Enrich your business plan with more than one financial model, Cash management

It is often possible to have several economic models for the sale of the same product or service. This involves an execution plan that allows simultaneous use of all economic models. We call this feature of the business plan to admit different configurations, the principle of flexibility, the importance of which we emphasize for the development and the future competitive struggle for the start-up.

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To be able to build a business plan that respects this the principle of flexibility, it is of course necessary to have identified the most important possible economic models and not just the one chosen to begin with. The possible economic models have the special character that they can not only be so numerous but multifaceted and in constant change. It is therefore difficult for the entrepreneur to figure out the different possible economic model formulas. Let us try to provide an approach that can serve as a guide in this research, to go beyond the obvious economic model.

The entrepreneur has already clearly defined the product or service he wants to bring to market and he has identified his target users. To enrich the reflection on the obvious economic model, we propose a list of components to identify the characteristics of an economic model, whose possible models are:

sale or rental (allow use), which for example refers to the software sector, in a sharp transition from the sale of licenses to the rental of the service (known as “SaaS”, Software as a Service, because this rental is very often based on a technical organization, where a single instance of the software is put online and used by several customers);

support / maintenance ;

payment by user or a third party who has an interest in it (such as advertising that pays to target a target audience that can access a free or inexpensive service);

Freemium / Premium model (free access to a service and basic features, payment for advanced features);

free patternwhere part of the product value is given against another supposedly higher value (of the construction type of a database, the contents of which will be highly valued later);

classic model ofbusiness provider where the provider of a business opportunity is remunerated with a commission on the quantity of the product sold thanks to him;

model of marketplacewhere the connection is basically remunerated with a double commission charged by the two exchange parties, etc. ;

direct sales / indirect sales depending on whether an intermediary is used or not.

Compare hypotheses with the field

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The underlying idea is to provide combinatorial research opportunities by combining these axes to establish a list of “theoretical” economic models to be analyzed. Once this list of possible models has been established, it becomes possible to explore the possibilities for theoretical construction of different economic models and to subject them to common sense and reality on the spot: elimination of unrealistic models, search for comparable models that make it possible to gain credibility and dig into others, try out the financial models that seem most interesting to the first leads or customers.

From this point of view, there will be a few economic models left that the entrepreneur wants to be able to use. That means he no doubt wants one or two, or even three, essential start-up business modelsof his company and a few others, is considered to be alternative or to be used in the future . In building his business plan, he must preserve the possibility of shared use of these different models, even other models that have not yet been discovered.

Title : My startup from the garage to success
Authors : Didier Chambard and Inès Sen
Editor : Agora Enterprise
Release date : 13/10/2016
Number of pages : 300
Price : 29.50 euro
ASINs : 2955783501

Didier Chambard is an investor as a business angel and has advised start-ups for 5 years. He was an entrepreneur for 12 years in the field of computer security, then CFO of a large publishing house.

Ines Senadvising start-ups for 2 years. She set up the innovation department in a large group, then an authentication start-up, and eventually she was a financial investor in an investment fund for 12 years.

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