Business modeling – where people go wrong…
1st September 2017
Where people tend to go wrong in the early days of creating a business model is they use basic spreadsheets that don’t contain sufficient complexities within them to develop these true calculations. Accuracy in your business model is fundamental to success or failure. Get your business model and forecast wrong and it will have the same knock-on effect as the reality of running out of cash. You won’t see the problem coming until it is too late.
If you require funding to launch your business you are also going to have to be able to confidently show your funders that you know what you are doing and that you know your numbers. Sadly there is a misconception (partly due to media such as Dragons’ Den) that many people don’t give this a second thought, which is nonsense. But to be fair, people need access to the right tools and support especially if they have never launched a business before. What we need to do for entrepreneurs across the country however is to dispel the Dragons’ Den myth that all entrepreneurs are in fact, stupid and too risky – when the reverse is true.
How can you realistically evaluate whether or not your idea will sell? Quite simply, you need to be sure that the model is as accurate as it can possibly be and that you can justify your assumptions – you will be challenged! You also need to be confident in your research and/or experience (which is equal in importance to the business model itself). Why will your idea sell? Who are you going to sell it to? What benefits are going to be provided over and above your competition? Are you going to need to invest to make a differentiation to your product or service? These are all questions that you will need to be able to answer with authority.
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