7. Define your Business Model
[Throughout this series of articles to explain how to build an investors deck we are using the example of Pant Station, an imaginary company that sells panties for men, to illustrate the different parts. If you want to read this series of article, I advise you to start with this one.]
When they evaluate a company as a possible investment, 💸 VCs want to find out exactly how it makes money. This is your business model. It’s hard to attract potential investors without a business model or at least a clear idea of it.
Whether you’ve already found it and proved it or you are still looking for it, you need to include as much information as you’ve got in your investors deck. You need to show investors the company can respond to the customers’ needs with a competitive offer and a cost that is sustainable. 🎆
What’s in your Business Model Slide
Thanks to all of your preliminary work we’ve covered in previous articles you can now define your business model by answering these simple questions:
How much am I selling my product?
To whom am I selling my product?
You can sell through several channels at different prices and even have more than one business models at the same time. For example a clothing company could both sell products and rent them for shorter periods of time which would require different logistics.
If you aren’t set on a specific business model yet then show which one you are experimenting and try to project the numbers for the investor to really assess its potential. It’s ok when you are early stage to be trying out different models.
Types and examples of business models
There are as many business models as there are companies, it’s hard to cover them all and it’s not necessarily by looking at what others do that you will find what will serve you best but here are some types of business models and examples you can go check out:
You can be very creative with your business model, some very traditional businesses have disrupted their industry with an original business model, take leasing for example, 50 years ago it was inconceivable to choose leasing instead of buying your own car, it has extended to everything: phone, homes appliances, etc.
Companies like Jho, For Days, Housefy or even BlablaCar have brought great innovation either by taking an existing business model and applying it to an unexpected product or event by rethinking entirely the way people commute.
For Pant Station we have chosen a mix of traditional and innovating e-commerce because our primary target customer is a 50 year old man who seeks more of a traditional selling process👴🏻. However we want to introduce an innovative business model early on to target younger generations in the future. Here is what our slide could look like:
Business models are not set in stone, they often change overtime, they adapt to on going innovation, evolve with the company’s growth and adapt according to the market. Don’t forget to keep your options opened and try thinking out of the box once in a while to see if you’re not locked into a model which could slow down your growth.