Validating your Business Model
July 6, 2014

It is important to understand your business model.  But what is a business model?

Basically, it is how you will make money.  Your company will provide a good or service to a customer in exchange for some money.  Pretty simple in theory, but there are many ways to figure out that “how” and then make it happen.

Business models sound fancy, but there are many long-lasting models that work.  If you are selling a good over eBay or Etsy, it is pretty simple, the basic transactional model.  If not, then here is some information from Steve Blank, one of the gurus of startup land.

Although the video is intended for startups (and most of Steve Blank’s stuff is aimed at the startup community), which differ from small business, the essential point is crucial to success…know your customer base.

The validation and pivots is a cycle.  Try to sell some products via one method (maybe eBay), does it work?  Yes, fantastic, take some profits and try to advertise to this customer base.  If not, then think why and try another method (maybe Etsy) and repeat.  The cycle between trying to find an engaged customer base and learning from their feedback is at the core of the business model.

In fact, Paul Graham, another startup “guru” has said:

The way to succeed as a startup is not to be an expert on startups, but to be an expert on your users.

To apply to the small business world, then substitute startup with small business and user with customer.  To be successful, become an expert on your customer.  As a small business owner, it is likely that you are your ideal customer, so just focus on what appeals to you and you are on your way to finding your customer base.