Startup 101: From Idea to Business Model

We all from time to time come across an idea for a Startup. A company that can be a million or billion or maybe trillion-dollar worth. A company that can be next Tesla or Amazon, but sadly, 99.99999% of us don’t take the next step. That idea remains just a fragment of our memory.

There is a reason Startups are hard. It takes a massive investment of time and money (not to mention courage, sacrifices) which both the commodities are in a limited amount. Even if some of us find the determination to start a venture, In reality, over 90% of them fail.

But bigger the risk, greater the rewards too. You can be the next Bill Gates, Jeff Bezos and if indeed you weren’t able to succeed in your mission, the journey itself is full of thrill and discovering unknowns.

However, One can increase the chance of being successful with the startup by many folds using the real-life battle-tested tool. One tool is BUSINESS MODEL CANVAS. 

Proposed in 2005 by Alexander Osterwalder based on his earlier work on business model ontology. It is a one-page document that works through the fundamental elements of a business or product, structuring an idea in a coherent way plus fosters understanding, discussion, creativity, and analysis.

You have an idea. The next step before which the majority gave up is translating that idea into a business model i.e., illustrating a startup value proposition, customers, revenue, and cost. Together these elements provide a coherent view of a business key pillar on which one can build the next billion-dollar worth venture.

In short, Canvas has nine boxes and can be divide into 3 board section:
1. Customer.
2. Offering.
3. Infrastructure.

Step 1. Figure out your customer segment.
Step 2. What Value propositions will you serve to each segment?
Step 3. Channel through which you will serve propositions to each segment.
Step 4. How will you maintain a relationship with the customers
Step 5. How much money can be earn per value proposition?

Step 5. Which activity is required to produce Value Propositions.
Step 6. What resource will be required to perform the above-identified activity?
Step 7. If any partners, you are out-sourcing the work.
Step 8. Mapping cost of each activity.

At the end of this exercise, your idea has taken a concrete form. It is no longer just a fragment of your memory; you have answered the most critical question for a startup.

If you like the above tool, I would recommend checking out the book `Business Model Generation` featuring practical innovation techniques. Designed for doers, embrace new models of value creation: for executives, consultants, entrepreneurs, and leaders of all organizations.