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Business Models need something very special to stand out

Stand Out With a Business Model Validation | Ron Flavin

October 17, 2016 by admin

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There is little room for error in the fiercely competitive world of startups. New ideas and innovative concepts are unique for increasingly short time frames. Competitors are no longer local but global—new, more innovative, more agile, stronger and better funded competition can crop up at a moment’s notice. And in the competition for funding, the old adage “you only get one chance to make a good first impression” is more true than ever before. With this in mind, a comprehensive Business Model Validation Analysis not only validates the data and assumptions supporting a business model, but it also demonstrates the commitment of founders to the success of the startup or early-stage venture. This can be a valuable asset in the quest to secure funding from VCs, angels, government grants, incentives or other means.

A BMV is not a Business Plan

Going through the process of preparing a comprehensive Business Plan is arguably a worthwhile exercise. The process forces founders to undertake a thorough planning process to lay out the pathway that their startup or early-stage venture is expected to take. A Business Model Validation Analysis looks at the Business Plan from a third-party perspective, evaluating the degree to which it is appropriate to the Business Model, while also providing invaluable, actionable data and critical recommendations to help ensure acquisition of the necessary funding and the firm’s sustained success.

What if my BMV gets a bad report?

In some cases, the completed Analysis may find that the Business Model has little likelihood of achieving success. While founders or potential investors and funders hardly find such an outcome desirable, ultimately, it can prevent a venture that is highly likely to fail from moving forward. Despite the fact that this is an unwelcome outcome, a negative Analysis can have some potential benefits such as:

  • Avoiding fruitless efforts that have a high likelihood of failure. Though optimistic, founders themselves are sometimes unsure about the validity of their Business Models. A negative analysis can help them avoid unnecessary efforts or investments of time, money and other resources.
  • Encouraging founders to re-think their Business Model and explore entirely new iterations of their proposed product, technology, service or revenue model. Though sometimes tough to take, a negative outcome can sometimes force founders to completely re-think their approach, therefore driving innovation. One need only look at iconic entrepreneurs such as Thomas Edison for proof of this concept. A negative analysis can allow founders to pivot before they get too deep into a launch or growth phase.
  • Demonstrating a willingness to accept outside analysis. Stubbornness among founders is both an asset and a curse. While a degree of founder stubbornness can certainly be essential to firm’s success, it can also be its downfall. Founders who are unwilling to accept outside analyses or strategic guidance can ultimately be destructive to their firms. In recent years, there have been a number of high-profile founders whose stubbornness has caused their firms to implode. A willingness to accept valid, third-party negative outcomes can demonstrate responsibility and maturity to investors, funders or other stakeholders.

Filed Under: Business Models, Startup Funding, Uncategorized

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