The importance of your business model for your startup success

Entrepreneurs are on a mission to build the future and inevitably they are breaking many rules in order to create their own. One of the key moments for the establishment of your company is the moment of choosing the right business model for your startup. This is essential decision for entrepreneurs and going B2B or B2C can really shape up the future success of your business. As everything else in your startup, choosing the business model depends on the nature of your products and services and their actual implementation.

The choice of business model requires thorough overview of the essence of your startup. Some businesses are inopportune to embrace B2B models and vice versa. B2C is all about the trends and even though the market size is relatively large it is strongly affected by the change of the tendencies. B2C companies must be flexible and ready for fast change. This is why when we talk about tech startups, especially about service-oriented startups, the whole picture changes.

B2B is one very difficult model to start your business with, but for serious and competent startup founders it is a way worth walking. With B2B model not only the product must be very strong, but also the whole team and especially the marketing specialists need to be really high qualified. When we talk about B2B we cannot picture success without strong, very professional and experienced marketers. With this model relatively important to the power of your idea is the execution of this idea. B2B is strongly relationship-driven model and startups which embrace this model often aim to be working with the most powerful players in the market by trying to attract them as customers. B2B models require hard work and professionalism, but when the business becomes successful the high pricing ensures high revenues.

In the recent years it has been noticed that venture capitalists tend to look with different eyes to B2B oriented startups. These businesses are not that trendy, they don’t have great amount of users and followers and not everyone is talking about them. Then what is the reason to attract that much attention from investors? To answer this question we must think of what do investors expect from their investments. They expect profit. And successful B2B companies are moneymakers. The picture gets clearer, right?

As an entrepreneur you need to choose your model according to your belief of your idea and its execution, according to the potential of your product and the assets you have to make it all happen. Choose what is better for your startup and don’t be afraid to change direction if you don’t feel that you are on the right way.

For more about the subject, you can see the presentation, which Eric Anderson gave during Etohum Startup Istanbul 2014 event, here. In his lecture he talked about why startups should also focus on B2B and the advantages of this business model.

─ November 14, 2014