Business Strategy Development: Models, Fudning, and Customer Acquisition

Let’s look at how to pick the right business model, match it to what you’re good at, and see if it can grow.

Choosing the correct structure is vital for entrepreneurs. Here are a few frequently used examples:

• Add-On: (Like airlines charging to check bags) 
• Affiliate: (Like Amazon Associates earning money for sales they send) 
• Auction: (Like eBay, where people bid on items) 
• Customer Loyalty: (Like Starbucks Rewards) 
• Direct Selling: (Like Tesla selling cars online) 
• Double-Sided: (Like Uber, which connects riders and drivers) 
• E-commerce: (Like Amazon selling stuff online) 
• Flat Rate: (Like Netflix’s streaming) 
• Freemium: (Like Spotify’s free and paid versions) 
• Long Tail: (Like Etsy, which sells unique, handmade items) 
• Pay Per Use: (Like AWS cloud services) 
• Razor/Blade: (Like printers selling cheap printers but pricey ink) 
• Subscription: (Like Dollar Shave Club, which sends razors)

What business model am I choosing

When a business hits a growth snag, the issue might be a flawed plan, poor marketing, or just not enough people wanting what they sell. Figuring out the reason is key.

Growing too quickly can also be a problem. It can mess up operations, make service worse, and lead to money troubles. Businesses might struggle to keep up standards or find the cash to keep up.

Some setups, like online services and stores, grow easily because they use computers and online stuff. They can handle tons of customers without much extra work. But things like consulting, where everyone needs special attention, don’t grow as easily. Finding out why a business stalls needs a good look at the company and the market. Sometimes it’s clear, like bad marketing, but often you need to dig deeper.

Some businesses, like online services and e-commerce, are set up to grow because they use computers and online platforms. They can serve lots of customers without spending much more. But if a business depends on one person or team’s skills, it’s harder to grow.

Which model aligns with my goals and skills

Choose a business model that fits your goals and uses your talents. Pick a way to make money that matches what you are good at. Finding your talents can be hard if you haven’t built projects, led teams, or handled investments before.

First, what’s most important to you: fast growth, steady income, being creative, or helping society? Be real about what you can do now, and find experts to help with what you can’t. Do a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of your idea. 

If you’re great with people, think about subscription or loyalty programs that depend on strong networks. Like a fitness trainer making a paid online workout group. Are you good at logistics? Try e-commerce or selling directly to customers.

If you know your stuff and have a network, affiliate marketing or freemium models are easier since they use existing audiences. A great marketer could use their contacts to sell software and get paid for each sale through their links. They could also give away a basic version of their product and charge for the better one.

Love being creative? Auction or marketplace platforms could change the game. A tech founder could make an app that links local repairmen with people who need small jobs done, taking a cut of each deal. Let’s say a programmer looking for freelance jobs could use a freemium model for their software. By giving away a free version, they can get lots of users. Then, they can charge for the better version. If you like hands-on work and being with people, sell directly at events like local markets. A potter could sell their work at farmers’ markets, get feedback instantly, and build relationships.

Can I scale it easily

Businesses that grow quickly usually use automation. Tech and robots do things faster. They don’t need breaks or days off. Plus, they cut down on mistakes that people might make.

Startups that share management duties also tend to grow fast. To grow quickly, make sure your project won’t stop if you aren’t there, and make your work as automatic as you can.

When you think about growing, ask yourself about money. Will growing your business cost a lot, or can you do it with the money you have now?

For example, an online school can grow without spending much. Adding students doesn’t cost much, mostly if you use recorded lessons or AI. But, if you want to open another store, you have to pay for rent, products prices, and more staff for each spot.

How much capital do I need to launch

The Lean Canvas is a good way to check your budget without spending money.

What are my fixed and variable startup costs

To do well financially in business, it helps to know the difference between fixed and variable costs. Track these costs on their own.

Fixed costs are those regular overhead expenses you pay no matter how much you sell. Think office rent, salaries, and taxes. These expenses usually stay about the same each month, although they might change a little due to things like inflation or new contracts. Variable costs cover things like making your product, shipping, transaction fees, and marketing.

Write these costs down in your Lean Canvas and see how they compare to your revenue.

