Nolsen Bedon, Ltd.

Creating Value: Concentrate on creating value, not your exit strategy.

Focus exclusively on creating long-term value and payoffs when you do a startup. Build a great revenue stream and your exit strategy will take care of itself.

To build a successful startup, you have to create a functional and rigorous business model. You have to be clear in your thinking on how you plan to generate sales revenue. The business model dictates whether a company is viable and likely to be in business for the long haul, or whether it will simply disappear once all the startup funding has been exhausted.

A robust business model always has several key characteristics:

The business model has to identify clearly what line of business the startup is in. Once that is clarified, appropriate processes and organizational strategies can then be put in place. For example, Virgin Atlantic Airways has a business model that specifies it is in the entertainment industry rather than the transportation industry. That decision has many flow-on consequences.

The business model always encompasses a pricing model. That way the company can use successive degrees of economies of scale to maximum advantage. It provides discipline and focus. Sustainability comes from being able to generate a profit rather than solely the stubbornness of the founders. There must be a clear understanding of the economic value of the firm’s products and services along with mechanism by which profits will be generated.

The business model has to be scalable. Rather than focusing on one single product introduction, good business models have a vision for a product line. You want to be able to offer a family of products that can be scaled up in the future rather than treating each customer like a one-off transaction.

The business model needs to be flexible so it can be amended to match changing market conditions. Business models always change as startups become better established and therefore it makes sense to have a business model that can be varied rather than one set in stone.

The business model needs to built around one clear, concise objective. The only way to build team spirit within an organization is for everyone to be working towards one clearly stated goal. Everything that happens should then be measured against that objective.

Startups That Work

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