If you have more than one business model, you don’t have a business model

If you have more than one business model, you don’t have a business model

If you have more than one business model, you don't have a business model

To succeed, a business must have a plan for short-term revenue and long-term profitability. Early-stage founders might be tempted to come up with half a dozen ways the company could make money. Don’t fall into temptation: five unproven solutions don’t make a real solution.

That said, sometimes there can be multiple business models that can generate profitability. The Business Model Canvas approach, where every aspect of the business is condensed onto a single slide, provides a holistic view of every aspect of your business. For a pitch deck, however, I think it’s worth narrowing it down to two things: customer acquisition and lifetime value.

For acquisition, focus on where you find your customers, whether these acquisition channels are scalable, and what it costs to acquire a new customer, commonly referred to as customer acquisition cost or CAC.

From a lifetime value perspective, look at the value of each customer, from the time they appear in your product until they stop using your product. Every dollar they spend along the way is the lifetime value of an individual customer. From there, you can divide your customers into different segments: a category of customers can be people who come to your platform and leave immediately; another category may be customers who stay for weeks, months or years.

For the sake of simplicity, it’s usually enough to take the total money earned from customers and divide it by the number of customers you have – that’s the average value of those customers so far. The challenge is to model how long they will stay. By definition, you will only know the number of a customer TRUE lifetime value after their departure; so here you will need to build a model and make assumptions about how much time your customers will spend with you and how much money they will spend along the way.

The sole mission of a startup is to find a repeatable business model

I’m quite sensitive to Steve Blank’s definition of a startup: “A startup is a temporary organization used to research a repeatable and scalable business model.” Or, in other words, your business is supposed to become a machine that can turn the $100 you put on top into the $150 that drops off the bottom. Take the $150, put it back in the top of the machine, and you have a fast-growing, viable, repeatable business model.


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