Chapter 4 : Business Models & Financial Basics

Every startup needs a clear business model – a plan for how it will make money and stay alive. In simple terms, a business model is a company’s core strategy for generating profit. It explains what the company sells, to whom, at what price, and how it manages costs. In other words, it lays out the value proposition (the products/services offered), the target market (who buys them), and the financials (revenue and cost structure). A well-defined business model helps attract investors and guides the team’s decisions. For instance, understanding how you will earn more than you spend is crucial – 82% of small businesses that failed did so due to cash problems. By sketching out a business model early on, new companies can plan for profit and avoid running out of cash.