Business Model Analysis for Entrepreneurs

Abstract

This note defines a business model and its major elements: a customer value proposition, a technology and operations management plan, a go-to-market plan, and a profit formula. For each element, the note lists questions that an entrepreneur must address when evaluating an early-stage opportunity. The note explores in greater depth several business model issues that are especially relevant to entrepreneurial ventures, including the impact of network effects and customer switching costs; conditions when a startup should consider vertical integration; the nature of first and late mover advantage; and conditions that favor viral marketing. The note concludes with practical guidelines for early-stage entrepreneurs on how to conduct business model analysis.

Learning Objective: To build students' understanding of elements of a business model and business model issues that are most salient in an entrepreneurial context.