A Simple Definition for a ‘Business Model’
The term business model is used loosely to describe how a business operates, but what is it as its simplest? Our CEO, Natalie Foley, breaks it down into simple terms and describes how a business model develops around a consumer need and evolves quickly through testing that de-risks concepts.
Here’s how we developed a new-to-the-world athletic apparel company:
- We first uncovered needs by going directly to our customers in the market - athletic apparel stores and their homes - to observe and learn about pain points directly.
- From there, service concepts were tested by going back out to the customer and getting their feedback in a co-creative way, including testing for early signals on how much and how a customer might be willing to pay for the concepts.
- We landed on an experience and a business model to test with it. We identified KPI’s and structured an in-market experiment (pre-beta) that felt real to the customers, who were actually paying on a subscription basis.
- After 2 months of testing with a scrappy lo-fi operational model, we paused to reflect on the learnings. This helped us de-risk the commitment to a subscription-based revenue model, increased our knowledge of operational complexities, and built our confidence to continue testing the venture at even higher-fidelity.
Do you have a business model that’s still coming into focus? Are you interested in experimenting with new business models at your organization, but not sure where to start? Drop us a line at firstname.lastname@example.org.
Also, see more examples of our work to test and launch new business models on our Peer Insight Ventures page.