What can I bootstrap

Going without funding means using your own resources to start and grow your business. You can do this by testing your ideas and using resources wisely. Here’s how:

1. Marketing: Use free or cheap channels like social media. 

2. Office: Work from home or a shared space to lower costs. 

3. Tech: Use free software when you can. 

4. Sales: Focus on selling directly and building relationships with early customers. 

5. Team: Start with a small team, and offer equity instead of high pay.

What are my customer acquisition channels

If you’re running a marketing or subscription business, here’s what you should be paying attention to: First off, make sure your SEO is solid so people can actually find you when they search online. Do this by using keywords that people search for, creating content that is actually helpful, and getting some good links pointing to your website. Next, keep your content updated with blog posts, articles, videos, and guides. This will get people interested and keep them coming back for more. And finally, get involved on social media. Share interesting stuff, join conversations, and get to know your followers. All of this will get your brand out there, keep your customers satisfied, and drive traffic to your site.

Paid vs organic marketing

One way is to get your current customers to recommend you. It’s cheap and helps spread the word. Also, make sure your website is set up well for search engines (SEO). This helps you show up higher in search results and proves you know your stuff. Partnering with influencers who fit your audience is another good move. It makes more people aware of you and gets them interested in what you sell.

Paid Marketing: Paying to Be Seen

Paid marketing means buying ad space to get right in front of possible customers. You get to control who sees your ads and what they say, which you can’t do with free methods. Here are some common types:

• Search Engine Marketing (SEM): This is when you pay for ads to show up on search engine results pages (SERPs), usually with Google Ads. SEM lets you aim at certain keywords and types of people. This makes sure your ads are seen by people looking for what you sell. For example, a bakery could bid on custom cakes near me so they pop up when people search for that.
• Social Media and Display Advertising: You can run ads on social media like Facebook, Instagram, X, LinkedIn, and TikTok. You can also put banner ads on different websites. This lets you target people based on things like age, interests, what they do online, and even if they’ve been to your website before. As an example, a clothing store might aim ads at women between 25 and 35 who like fashion and online shopping.
• Offline Advertising: This means using old-school ads like newspaper and magazine ads, radio spots, TV commercials, and billboards. These can reach lots of people, but they’re not as targeted as online ads and can cost a lot. For example, a car dealer might air a TV ad during a big game.

Organic Marketing: Building a Reputation Over Time

Organic marketing is about creating a strong online presence and getting customers with good content and interaction, without paying for ads directly. It takes time and effort, but it can give you great results that last. Here are some common ways to do organic marketing:

Can I leverage referrals SEO or influencer marketing

Let’s explore different ways to get your name out there! Word-of-mouth, search engines, and even social media influencers can do wonders for your visibility. The trick is to experiment and see what resonates with your target audience. Having a solid plan to evaluate different methods is essential to figure out what will work best for your specific business.

Want to get your name out there? Try word-of-mouth, search engines, or social media. See what works for your audience by testing different ways. Planning is important to know what works for your business.

• Referrals: Friends’ advice matters. Give customers a reward when they send new people your way. It’s a cheap way to get more customers.
• SEO: Get to the top of search results when people search for what you sell. SEO helps your website rank high. It drives traffic and makes you the expert. Use keywords your customers search for.
• Influencers:  Work with popular people online. When they talk about you, people listen. Find influencers who fit your brand and can introduce you to more people. Be sure their followers are your target customers.

How to start a subscription-based business

Starting a subscription business means planning carefully to create steady income and build customer relationships.

What are the key elements of subscription models

By focusing on these areas, you can build a subscription business that creates income and builds customer relationships.

Key steps:

1. Find a Need and Offer Value: Pick a market and offer something that gives ongoing value to subscribers.
2. Price It Right: Find a price that makes money and is affordable. Offer different plans for different needs.
3. Retain Customers: Subscription businesses need loyalty. Offer good service, ask for feedback, and keep improving.
4. Build Tech: Get a system to manage subscriptions, payments, and data.
5. Market Smart: Focus on getting subscribers and keeping them interested. Content, email, and referrals are helpful.

How to retain subscribers and reduce churn

Instead of general buyer groups, focus on understanding your long-term subscribers. What do they expect? How can you make their experience personal and build a bond? Maybe build a community around your brand or offer exclusive benefits.

Subscription models need loyalty, which comes from a strong brand and a sense of belonging. Focus on the ongoing value of your service. Make it easy to use, show how it solves problems, and show what makes it different.

A convenient service and a unique value make it easier to keep subscribers. A good subscription isn’t static. Track things like churn rate, customer value, and recurring income to find ways to improve. By focusing on customer relationships, you can build a business.

How much am I willing to invest initially

Deciding how much to invest at the start is super important. It should match what you want to achieve financially, how much risk you can handle, and if you understand how much you might earn back. Money is important, but remember your time, who you know, and what you’re good at also count. New businesses often use these things, especially when they’re just starting. Many successful ones start with crowdfunding to get money and see if their idea is good. Also, they look for experts who want to help, maybe at events or in their circle, and offer them a share in the company or future chances in return for their help. Also, remember that price isn’t the only thing customers care about.

