Assessing a Business Model
Traditionally,business models have been assessed in a subjective manner by entrepreneurs, venture capitalists, bankers, and academics. No one really understood or studied what made a great business model great. Like good art, they simply knew it when they saw it. Many times, these wise business people were correct in their assessment of a business model. However, we figured there had to a more scientific method to decide whether a business model was strong or weak.
After studying thousands of entrepreneurs, we created an objective methodology to score a business model. We discovered that every business model has eight key areas. These eight areas of the business model are:
- #1: Excellent Margin
- #2: Easy to sell
- #3: The Four Capitals©: Intellectual Capital, Financial Capital, Human Capital and Brand Capital
- #4: Ongoing competitive advantage
- #5: Quality Customers
- #6: Longevity of business/industry
- #7: Graceful Exit
- #8: Avoidance of Pitfalls
If you would like to assess your business model look on the web for some of the free Business Model Evaluators.