Assessing a Business Model
Traditionally, business models have been assessed in a subjective manner by entrepreneurs, venture capitalists, bankers, and academics. After all, if you want to receive funding from one of these, they want to look at the business plan to decide whether or not to invest. No one really understood or studied what made a great business model great. Like good art, they simply knew it when they saw it. Many times, these wise business people were correct in their assessment of a business model. However, we figured there had to a more scientific method to decide whether a business model was strong or weak.
After studying thousands of entrepreneurs, we created an objective methodology to score a new business model. We discovered that every business model has eight key areas. These eight areas of the business model are illustrated below.
Some areas carry greater weighting than others. For instance, Excellent Margins represents 20% more score weight than Easy to Sell. The business model assessment system has 1040 total points available. Scores range from 0 to 1040. We have found that a score of 750 or more is above average, but scores of 900 or more indicate a strong business model.