A business model explains how a company sells and delivers its product, how customers pay, and how the company generates revenue. It is the practical answer to: “How will we sell this, and how will we get paid?” section 13.0
Choosing a model is an early company decision, not paperwork to postpone. It shapes the product, staffing, customers, profitability, and business plan; changing it later can be painful. section 13.7 section 13.0
A useful model makes clear:
- How the company will make money. section 13.0
- How customers will pay. section 13.0
- How products or services will reach customers. section 13.0
- Why this model fits the company’s product and goals. section 13.0
A founder learns to match the model
A founder repeatedly approached investors without checking fit: one needed to invest $20 million while the startup needed $2 million, and another wanted software-as-a-service companies while the startup was building hardware. The lesson was simple: match the company’s model, stage, and metrics to the investor’s current model before pitching. section 9.0
There may be several workable models, so develop and test the strongest candidates rather than assuming one answer is universally right. A model can evolve as the company grows, but a fundamentally bad choice is difficult to recover from. section 13.0
