It’s no secret that one of my favorite shows on television is Shark Tank. My other favorite is Hell’s Kitchen, but that’s a different blog post… On Shark Tank, business owners present their companies and ideas to a panel of successful investors by doing a quick 3 minute presentation before the “Sharks” start asking questions.
The first question is almost always “what are your sales so far?” In other words, are people buying what you are selling? If the answer to that question is a very low number, the sharks ask why no one is buying yet. If the answer is a large number, the sharks will wonder why the business owner is seeking more funding. What they are really trying to discover is what business model the owners are using. How is the business engaging clients and making money?
A business model as several key components that you must consider whether you are starting a new business or looking to grow an existing one. They include:
- Your Target Market
- Your Value Proposition
- Sales Channels
- Client Engagement Strategies
- Key Activities of the Business
- Key Partnerships
- Key Resources
- The Cost Structure
- and Revenue Streams
If one of these components are missing from your business plan or strategic plan, you are not going to be as successful as you could be. One recent contestant on the show recently stated to the sharks when they asked about her business model “We don’t have a business model, we’re making this up as we go!” It should be very telling that all of the sharks lost interest the second that came out of her mouth.
What is your business model? Could you explain it to someone in a few minutes?
Paul
(My 10 year old typically watches the show with me. Last week I had missed the intro of one of the presentations and I asked him what was going on with the proposal. He replied “He’s been in business for six weeks, has $10,000 in sales and is giving his company a valuation of $500,000. I think he’s going home disappointed.” That’s my boy!)
http://www.strategic-adventures.com/content/business-plans
