Category Archives: Marketing & Sales

How To Evaluate Your Startups Business Model

How To Business Model

How To Evaluate Your Startups Business Model

The business model is the means by which your company makes money for the value that you deliver to your customers.

It is the strategy for how you monetize your product or service.

Your customer will be the ultimate judge of whether your business model works or not.

As a result, it may take trial and error to figure out the best model for your business.

Nonetheless, there are some important steps you can take to help ensure you get started with the best business model possible.

Step 1: Evaluate Your Competitors

By simply looking at your competition you will learn about the business models that your customers potential currently have to choose from. Whether you replicate a competitors business model or your deliver additional value to the customer by improving their business model, it is important for you to know what your customers’ options are.

Step 2: Understand Your Customer

Are you selling to men, women, or children? Are you selling to the wealthy or the poor? Is your product or service an everyday purchase or a luxury purchase? What drives your customer to purchase your product? Knowing the answer to these questions and truly understanding where your customer is coming from will help you determine the best model for you.

Step 3: Determine Your Cost of Sales

It is extremely difficult to determine your price and business model unless you know your cost of sales, also referred to as Cost of Goods Sold (COGS). Without this information, you won’t know whether your price generates a gross profit or a loss.

Step 4: Determine Your Operating Expenses

Every business has some cost of running the business that is not directly related to the sale or a product or service. For example, office rent, marketing budget, accounting, etc. It is important that you understand this cost structure as well so that you can turn a net profit once these expenses are accounted for as well.

Step 5: Compare Business Models

You will want to take your top 2 or 3 business models and build out a complete set of financial projections for each so that you can test the key variables of the business models and compare them with one another.

Below is a list of the most common business models:

  • 1. Brick and mortar
  • Whether you open your own brick and mortar retail store or you sell your product wholesale to a brick and mortar retailer, one of the oldest and most basic business models is a traditional storefront.

  • 2. Direct Sales
  • Direct sales is a method where the company sells directly to the end-user via a sales force. By cutting out the middleman, direct sales usually allows the company to sell the product for less and provide value to the customer via reduced prices.

  • 3. Subscription
  • The most obvious example of a subscription revenue model is a magazine or newspaper. Subscription business model is very popular and lauded among business owners due to its recurring revenue nature where gaining one new customer results in ongoing revenue throughout the lifetime of that customer.

  • 4. Multi-Level Marketing
  • Multi-level market, or network marketing, is a model where independent marketers buy a company’s products and sells them to consumers directly as well as to other “downline” marketers who in turn do the same. Each marketer in the “downline” receive a commission on that sale.

  • 5. Auction
  • The auction business model is free-market capitalism at its finest where the customer who is willing to pay the most gets the product.

  • 6. Service
  • The service industry is very broad and includes many sub-models but at its core, consumers pay a flat rate or an hourly rate for services rendered.


    Whether you have a question about your business plan or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

    Where to find market, industry and competitive analysis?

    Competitive research from The Starup Garage

    Where to find market, industry and competitive analysis?

    Welcome to video Fridays
    from The Start Up Garage

    A place where Tyler Jensen, The Startup Garage’s founder, answers questions directly from viewers

    Key Take Aways From Video:

    1) One of the first places I start with is industry associations or trade associations for that particular industry that you’re going to be in.

    2) Google search — really getting into google and searching for the data that you’re looking for is a great place to start, especially on the competitive analysis because your competitors are going to be online most likely, or they’re probably not a competitor.

    3) The library has access to a lot of databases. These databases cost a lot of money, but if you go through your library you can get free access to them.

    4) Build a team of advisors These are probably the best resource.

    Whether you have a question about your business plan or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

    Why You Should Plan for Niche Domination

    Find A Niche Business Planning from The Startup Garage

    Why You Should Plan for Niche Domination

    Plan for Niche Domination

    What is all this dialogue about “Niches” and who should really care? Why should your next business plan focus on finding and developing a niche?

    Seldom do two people from the same discipline (sales, marketing, research, etc.) define niches the same way or agree to the value of pursuing the domination of a niche (if the idea ever comes up).

