create business model for startup

What is the most important step once you find that you have an idea which will have a niche and opportunity in the market? I am sure 7 out of 10 entrepreneurs with the technology background will answer it as building a very good product or a killer prototype based on the idea.Few might answer it as the creation of a minimum viable product or mvp. Some might answer that preparing a business plan is important. But let me tell you, the most important thing that you need to focus immediately once you decide to jump into a startup is to create business model which is effective and realistic.

This document is going to be the base for your business. It need to be adaptive to accomodate all changes that happen during the course of the startup journey. An elegant business model is equally important as an innovative product/solution . Designing the right business model require the right diligence and care as in designing the solution. If you are a team of two entrepreneurs, one with skill in designing the product and the other focussed in designing business model, that might increase your chance of success multifold.

Following are the key factors that are needed for you to create  business model for your startup. You might need to brainstorm and identify how your startup can fit into each of these factors.

Key  Value Proposition

What is the value that my product/solution provide to the target market. Is there a unique value which no others are providing. Or if there are other providers, do i have a unique service model which  adds value to my customer. It can be price or plan or support model or anything. A key value proposition is very important to validate the business viability of a startup.

Strengths & Capabilities

What are my strengths. What are the capabilities that i have which makes me competent to deliver the product/solution. Identifying the strength, weakness and capabilities  will allow the startup to form a business model according to that. A startup should take maximum advantage of the key strengths and avoid exposing the weaker parts to the market initially. Also identifying the weaker area will help in planning a solution for the same at the earliest.


Revenue Streams

This is a key factor as this determines the business value of your idea. There are many questions related to revenue model and return of investment like the following.

What are the ways in which i can generate revenue from my product/solution? Is there a way i can maximize them?How will i realign my revenue streams and plans, once i start to get tight competition from the market? Will my business be able to cop up with scenario when one of the main revenue stream gets cut off in a later stage in production? What is the optimum price range at which i can provide the services, without being rated too high w.r.t competition? These are some of the questions which need to be answered as part of this.


Keeping a proper plan and record on initial expenses as well as a plan for future expenses is very important. Following are few of the important items related to the expenses that need to be recorded while you create business model for the startup.

What are the major type of expenses and major expenses? Is their a way that i can reduce some of the expenses without compromising my roadmap and plan? Is their a way that i can postpone some of the expenses to a later stage based on fund availability? How my expenses will increase as i progress and scale? Will i be able to tally my revenue and expenses once i progress with the operation?

A well designed business model will have a clear plan and relation established between revenues and expenses sections.

Associations & Partnering

This section covers the thoughts on how the business can be extended quickly and effectively by making right associations and value partnership. Also the timing and context of such associations will be very important and a proper plan in the business model will give the startup high advantage. Partnerships and associations are mostly  essential in leveraging the full potential of any business.

A well prepared business model will help you decide how the operations need to be planned. Also it will help you to decide the order of priority of items. You might need to update the business model regularly  as you pass each phase of growth.


Now that if you understood the value of the business model, do some more research on the topic. There are many structured templates available to document your thoughts on this. Make sure that you or one of your team member had spend enough time to create business model  in early part of your startup journey itself. Without it you are only half prepared for that journey and that will impact your chance of success.

Let me know as well, if you find more points that will help in this regard.



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