as how the customer is engaging with your business. Mapping out the journey of a sale, or the whole process of production, or even of delivery, can help the founders instantly identify the loopholes.
Macro and Micro Analysis: It is also wise to carry out some research on the market trends. Macro factors such as economic health, growth of the market and competitor analysis can help either realize the potential of the business or understand the pit falls.
Visual Brainstorming: Drawing out aspects like the customer cycle, or delivery supply chain can help visualize and simplify the process. Be visual, and be creative. Use flowcharts, white-boards and scribble pads to put your ideas down.
So these are some techniques that an entrepreneur can use for the business model analysis of his startup. But, the startup founders at times may find themselves lacking new ideas or innovation. So, it may be a good idea to involve a fresh set of ears at this point, and bounce the ideas on somebody with a neutral, yet knowledgeable perspective. Read next for some resources and tools that can help you do your business model analysis.
Resources for Business Model Analysis
The following are some good tools for understanding your own Business Model.
For Customer Insights, some good tools for free surveys are Google Forms and SurveyMonkey. Skype can be a great tool for conducting interviews with customers if they are beyond reach.
PESTEL, SWOT and Five Forces Analysis are powerful tools for overall market assessment and to understand the competition as well.
Customer Empathy Maps are great for scenario analysis and storytelling. They give a visual representation of what the customers think and what they want.
The Business Model Generation Canvas helps understand the overall picture better, and for the founders to brainstorm.
The founders/co-founders of the startup should carry out these exercises on their own in the beginning. However, more often than not there will be a time when fresh ideas will stall and an outside perspective is always recommended. Also, carrying out these exercises may require more high level thinking from a trained outsider, and so Business Model Generation experts can be considered at this stage.
For example, a company like Stratagaze Consulting helps start-ups and even mid sized companies define their business model and enhance it to create Unique Selling Propositions (USPs). The company has helped many new companies to beat their competition and innovate at every value point of their business.
So, in summary, Business Model Analysis is imperative for any entrepreneur in founding a successful start-up. In fact, a Business Model is more important and valued than Business Plans. Even investors look for innovative Business Models, as opposed to well-written Business Plans. The overall Business Strategy is a result of a carefully constructed Business Model.