    If defining the niche is hard, let’s define “domination” and see what kind of agreement we get there.

    In the Science of “Revenue Generation” to develop a “Revenue Strategy,” you must answer 5 foundation questions.  Question number three is “What is the niche or niches you plan to (or do) dominate?”

    4 Reasons To Dominate a Niche

    To have a successful Revenue Strategy you must dominate a niche.  Beyond the strategic requirement for dominating a niche there are 4 critical operational reasons to dominate a niche:

    1.  If your Revenue Strategy is not compelling enough to even attempt to dominate a niche, you’d better rethink your strategy.  Your ability to dominate or at least to challenge domination is a quality control point for your Revenue Strategy.

    2. 99% of all the companies on the planet have more possible customers (suspects) than resources to call on them all (even with the internet).  So everyone needs to marshal their resources in a very focused way to get the biggest return possible for invested resources. That focused way is a niche.

    3.  If a company in a hot market decides to let random opportunity drive their revenue direction, the following are some of the risks from that random effort:

    Fulfilling anyone with a need, with a general offer that is not truly compelling will fail in a more competitive market.

    Fulfilling anyone with a need in a hot market results in a cost and pricing structure that has never been really tested, which results in high costs, low margins and a price not based on value or proven to be competitive.

    Fulfilling anyone with a need does nothing to create long-term customer relationship.

    When a market is hot it appears to be satisfied with random fulfillment.  When the market cools or is serviced by a focused/lean competitor who delivers high value the random fulfillment seller is at great risk or disappears.

    Last if you are in any market that you are not dominating or working towards domination the customer sees you like every other random vendor. When that happens, the buyer’s decisions are driven by price.  At this point, the seller who has decided to dominate niche through high value or lean operations will win over the random fulfillment company every time.

    4. When you dominate a niche based on adding real value, you:

                     a.  Make more money

                     b.  Have higher margins

                     c.  Win more deals

                    d.  Win more deals with less selling cost and time

                    e.  Will have more repeat business and referrals

                   f.  Attract the right customers, staff and partners


    Let’s be clear about what we mean by niche and dominance from the Revenue Science point of view.

    A niche is a market that has the problem you uniquely solve and that can be compelled to buy your offer so both parties receive high value.

    From your standpoint, a niche may seem very large.  So to dominate, you have to define your target niche so you have the Revenue Resources Required to execute domination. Working this into your next business plan will keep your resources focused and not wasted.

    For years, Apple dominated about 5% of the computer market, but their customers were loyal, repeat buyers. They paid a high price. They did not just refer additional business to Apple, but were fanatic evangelists of Apple products – Apple truly dominated that niche, but not the computer industry.

    Every company should target the niche to dominate that they selected in their Revenue Strategy and supported by the necessary Revenue Resources Required to execute domination.  Picking a niche to dominate that is beyond the available resources is to be out of integrity and will harm your brand.

    Deciding to dominate a niche or a few niches (based on available Revenue Resources Required) will make everything more aligned.  It will be clearer and simpler for your team to execute.  The market will recognize who you really are by what you do. You will avoid a high “Cost of Chaos” so you will make a lot more money.

    Don’t pretend you can do everything and randomly fulfill a general market.  No one will believe that. Even if your market is hot, dominate niches. It is more profitable for both the short-term and the long-term. Dominating a niche will give you a strong foundation to build on for your business planning.

    Take a step back, get clear and start dominating at least one niche now.

    About Guest Post Author, Rick McPartlin

    Rick McPartlin-LinkedIn-Photo

    Rick McPartlin-LinkedIn-Photo

    Rick McPartlin, TEC Canada 2008 US Speaker of the Year, has spent more than 20 years applying “Revenue Generation” science in organizations as small as startups and as large as $50 billion corporate giants like Johnson & Johnson, ATT, Siemens, SAIC, E&Y, and Sun Microsystems.

    Rick is the co-founder and CEO of The Revenue Game a rapidly growing firm focused on midsized companies that want to apply this science to proactively and predictably engineering the growth of profitable revenue in the real world.

