Stage 3: Craft Business to Know Viability

Most start-ups fail not because they didn’t find the right problem to solve for the user demographic or that their solution lacked technological prowess but because they could not figure out a sustainable business model for their idea. Similarly, most hugely successful start-ups didn’t just understand the problem of their user demographics and build a solution to solve the problem. They crafted a business model that made them hugely successful. For example, Google, while helping users find more relevant websites using their superior algorithm, figured out an advertising business model that until this day generates 9 out of every 10 dollars of its revenue.

It is critical to understand the business context in which you are playing, the value proposition to your user demographics and various aspects of the business model as you embark on this exciting journey. This stage will guide you through all the key aspects of crafting a business.

Here are the most important steps of this Stage:

Step 1: Business Context

Before we craft the value proposition for your business model, it is important to understand the external context your business will be operating in. Statistics do not favour the success of start-ups. Only one out of 10 start-ups ends up achieving some form of success. Most start-ups just focus on their idea and do not spend enough time thinking about the externalities affecting their business.
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Step 2: Value Propositio

The core of the business model is the value proposition of your solution to the customer. To be able to understand how your solution capabilities benefit the customer, consider an archer who aspires to hit the target using his bow and arrows.
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Step 3: Business Model

As mentioned earlier, the business model is the most crucial and perhaps the most difficult part of designing a business. It involves all aspects of the business, from customers to operations to partners to funding and revenues. There have been numerous frameworks that have gained popularity over the last several decades. These frameworks range in complexity from highly sophisticated analytical models to basic napkin-sized versions for quick-and-dirty analysis. The framework that I’ll describe here lies somewhere in the middle and can be used by anyone starting a new venture. It neither requires complex analytical skills nor is too simple to have meaning.
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Step 4: Elevator Pitch

After going through the previous steps from Stages 1,2, and 3, it is important to communicate the value and positioning of your business to the outside world in a manner that is easily understandable and impactful. This step is about helping you craft a succinct message. This messaging could be geared toward potential investors, partners or customers. An elevator pitch is a common metaphor that has gained wide acceptance. An elevator pitch is a short statement that explains (to investors or other interested parties) the most important facts about your company – all within the time frame of an elevator ride.
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