If you happen to be independently wealthy or are planning to run a non-profit business, this page can be skipped. If you are like the other 99.9% of the world, the business model is the life blood of your concept. If the Concept is the Brain, the model is the guts. If you don’t feed your new machine the right food, nothing is going to go well. What do you feed a business model? You feed it lots and lots of revenue and as little expense as possible. While the adage you have to spend money to make money is accurate, you have to make more than you spend.
Top level entrepreneurs review their model on a daily basis. They check their revenue and expenses and they spend countless hours checking and rechecking that their projections are coming to pass.
Business models are essential for financing purposes and they are the only way an entrepreneur will ever be able to make long term decisions regarding what to do to grow, expand, fix or sell their enterprise.
Models deal with all revenue streams, fixed costs, variable costs and everything in between. By building a model, it forces the owner to confront many important issues before they are in over their head and drowning in a sea of excessive expectations. Horror stories of owners spending 12 hours a day at work 7 days a week just to get the bills paid are the result of bad models. Entrepreneurs with failing models have completely missed the freedom train and are now on the slow boat to a lifetime of servitude.
Getting the business model right is an absolute must for any entrepreneur. It will act as your guide and your light in the darkness when things don’t go as planned.