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There are 14 classic business-model types, which are positioned on the graph. They range from "Research Project" down in the lower left-hand corner, up to "Model Venture" in the upper right.
The highest percentage shown in the following table indicates which business-model type is most like
your venture. Percentages for several of the next-closest types are listed as well, but of particular importance is your company's correlation to the desired "High Potential Venture", which is highlighted here and discussed more fully in Section 4.
Simply click on any of the highlighted business-model types for detailed explanations, examples, and strategies for modifying the business model in order to improve its chances for success.
The first 5 Business-model Types listed here are not really wealth-producing businesses because they lack the necessary elements to Be a business and to Keep
much of any value created:
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Type
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Research Project: No business model, consumes resources with no end in sight. Since nothing has been produced yet, there is nothing to keep and it isn't a business. It is driven by the quest for innovation.
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Hobby: No revenue model, don't want one, don't need one, there isn't one.
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Buy-a-Job Small Business: Self-employment opportunities that are
strong in persistence, frequency and product longevity but weak in the core competence of a venture. A lawn-mowing service, for example.
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Low-Competence Venture: Weak idea, weak management team. Not a business, hard to keep, characterized by lack of resources, highly competitive niches.
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Charity: No viable independent revenue model, so revenue is subsidized. Product or service is wanted, but customers can't pay for it, demonstrated by insufficient volume and margins.
Most emerging technology companies correlate highest to a Charity.
Don't let this concern you since most emerging companies have few revenues, an unproved market presence and business model.
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The next 3 Business-model Types are essentially small businesses. They have some of the elements to Be a business and to Keep some—and in a few cases much—of the value they create:
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Hostage Venture: Can't grow because of monopolistic acts by customers, vendors, employees, or founders, thereby restricting margins, resources, and volume and appropriating value. Such ventures may be trying to sell to the "Big Three" automakers or the pharmaceutical industry without corporate alliances in place. Another example is an inventor's licensing agreement that may be onerous.
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Lifestyle Small Business: Generates a good income but is small, limited or has no exit opportunities. An example is a bed and breakfast. It is characterized by frequency and product longevity but to be viable, it must have some degree of innovation and hard to duplicate.
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Fad Venture: Short life, potential high return, e.g. Pet Rock.
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The following 6 Business-model Types have a higher probability of being successful over time and in raising equity/debt capital. They have many of the necessary elements to Be a business and to Keep the value that they
create:
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Struggling Proprietary: Strong barriers to entry and protected intellectual property but problems in reaching the market. This venture is characterized by a technology/market mismatch in demand, supply, or timing. The Company often lacks marketing or business development skills.
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Competence-based "Troubled": Good technical management but a product looking for a market.
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Competence-based "Success": Financially successful firm. Business success is demonstrated more on management's ability to succeed in the market but a decaying level of innovation in products and services is present.
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High-Potential Venture: A company that has reached critical mass and has attracted venture capital. Innovation and quality management is important in sustaining growth to a successful exit strategy.
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Technology-based "Success": Good technology, good management and good product market match but dependent more on continuous innovation due to product life cycles. Probably getting ready for an IPO and will use funds to keep up with the changing market or a good acquisition target.
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Model Venture: Takes full advantage of the venturer's expertise and stakeholder support. While not a perfect venture, it functions optimally. A "Dow Jones" company is an example on a large scale.
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