BUSINESS MODELS - The most important building block for a market entry
The startup world is fast-paced, constantly changing, and fiercely competitive. Even today, 9 out of 10 new startups fail - and the top reason? A product that doesn’t fit the market.
As a coach and mentor, I have worked with numerous startups across Europe and Asia, helping founders and teams develop, fine-tune and validate their business models - in what I believe is one of the most fundamental and crucial aspects that separate the success stories from the rest when entering a new market.
A common misconception is that a business model focuses primarily on the financial side of a business - making sure that revenue covers operating costs so that one can have a profitable, rather than loss-making venture. In reality, a good business model needs to do so much more.
A successful business model focuses not just on the financials, but every aspect that makes your business relevant in the market you’re planning to enter. Beyond the dollars and cents, a business model should always begin by answering several critical questions:
- Who are my customers, and what are their needs?
- Which of their problems are we solving with our product or service?
- How can we make sure our solution is delivered to customers effectively?
Whether you are launching an entirely new product, or aiming to break into a new market or explore a different segment, working out the answers to these questions will help ensure that limited resources are used in a way that is informed, targeted and impactful. Spend the time to get it right, and you’ll land on that elusive, but all-important sweet spot of product-market fit - where you are delivering a solution that effectively addresses a pertinent customer need.
In this, knowing your customer and your market is key. From knowing which social media channel your target audience uses most, to the time of the day they are most active, to the biggest financial priorities they may have, information and insights on your target consumer will help build a business model that makes sense for your market entry.
However, reality is far more complex and nuanced than this. While having detailed insights and complete information is ideal, most startups have a business model that is based largely on assumptions. Rather than being a cause for concern or worry, the real key here is to keep taking calculated and conscious steps to turn your most crucial assumptions into facts. Skip this important step, and you may find yourself with an idea that ends up being a solution that’s looking for a problem. If the problem can’t be found, or the solution can’t be changed to address a pertinent problem or need, chances are that demand will never take off, and the business simply won’t succeed.
My role as a mentor really focuses on helping teams and founders through this journey, working to stress-test assumptions, refine ideas and validate models early on in the startup journey - to build a robust business model that’s about more than just the numbers, but the need in the market for what you have to offer.
Mr. Alexander Jansen is the CEO/MD of doto one GmbH and an Entreprenuer-in-Residence (EiR) from SWISS EP Vietnam. Alex has worked with numerous startups from Europe and Asia and since VIISA Acceleration Program Batch 7, Alex has been helping startups in VIISA on building their business models.
Above is his sharing on Business Model Canvas and its importance in rolling out your business. If you want to get the support from Alex and other experts on different domains, apply to VIISA Batch 8 at: http://www.viisa.vn/apply-batch-8