For young entrepreneurs, your first order of business must absolutely be making sure your bright idea will pay off.
As a freshman in college, one of my professors told me that profits, marketing, location and people are all important, but the real secret to any successful business is a great business model.
He then illustrated his point by way of the franchising industry: The most successful models like Pizza Hut and McDonalds, for instance, are so simple to understand that with minimal training, individuals of all stripes can operate the business. I often find myself echoing this wisdom when I chat with other budding college entrepreneurs.
But don't stop with simplicity. Here are four questions to ask yourself to ensure your business model is on track for success:
1. Does this business model make sense? You may come into communication with investors through business-plan competitions and other funding opportunities on campus. As such, think about your business idea from their perspective. Would you willingly pour time, energy and personal resources into your venture?
2. What do you do? This is plain and simple: if your customers don’t understand what you do or how you do it, they won’t buy what you’re selling. As soon as you have a minimum-viable product, let everyone you know test it and tell you what they think. It’s that early feedback that will be invaluable when you’re trying to attract new customers.
3. Can others explain your model? The people working for you need to be able to articulate your vision. They need to understand the value that your goods or services provide and why consumers should be purchasing them from you. A clear business model makes it easier for employees to communicate your business’ value proposition.
4. Can the company break even? Sustainability is crucial. Your business model must communicate how your company brings in revenue (or plans to bring in revenue) and covers your expenses. If the business model fails to do this, then your company won’t last. Be sure you have a long-term growth plan in place for making money.
Related: 3 Tips to a Speedy Launch
Once you’ve figured out the answers to these questions and can effectively implement them into your business model, you are on your way to building a scalable business.
What’s the most important element in a great business model? Share your thoughts in the comments section below.
**Apply Now** Are you an enthusiastic college- or graduate-student entrepreneur, eager to share your on-campus experiences? Apply to be a YoungEntrepreneur.com College Treps columnist.