{"id":285,"date":"2026-03-01T12:11:13","date_gmt":"2026-03-01T16:11:13","guid":{"rendered":"http:\/\/www.justinmcclellan.com\/blog\/?p=285"},"modified":"2026-04-07T14:03:19","modified_gmt":"2026-04-07T18:03:19","slug":"business-models-and-business-plans","status":"publish","type":"post","link":"http:\/\/www.justinmcclellan.com\/blog\/2026\/03\/business-models-and-business-plans\/","title":{"rendered":"Business Model Refinement \u2014 How This Actually Makes Money"},"content":{"rendered":"<div class=\"mceTemp\"><\/div>\n<p data-start=\"414\" data-end=\"568\">At this stage, you are approaching product\/market fit. You have a defined problem, a validated customer, a solution concept, and a working elevator pitch. The next question\u2014especially from investors\u2014is simple:<\/p>\n<p data-start=\"626\" data-end=\"661\"><strong data-start=\"626\" data-end=\"661\">How do you actually make money?<\/strong><\/p>\n<p data-start=\"663\" data-end=\"804\">You likely already have a rough idea of the business model. Now it needs to be refined into something <strong data-start=\"765\" data-end=\"803\">credible, testable, and defensible<\/strong>.<\/p>\n<hr data-start=\"806\" data-end=\"809\" \/>\n<h3 data-section-id=\"1powdvy\" data-start=\"811\" data-end=\"859\"><strong>A Note on Business Plans: Use Them Correctly<\/strong><\/h3>\n<p data-start=\"861\" data-end=\"944\">A traditional business plan (30\u201390 pages) forces multidisciplinary thinking across:<\/p>\n<ul data-start=\"946\" data-end=\"1004\">\n<li data-section-id=\"wem7gs\" data-start=\"946\" data-end=\"956\">Market<\/li>\n<li data-section-id=\"1gybhab\" data-start=\"957\" data-end=\"968\">Product<\/li>\n<li data-section-id=\"nyjb7y\" data-start=\"969\" data-end=\"983\">Operations<\/li>\n<li data-section-id=\"173ueww\" data-start=\"984\" data-end=\"995\">Finance<\/li>\n<li data-section-id=\"6tnq23\" data-start=\"996\" data-end=\"1004\">Risk<\/li>\n<\/ul>\n<p data-start=\"1006\" data-end=\"1152\">Done properly, it is less about the document and more about the process. It aligns the team, exposes gaps, and prepares you for investor scrutiny. Most external stakeholders will not read it in detail. But if you have not done the work, it will show immediately in Q&amp;A. Treat it as a <strong data-start=\"1292\" data-end=\"1312\">working document<\/strong>, not a deliverable.<\/p>\n<hr data-start=\"1334\" data-end=\"1337\" \/>\n<h3 data-section-id=\"mt7gi\" data-start=\"1339\" data-end=\"1375\"><strong>Focus on the Business Model First<\/strong><\/h3>\n<p data-start=\"1377\" data-end=\"1417\">At its core, the business model answers:<\/p>\n<ul data-start=\"1419\" data-end=\"1519\">\n<li data-section-id=\"10sd6hs\" data-start=\"1419\" data-end=\"1451\">How do you <strong data-start=\"1432\" data-end=\"1448\">create value<\/strong>?<\/li>\n<li data-section-id=\"l179j5\" data-start=\"1452\" data-end=\"1485\">How do you <strong data-start=\"1465\" data-end=\"1482\">deliver value<\/strong>?<\/li>\n<li data-section-id=\"1e2jxwg\" data-start=\"1486\" data-end=\"1519\">How do you <strong data-start=\"1499\" data-end=\"1516\">capture value<\/strong>?<\/li>\n<\/ul>\n<p data-start=\"1521\" data-end=\"1600\">You should now pressure-test how your solution actually operates as a business.