.How the business will make money is the very first thing that startup entrepreneurs should know. This will define their business model, which is basically the accumulation of all strategies and tactics as to how the business makes money.
Here’s the advice of Guy Kawasaki on how to define your business model in his book “The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything”
To do this you need to answer two questions:
- Who has the money in their pockets?
- How are you going to get it into your pocket?
More elegantly stated, the first question involves defining your customer and the pain that he feels. The second question centers around creating a sales mechanism to ensure that your revenues exceed your costs.