    Guest Post Opportunities

    If you would like to contribute content for the high-growth tech industry, contact


    Mobile is Transforming Consumer Retail Behavior

    Mobile Retail Development Trends from The Startup Garage

    Mobile is Transforming Consumer Retail Behavior

    Multi-Device Retail Preference

    Multi-device usage is quickly becoming the norm in consumer behavior.  Consumers will research a product on their phone or iPad, test the product in a brick-and-mortar store, and go home to purchase the product online from their laptop computer.  While this shift to multi-device usage can make it difficult for marketers to reach their consumers, it does come with added benefits.  This behavior evolution enables brands to engage their audience multiple times across devices with the same marketing campaign, thus increasing brand awareness, recall and ROI.

    The Move to Mobile

    Consumers are turning to their mobile platforms now more than ever for research and purchasing retail items.  The consumer market has experienced a rapid increase of in-store mobile usage.  Furthermore, thanks to mobile, consumers have changed the way they engage with brands.  Thanks to a research study conducted by JiWire, we’ve discovered the following shifts in consumer retail behavior:

    • 42% of consumers prefer to research retail-related shopping on their smartphones and tablets over other devices, while 45% prefer purchasing in-store.
    • Consumer engagement with retail ads increases 42% within a two mile radius of the store’s location compared to ads inside the store.
    • Of all the commercial venues where people use their mobile devices, retail venues are #1, representing 31% of all mobile usage.
    • Smartphones replace laptops as the device connecting to public WiFi for the first time in history.


    Whether you have a question about consumer mobile behavior or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

    Pricing Strategies Than Can Improve Sales

    Pricing Strategy for Growth from The Startup Garage

    Pricing Strategies Than Can Improve Sales

    The Right Price Can Make a Big Difference

    Using smart pricing strategies can make a big difference to your sales and help you succeed in a competitive marketplace.  Each product and service is unique and therefore what works for some companies may not work for others.  Nonetheless, the strategies outlined below may be a good solution for your business.

    1. Give Your Customer Choices

    By giving your customers choices, they feel in control of the purchasing process and are more likely to feel committed with their purchase.

    2. Limit Your Choices

    However, when you provide your customers with too many options, they can experience action paralysis, feeling demotivated to purchase or incapable of making a decision.  Provide enough options to allow your customer to make a decision about their purchase but not so many that you confuse them.

    3. Utilize a Price Anchor

    Price anchoring utilizes a human psychological tendency where people rely on the first piece of information offered when making decisions.  With that said, the best way to sell a $500 necklace is to sell it next  to a $1,500 necklace.  By placing a premium product or service next to your standard version, you can create a value or bargain comparison that will drive your customer to make the purchase.

    4. Reduce the Pain Points

    By making the sales process as simple, efficient, and quick as possible, you will find that your customers are more prone to purchase.  The less that is required of the customer to buy your product or service the better.

    5. The Old #9 Classic

    One of the oldest tricks in the book is ending the price of your product or service with a 9.  Rather than selling your necklace for $500, try $499.  While there is much anecdotal debate about the effectiveness of this strategy, several researchers conclude that this strategy is in fact effective.

    6. Test Your Pricing at Different Levels

    See how your total sales and profits change when you test your product and pricing mix.  When selling a premium and a standard product, try adding a third version.  See if sales go up if that third version is a notch below the standard.  And likewise, if that third product is a notch above the premium.


    Whether you have a question about pricing strategies or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

    Understanding Barriers to Entry

    Barriers to Entry from The Startup Garage

    Understanding Barriers to Entry

    Entry into any market by a startup business is in some way possible, though it is often constrained by some sort of economic, procedural, regulatory or technical obstacle.  Such obstacles are often referred to as ‘barriers to entry.’  Some examples of barriers to entry include high startup costs, strict laws and regulations, inability to access resources, economies of scale, high tariffs, high switching costs, zoning, distributor/supplier/vendor agreements and customer loyalty.

