How to build a business model for a startup in 7 steps

So you have got that great idea? Now is the time to turn that brilliant idea in your head into a viable business. How do you take your business from the ideation phase, turning it into a profit-making enterprise? What you need is a sound, profitable business model. So then the question is; how to create a profitable business model for your startup?

Having an idea is just the starting line of the business-building process. Yes, you want to enter the marketplace with a new, unique, and creative innovation to capture the attention of your target audience. But, this is certainly not all you need to have a successful business. You have to create a solid plan or strategy, which will serve as a roadmap for you to turn your idea into a profitable and sustainable business.

To do this, you will need to define the problem you’re going to solve, then define the target audience who has this problem. You then have to determine which marketing strategies and channels you will need to use to reach potential customers, and the way you will present your offers to them.

What is a Business model?

According to Investopedia, a business model is a company’s plan for profit-making. It shows the products or services the company plans to sell, its identified target market, and any expected expenses.

How to build the right business model for your startup

To create the perfect business model for your startup, you need to make a custom-made outline. This article will guide you through a smooth runway for an easy take-off of your startup. So get your pen and notepad, let us get started. 

Note, before you make your idea into a full-fledged business, there are many questions you need to ask yourself. The answers will help you determine the right path and decisions to make. Here are some crucial aspects you need to take into consideration while making your decision:

  1. What problem are you solving
  2. Your target market
  3. Define your competitors
  4. What is your value proposition?
  5. Select the channel to reach your audience
  6. Determine your revenue streams
  7. The business model Canvas
  1. What problem are you solving? 

Once you come up with an idea, you should figure out what problem you are going to solve. It could be a practical, or an emotional problem. This will depend on the product you are creating or the services you want to render. Define and refine your answers, and try to keep the number to no more than three key problems your product or service will solve.

  1. Your target market 

First, who do you want to serve? Determine your customer segment based on needs and attributes. This will include customers who have pain points that your startup can relieve.

  1. Identify/Define your competitors 

It is vital to take note of the presence of other industry players as you step into the market, especially the big players. Examine how many there are, what they are doing, and how successful they are. Ask yourself questions like; can I do better than them? What makes my startup different from them? What value can I create in the market? Identifying, and understanding your competition is almost always going to serve you in a variety of ways both short and long term. It also allows you to avoid a common pitfall, which is plunging into an oversaturated market. 

  1. What is your value proposition?

Your value proposition is the center of your competitive advantage. This is what separates you from your competitors. As a startup, you can provide value through innovation, price and costs reduction, accessibility, convenience, etc. You can check out awesome value proposition examples here.

  1. Select the channel to reach your audience 

Create a list of channels that you will utilize to reach your audience. These channels will take your products/services to them. Choosing the right platform is highly dependent on your audience and where you can find them. Hence, an effective channel presents your product or service at an efficient and cost-effective rate. 

  1. Determine your revenue streams 

The big idea that made you decide to build a business should be the main source of revenue. Focus on this revenue source as you begin. But, you can also consider other available opportunities to add multiple revenue streams. For instance, if you are in the real estate industry, you could offer other services like consultancy, as upsells and cross-sells.

  1. The business model Canvas

The business model canvas is a straightforward and excellent tool to help you understand a business model in a structured way. Using a business model canvas will give you a clearer idea of the customers you serve, the value propositions you offer, what channels you use, and how your company makes money. This canvas helps up-and-coming entrepreneurs define the various aspects of their business clearly. 

Using the Business Model Canvas template, you can improve it to suit your needs, or create your ideal business model. 

A good Business model canvas highlights the vital aspects of any business: 

  • The Infrastructure — This consists of your key business resources, activities necessary for creating and providing value to the customers, and your business partners 
  • The Offer — This is your value proposition. It involves the products and services you are offering to your customers. Here, include features like price points, and the benefits they receive. 
  • Customers — This is where you include everything you know about your customers. It will include your target audience, market, potential and existing customers. This report will be useful when determining which marketing strategies and channels you will utilize to maximize results. When you have an entire business structure and all your core activities and resources together, it will become helpful, especially if you plan on working with a team


Keep in mind that when choosing a business model for your startup, it’s only the beginning of the process. There are different ways to kick-start your business, so you will need to weigh your options carefully before making the final decision. For you to have a successful and profitable business, it’s vital that you do deep research. Make sure that the model you chose is compatible with your idea and target market.