The Entrepreneur’s Business Model for a Startup

October 9, 2009 · Posted in Business Planning, Fashion Business Loans, Fashion Business Start · Comments Off 

(at the) top model
Creative Commons License photo credit: David Locke

What is your business model? Amazingly many people who start a business can’t answer this question. In its most basic form, the business model is the diagram of how you will convert your product or service into money in your pocket.

Many entrepreneurs suffer from the Field of Dreams affliction. They are sure that their product or service is so fabulous that everyone will want it without taking into account how their potential customers buy things or even how they will finance the gap between the sale and the cash coming in the door.

To create your business model, you need to answer the following questions:

* to whom are you going to sell your product?
* what problems does your product or service solve for the customer?
* how you are going to reach your customers?
* how and when the customers will pay you?
* how your products will get from concept stage into your customers’ hands?
* who are your competitors and how are you different? Read more

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What to Include When Building Your Income Statement

December 14, 2008 · Posted in Business Operations, Online Marketing · Comments Off 

The Triumph of Couture.jpg
Creative Commons License photo credit: Tammy Manet

Often when a entrepreneur starts a business, he or she creates an income statement for the plan that is often built on unrealistic expectations and/or missing key elements. Understanding what goes into an income statement will help you create a realistic plan.

An income statement is separated into several parts. The first section is the revenue section, which can be one line or several lines if you want to break out your revenue by product or service. In general, your revenue can grow as quickly as you would like, but you must understand the drivers behind your growth.

For instance, if you have developed a new product for a semiconductor manufacturing process, it may be eighteen months before you see your first revenue because that is how long the semiconductor manufacturing cycle lasts, and your product will not become part of the process until the next cycle.

If you’ve created a revolutionary anti-aging skin cream, you may be to grow your revenues exponentially, but there will be a significant marketing and sales budget behind that growth that will have to be accounted for in your expenses. And note, those sales and marketing dollars will have to be spent before you see a dime of revenue. Read more

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