    Creating Barriers to Entry

    Industry leading competitors often put a lot of focus on establishing barriers to entry to keep new entrants out of the market.  The more a competitor can achieve customer loyalty, benefit from economics of scale and limit new entrants access to resources, for example, the more difficult it will be for a new entrant to compete.  The most effective way to establish barriers to entry is through developing sustainable competitive advantages that are difficult for competitors to replicate.  Some sustainable competitive advantages that many companies turn to include

    • Intellectual property – patents, trademarks, domain names, copyrights and trade secrets that provide competitive protection)
    • Dynamic product lines that allow companies to establish multiple revenue streams and follow-on product variations
    • Cost advantages – economies of scale, vendor relations, or some other factor that allows you to offer a significantly lower cost than your competitors
    • Brand loyalty – keeping your customers happy can be the most effective way of keeping them from turning to your competitors.

    When you are in the business planning process and writing your business plan, be sure to think about sustainable competitive advantages and barriers to entry that you can establish to make it difficult for new entrants to cut into your successes.


    Whether you have a question about sustainable competitive advantages or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

    Sustainable Competitive Advantages

    Sustainable Competitive Advantage from The Startup Garage

    Sustainable Competitive Advantages

    A competitive advantage is some aspect of the company and/or its product or service that gives it an edge over its competitors and allows it to generate greater values for the firm (in sales and/or profit margins) for the firm and its shareholders.  Two primary examples of competitive advantages include: 1) comparative cost advantage – a firms ability to sell a good or service at a lower cost than its competitors as a result of lower production costs; and 2) differential advantage – a firm’s ability to product products or services that are seen as better than its competitors’.

    Sustainable Competitive Advantages

    Simply put, the more sustainable the competitive advantage, the more difficult it is for competitors to adopt the advantage.  Sustainable competitive advantages are not easily copied and generally stem from one or more of the following: vendor relations, product sourcing advantages, prime location, unique products/services; customer loyalty, customer service reputation, or distribution channel advantages.  When developing a business plan and business model, it is important to look beyond the product/service/competitive advantages and try to establish advantages that are truly sustainable.  The following are some tips to help you with this process:

    • Intellectual Property

    While all I.P. has its shortcomings, patents are probably the best sustainable competitive advantage on offer as they provide 20 years of competitive protection.  Beyond patents, it is important to consider trademarks, copyrights,  domain names, long-term contracts and trade secrets.

    • Dynamic Product Line

    A one-of-a-kind, differentiated product line may have several competitive advantages.  But for how long?  Don’t be the one-hit-wonder of the entrepreneurial world by coming out with one great song but failing to back it up with a great album and future albums.  Discover how your innovative technology can incorporate with add-on products that bolster your revenue sources as well as follow-on products that keep you ahead of the competition.

    • Dramatic Cost Advantage

    In order for a cost advantage to be a sustainable competitive advantage you will need some dramatic breakthrough in the technology, manufacturing or revenue model of the product.  A breakthrough that is not easily copied by your competitors and that is ideally protected via patents or tightly held trade secrets.

    • Seasoned Management Team with Key Relationships

    One of the greatest competitive advantages is a great management team.  A great management team with proven success in the past is most likely to continue their track record, lending to a real sustainable competitive advantage.  One of the main reasons for their past and continued success will come from the key relationships they have developed over the years with vendors, manufacturers, suppliers, distribution channels, industry influencers, major contractors, etc.

    • Brand Loyalty

    By building strong relationships with your customers and keeping them happy, you will benefit from repeat businesses even if you do not offer the cheapest or most effective product.


    Whether you have a question about Sustainable Competitive Advantages or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

    The Importance of Differentiation

    Standout Competitive Advantage from The Startup Garage

    The Importance of Differentiation

    When asked about their product or service, most entrepreneurs could go on and on with the various features and advantages.  However, once you ask them, “what makes your product or service desirably different?” their pitch begins to flounder.  They begin to fall back on their key features or advantages over their competition.  But, the question remains, while your product may have an advantage over the competition, is that enough to make it desirably differentiated?  When determining how you can differentiate your product or service, consider the following:

    Core Competencies

    Too many entrepreneurs and startups get caught trying to be everything to everyone.  Identify a problem that is not be solved and determine how you can best apply your core competencies to solve that problem.  It doesn’t take endless features and nuances to solve a problem well.