What is my personal financial capacity

Before investing, figure out what you can afford. Look at your income, what you spend, what you owe, and what you have saved. Don’t put yourself in a tough spot. Ask yourself:

• What’s my income each month after deductions?
• What do I need to spend each month (rent/mortgage, utilities, food, transportation)?
• What debts do I have, and what are the interest rates?
• How much do I have saved up?

Making a budget and seeing where your money goes will help you know how much you can invest without stressing out.

How to balance risk and investment

Keep in mind that what happened in the past doesn’t guarantee what will happen. Check things out carefully before investing. Every investment has some risk. Balancing risk and reward means knowing how much risk you’re okay with and spreading your investments to lower possible damages. Think about:

• How much risk can you take? Can you handle losing some or all of your investment?
• Dividing up your investments: Putting your money in different things (stocks, bonds, real estate, etc.) can lower your overall risk.
• Getting Advice: A financial advisor can give you advice that’s right for you and help you make smart choices.

Where can I get funding

Getting funding is a big challenge for most new businesses. The good news is there are different options, each with things you need to do and gains.

Elevator Pitch: This is a short, interesting summary of your business idea. It should be quick enough to tell someone in an elevator (30-60 seconds). Explain the problem you’re fixing, how you fix it, who your customers are, and what makes you better than others. This pitch is key to getting people interested and getting meetings with investors.

• Pitch Deck: This is a longer presentation that gives more detail than your elevator pitch. It usually includes:
• Problem: Your chance to explain the problem you’re tackling.
• Fix: Your moment to present your special solution.
• Market: Your target customers and the scale of the market.
• Product/Service: A showcase of what you offer and its features.
• Business Model: The process of how you plan to make money.
• Team: A quick introduction to who you’re working with and their qualification.
• Progress: A mention of the strides you’ve made, like some early adopters or sales.
• Financials: Projection of financial standing along with crucial metrics.
• Funding Request: A clear statement of the capital you seek, along with the proposed application.
• Investment options: A presentation of incentives to woo early funders.
• Convertible Notes: A debt tool that changes to equity later, often with a discount.
• SAFE (Simple Agreement for Future Equity): Sets the investor’s right to buy equity in a later funding.
• Equity Crowdfunding: Gathering smaller investments from a wider pool through digital.
• Grants: Funding you don’t need to return and don’t need to trade for equity.
• Government Grants: For example, the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs in the United States back up groundbreaking research and growth.
• Foundation Grants: Several foundations present grants to causes they believe in, mainly when it comes to areas like social upliftment, education, and medical care.

Grants loans investors comparison

Finding money is a vital thing for starting and expanding a company. There are various funding types to consider, each comes with its own set of requirements, upsides, and downsides. To be on the right track, you must carefully access the opportunities and choose the best one.

1. Grants: Often provided by groups like government bodies or foundations for particular projects.

Upsides: Free money is always a plus from a business point of view.

Downsides: The competition is fierce, the conditions can be strict and the application can be exhaustive.

Scenario: A company could get a grant from local government to research sustainable energy.

2. Loans: Borrowed funds that must be paid over time with additional revenue.

Upsides: You hold ownership of your business.

Downsides: Collateral is required, regular payments must be made with interest.

Situation: A company starts with a bank loan to buy equipment.

3. Investors: Capital is provided for share/equity of the company.

Upsides: Money is earned as well as expertise.

Downsides: Influence over the direction of your business, less control.

Perspective: Company raises capital from stocks to grow operations.

What are the requirements for each funding source

It’s key that you understand what each grant, loan, or investment source requires. Each has its own conditions.

1. Grants:

Eligibility: Relates to what kind of company/industry you have.

Application: A proposition stating your strategy, budget, and what results to expect.

Reporting: Consistent feedback on the application of funds.

2. Loans:

Creditworthiness: Good scores with finance authorities.

Collateral: Supplying assets that can secure the lender.

Business Plan: Full model with projections and management team.

3. Investors:

Business Plan: Must be unique with high growth potential.

Financial Projections: Realistic projections for the future of income.

Management Team: Prove how your staff are exceptional and experienced. 

Funding Type	Eligibility	Application	Upsides	Downsides
Grants	Relevant company/industry	Strategy, budget, results	Free, non-repayable	Strict conditions, tough competition
Loans	Good creditworthiness	Supplying collateral/assets	Ownership stays with founder	Regular payments, interest
Investors	Unique plan with growth potential	Business plan, team, projections	Expertise and capital	Loss of control/influence

Funding Type Matrix