7 Questions to Assess Your Business Model

A business model describes the rationale of how an organisation creates, delivers and captures value. If you need a little help assessing how well yours is doing, take a minute to ask yourself these seven questions, come up with answers on a scale of 1 to 10, and figure out how you can find ways to improve.

Switching costs

Worst case scenario: Nothing holds my customers back from leaving me.

Best case scenario: My customers are locked in for several years.

Recurring revenues

Worst case scenario: 100% of my sales are transactional.

Best case scenario: 100% of my sales lead to automatically recurring revenues.

Earning vs spending

Worst case scenario: I incur 100% of my cost of COGs before earning revenues.

Best case scenario: I earn 100% of my revenues before incurring costs of goods and services sold.

Game changing costs structure

Worst case scenario: My cost structure is at least 30% higher than my competitors.

Best case scenario: My cost structure is at least 30% lower than my competitors.

Others who do the work

Worst case scenario: I incur costs for all the value created in my business model.

Best case scenario: All the value create in my business model is created for free by external parties.

Scalability

Worst case scenario: Growing my business model requires substantial resources and effort.

Best case scenario: My business model has virtually no limits to grow.

Protection from competition

Worst case scenario: My business model has no moats and I’m vulnerable to competition.

Best case scenario: My business model provides substantial moats that are hard to overcome.

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