    Know Your Customer

    Know the fears of your customer.  Determine the reasons that they either avoid a purchase or run towards it.  Continue to narrow your target market until you can identify the crux of the problem for a segment of the population.  The better you know this segments pain points, the better able you will be to create a product that solves a unique problem in the market.

    Write a Positioning Statement

    A positioning statement is a one or two sentence statement that articulates your product or service’s unique value to your customers in relation to your direct competition.  It explains why your customers should purchase your product or service over that of your competitors.


    A Note On Intellectual Property

    If your product or service truly is well-differentiated and one-of-a-kind you may be able to acquire some intellectual property to help secure your idea from competitor theft.  Discuss your product, service, processes, etc with a startup lawyer to determine if you can obtain any trademarks, patents or copyrights. 


    Whether you have a question about Differentiation, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!


    Narrowing Your Addressable Market Down To Your Target Market

    Narrow Target Market with The Startup Garage

    Narrowing Your Addressable Market Down To Your Target Market

    Before we go over some tips for narrowing your addressable market into a concise target market, lets first define these terms.

    Addressable Market

    The addressable market is the group of people (or businesses) whom might be interested in what you are selling.  It is the broadest umbrella of potential customers that your target or service may be suited for.

    Target Market

    The target market are those people (or businesses) within your addressable market whom are most likely to buy from you.  Typically, they are the lowest hanging fruits and therefore the cheapest to acquire.

    Narrowing Your Addressable Market Down to Your Target Market(s)

    It is important to have both an addressable market and a target market when writing a business plan.  Your addressable market will give the reader (potentially investors) a good understanding of the potential market opportunity should this business take off.  However, do not stop here.  Many entrepreneurs make the mistake of only looking at the big picture when defining their market.  Investors know – and so should you – that a start-up cannot be everything to everyone.  Startsups have a lot going up against them: no market awareness, tight sales and marketing budgets, steep competition, etc.

    As a result, you will want to target a strategic set of market segments within your addressable market.  The low hanging fruits – those most likely and able to buy – will probably want to be your initial focus as these will cost the least amount of money to acquire, thereby leaving sales and marketing dollars for other segments.

    A Note on Core Competencies

    When determining both your addressable and target markets, keep your core competencies in mind.  You may be able to make moderate tweaks to your product or service to make yourself attractive to a new segment.  This may or may not be in your best interest.  Just be sure to stay focused on what it is you do best and determine the audience that most needs your solution to their problem.

    Whether you have a question about your Addressable vs Target Market, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

    Value Propositions vs. Positioning Statements

    Position vs Value Proposition from The Startup Garage

    Value Propositions vs. Positioning Statements

    The main objective of a company’s marketing strategy is to define and reach the target customer demographic while differentiating itself from the competition.  Value propositions and positioning statements stem from this marketing strategy and help the company to accomplish its marketing goals.  Many people use these terms interchangeably when writing a business plan or discussing their marketing strategy, but there are some key distinctions.

    Value Propositions

    A company’s value proposition describes the key functional and emotional benefits of its products, services and brand. Typically, functional benefits refer to key product/service features and advantages.  Meanwhile, emotional benefits refer to the positive feelings and emotions that customers experience when engaging with the company’s product, service or brand.  Whether the benefit is functional or emotional, the key is to create value and to convince customers that they are getting value for their money.  With this in mind, the main idea of a value proposition is to convince the customer that your product or service creates “value for their money.”  In other words, the benefits of your product or service minus the cost of your product or service results in value that is greater than the cost of the service

    Positioning Statements

    Positioning statements flow from your value propositions and a single value proposition may contain several positioning statements.  They are more focused messages that form the basis of advertising campaigns.  Positioning statements describe why a set of customers should use one product over another.  The positioning statement includes the target audience, product name, category, benefit and competitive differentiation.


    Value propositions and positioning statements share the following similarities:

    • Directed to a specific target market
    • Focused on the customer
    • Identify unique points of differentiation
    • Declare key benefits

    Key Differences


    Whether you have a question about Value Propositions vs Positioning Statements, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!