At a very early stage, founders typically start with a business idea. To further evaluate if the business idea creates value and is economical, a business model should be developed as part of the planning process before founding a company. But also, existing startups and companies adjust their existing business models from time to time and develop new business models.   

The business model plays a central role in both the founding and the development phase. Therefore, we have dedicated the first sessions of our new Start-up Academy to this topic and gave the participants comprehensive input on all aspects of business modeling.

A business model describes how the company creates, delivers, and captures value. In essence, a business model is a tool that outlines the key elements of a company’s operations, including its target market, revenue streams, cost structure, and value proposition. Frameworks that support the founders to develop business models and structure their ideas are the lean canvas, the value proposition canvas, the business model canvas. The Gründerplattform of the BMWI provides templates, descriptions, and instructions of the above-mentioned for free on their website. Also, the University of St. Gallen and the BMI Lab support with their business model navigator

A business model should clearly identify the target market for a company’s products or services, the unique value that the company offers to its customers, and the channels through which it will reach and interact with those customers. It should also outline the company’s cost structure and the revenue streams that it expects to generate. There are many different types of business models, and they can vary widely depending on the industry, the company’s goals, and the competitive landscape. Some common examples of business models include subscription-based models, advertising-based models, and direct sales models. Regardless of the specific model used, a successful business model should ultimately enable a company to create sustainable revenue streams while delivering value to its customers.  

To get a better idea about what is a good business model, it is worth to look at other startups. One success story of a German startup is DeepL, who set a new industry standard with their translation machine and prevail against big player such as Google, Pons, and Langenscheidt. While today DeepL is a translation machine, they started as Linuguee, an online dictionary. Therewith, they were and are still able to offer the dictionary for free.  While developing their translation machine for DeepL, revenues from selling advertising space at Linguee financed and training data enhanced the algorithms of DeepL. The Gründerplattform also provides further examples about successful business models and the respective business model canvas of startups. To be successful as founders, the vision of the startup might consist of different steps and business models which are developing over time. The university of St. Gallen and the BMI Lab provide a holistic overview of different business models, how they could be mixed, and their patterns.  

Using frameworks, methods, and practice examples, the initial business idea will be enhanced to a business model. This is an iterative process rather than a static one-time activity. Using the power of the community, the exchange with other founders, sparring partners, potential investors, and potential customers is our recommendation to receive different perspectives and feedback. Feedback from potential customers could be collected with surveys and interviews. In this sense, a business model is also a communication tool that allows to explain a complex project to others in a clear and easy way.  

The exchange with other founders, sparring partners, and investors is one of our key goals with encourageventures. We believe in the open and transparent communication of a strong community, where our members share experiences with others.