STEP 15Design a Business Model

A diagrammatic representation of the chart represents numbers fourteen fifteen, and sixteen. Number fifteen is highlighted.

In This Step, You Will:

  • Understand the various existing Business Models across industries for capturing some of the value your product brings to your customer.
  • Choose a Business Model that best aligns with both your customer and your venture's goals.
A diagrammatic representation of two men playing see-saw games. The downward direction represents the amount of time spent on value creation and innovation.

Entrepreneurs usually spend far too little time on analyzing and choosing a Business Model.

Why This Step, and Why Now?

Wise selection of a value extraction Business Model can dramatically reduce Cost of Customer Acquisition (CoCA), increase Lifetime Value of an Acquired Customer (LTV), and provide you with a competitive advantage. It may even be the difference between your product being adopted or not. You do this now because, thanks to the work you've done in the previous steps, you have for the first time all of the elements needed to make an informed decision.

Let's Get Started

Business Model is a term that is used extensively in entrepreneurial and business discussions where the definition is very general and not precise. In this situation, Business Model is specifically the method by which you extract rent (i.e., get paid) for the value you create. This could technically be called your value extraction model. Before you choose your Business Model, you should consider the different ...

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