25 Business Model Questions Every Entrepreneur Must Answer

What should you consider when creating a business model? How should you evaluate and test a new model?

A business model defines how a company creates, delivers, and captures economic value. Drawing from concepts in the books Business Model Generation and Running Lean, we’ve created six exercises containing several business model questions that will help you devise a model that fits your vision.

Continue reading for these exercises you can do with your team.

Exercise 1: Define Your Value Offer

Business Model Generation, by innovation experts Alexander Osterwalder and Yves Pigneur, is a contemporary guide to systematic business innovation. The book provides a template for brainstorming and visualizing the overarching elements that make up a successful, holistic business model.

The following business model questions will help you define how you intend to offer value to customers (Osterwalder and Pigneur refer to this element as “Value Propositions”). Your value offer outlines the benefits you intend to provide in the form of products and services. The authors state that successful value offers align with the needs of your customers and differentiate themselves from existing solutions.

When creating your value offer, consider these questions:

1. Do you intend to disrupt the market with an innovative value offer, or do you intend to improve upon what’s already out there?
2. What specific value do you intend to deliver to the customer?
3. How will you adapt your value offer for each of your customer groups?
4. What makes your value offer more appealing than that of your competitors?

Exercise 2: Challenge Assumptions to Generate Ideas & Solutions

Sometimes, we get stuck on seeing things a certain way and find it difficult to think of more efficient or creative alternatives. Osterwalder and Pigneur suggest that reframing questions can help you to challenge your assumptions to generate new ideas and solutions for your business model.

1. Think of one product or service you intend to offer and the customer group you intend to serve. What is the worst possible feature you could add to this product or service? What would upset your customer group?
2. Why would this feature upset your customer group? What problems would it create?
3. What if you changed your customer group or offered your product or service to a different market? Would anyone be happy to pay for this feature? 
4. What’s the complete opposite of this terrible feature? How can you use your answer to improve the product or service you intend to offer?

Exercise 3: Create an Overview (Business Model Generation)

The following business model questions will help you create an overview of your model by focusing on the what, who, and how of your value offer.

1. Think of one product or service you intend to offer. What value does it offer? What problem does it solve?
2. Who are you offering this to? Who needs your solution?
3. How is your offer more valuable than what your competitors are offering? Why would your customers choose your value offer?
4. How do you intend to make money with your value offer?

Exercise 4: Create an Overview (Running Lean)

While the previous business model questions are based on Business Model Generation, the following exercise is based on Running Lean by Ash Maurya. The books helps you build and sustain a flexible business model that evolves alongside customer preferences.

Maurya recommends creating an overview of your business model by defining the customer group you’ll target, identifying their problems, and determining how you’ll solve these problems. While there’s some overlap with the questions in the previous exercise, this approach will produce some different and additional insights.

1. Think of one product or service you intend to offer and briefly describe it. (For example, you intend to offer comfortable orthopedic shoes.)
2. Write down at least one customer group that will want your product or service. (For example, you might target middle-aged adults with conditions like plantar fasciitis, who seek effective solutions to alleviate foot pain.)
3. Consider the customer group you chose. Write down at least one problem they face when using existing products or services. (For example, this customer group often has to put up with unattractive footwear options for the sake of pain relief.)
4. Think of some simple ways to address the customer problem(s) you’ve identified. Write down at least one way to integrate a solution into your product or service. (For example, you could emphasize ergonomic design and style, thus ensuring both optimal comfort and a fashionable appearance.)

Exercise 5: Align Your Organization and Resources

Once you’ve defined your business model, you’ll need to evaluate if your organization is prepared to move forward with it. In addition to assessing your technology and resource requirements, Osterwalder and Pigneur suggest that you consider the following business model questions inspired by Jay Galbraith’s Star Model to assess whether you need to restructure or adapt your business operations to successfully implement your business model.

1. Do your current strategic goals align with the business model?
2. Does your organizational structure support the business model?
3. What processes will you need to implement to support the business model?
4. How can you reward your team and encourage them to align with your business model objective?
5. What people skills do you require to implement the business model?

Exercise 6: Validate Your Hypotheses

According to Ash Maurya, testing the hypotheses that underpin your business model is key to building a successful business. With the following business model questions, we’ll walk you through the process of designing customer interviews, creating prototypes, and conducting pilot tests.

1. Write down the nine key hypotheses underlying your business model: customer groups, customer problems, value offer, possible solutions, touchpoints, profit sources, expenses, key performance indicators, and competitive edge.
2. What questions will you ask potential customers to validate your customer groups and their problems? (For example, for your orthopedic shoe business model, you might ask customers if they experience consistent foot pain or discomfort while wearing regular shoes, or if they’re actively seeking footwear options that combine comfort with style.)
3. What features will you include in the prototypes of your offer to validate your solution and price point? (For example, you might incorporate advanced cushioning technology for enhanced comfort, or use premium materials that provide support without sacrificing style.)
4. Briefly describe how you intend to gather feedback and measure user responses during your pilot tests. (For example, you might conduct surveys to gauge overall satisfaction and comfort level, or monitor online reviews and social media conversations for user feedback.)