Entrepreneur’s Diary #103 Basics Compact – Today: “Categorical Evaluation of Business”

I often see how “experienced” managers and – too often self-appointed – “business angels” are quick with making short shrift of and judging business models introduced by, for example, start-ups. For instance, without having to give it much thought, they always know precisely what business cannot work in Germany, what is the only thing you can produce in China or why a business model is no good. They are omniscient when it comes to what you have to do, what will be a success and what you cannot do.

As opposed to this, I notice that a lot can be achieved if the “right” teams are involved. And if the persons in those teams are the “right ones” because they have a good education and work towards their goals with courage and joy. If those requirements are met, I often witness surprising success. Success which actually falsifies those dogmatic assumptions.

Consequently, I constantly warn against “categorizing” business models. Just like I also warn founders against giving themselves soothing ideas using “logical” conclusions. Let me cite a few often-used arguments I frequently hear:

Our target group consists of xy millions of people. If we only reach every thousandth of them, we will have xy times a thousand customers. And if we charge 10 Euros licence fee for each app, we will get xy times 10,000 Euros. What you get is a contract that looks extremely attractive and seems to be more than adequate for success.

Whenever I hear this kind of reasoning, the thing I would like to do is run away. This is exactly how you cannot do it. A good business model is like a burning match which quickly lights at least a small fire.

If this does not work, you had better keep away. And if it lights a small fire, you must be careful to get more than just a straw fire. What you want is a nice and sustainable burning. And if that is what you want, you will basically always need a lot of industriousness, prudence, creativity and stamina. Which means that a stroke of fortune can bring success. And, as we all know, fortune favours the bold.

(Translated by EG)

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