<\/p>\n<hr data-start=\"1602\" data-end=\"1605\" \/>\n<blockquote>\n<p style=\"text-align: left;\" data-section-id=\"1hgja2o\" data-start=\"1607\" data-end=\"1661\"><span style=\"text-decoration: underline;\"><strong><em>Example: Airport Baton Service<\/em><\/strong><\/span><\/p>\n<figure id=\"attachment_401\" aria-describedby=\"caption-attachment-401\" style=\"width: 182px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-401 \" src=\"http:\/\/www.justinmcclellan.com\/blog\/wp-content\/uploads\/2016\/09\/Screen-Shot-2018-04-04-at-10.41.55-PM-199x300.png\" alt=\"Screen Shot 2018-04-04 at 10.41.55 PM\" width=\"182\" height=\"274\" srcset=\"http:\/\/www.justinmcclellan.com\/blog\/wp-content\/uploads\/2016\/09\/Screen-Shot-2018-04-04-at-10.41.55-PM-199x300.png 199w, http:\/\/www.justinmcclellan.com\/blog\/wp-content\/uploads\/2016\/09\/Screen-Shot-2018-04-04-at-10.41.55-PM.png 217w\" sizes=\"auto, (max-width: 182px) 100vw, 182px\" \/><figcaption id=\"caption-attachment-401\" class=\"wp-caption-text\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0( Not a real ad )<\/figcaption><\/figure>\n<p style=\"text-align: left;\" data-start=\"1714\" data-end=\"1807\"><strong><em>Instead of selling improved batons as a one-time product, consider a service-based model:<\/em><\/strong><\/p>\n<ul>\n<li style=\"text-align: left;\"><em>Airlines do not buy batons<\/em><\/li>\n<li style=\"text-align: left;\"><em>They subscribe to a \u201cfully managed baton service\u201d<\/em><\/li>\n<li style=\"text-align: left;\"><em>Every gate has working, charged batons every day<\/em><\/li>\n<li style=\"text-align: left;\"><em>Maintenance, charging, and logistics are handled centrally<\/em><\/li>\n<\/ul>\n<p style=\"text-align: left;\" data-start=\"2015\" data-end=\"2031\"><strong><em>Execution model:<\/em><\/strong><\/p>\n<ul>\n<li style=\"text-align: left;\"><em>Small local team (1\u20132 people per airport)<\/em><\/li>\n<li style=\"text-align: left;\"><em>Daily pickup and redistribution of batons<\/em><\/li>\n<li style=\"text-align: left;\"><em>Centralized overnight charging (simple infrastructure)<\/em><\/li>\n<li style=\"text-align: left;\"><em>Guaranteed availability \u2192 eliminates operational friction<\/em><\/li>\n<\/ul>\n<p style=\"text-align: left;\" data-start=\"2247\" data-end=\"2263\"><strong><em>Value delivered:<\/em><\/strong><\/p>\n<ul>\n<li style=\"text-align: left;\"><em>Eliminates battery replacement labor<\/em><\/li>\n<li style=\"text-align: left;\"><em>Reduces spare inventory requirements<\/em><\/li>\n<li style=\"text-align: left;\"><em>Ensures reliability (no dead equipment during operations)<\/em><\/li>\n<\/ul>\n<p style=\"text-align: left;\" data-start=\"2410\" data-end=\"2474\"><strong><em>This is not a better product\u2014it is a better operating model.<\/em><\/strong><\/p>\n<\/blockquote>\n<hr data-start=\"2476\" data-end=\"2479\" \/>\n<h3 data-section-id=\"1tu33k6\" data-start=\"2481\" data-end=\"2512\"><strong>Key Business Model Questions<\/strong><\/h3>\n<p data-start=\"2514\" data-end=\"2559\">You should now be able to answer, concretely:<\/p>\n<h5 data-section-id=\"189x4pd\" data-start=\"2561\" data-end=\"2577\"><strong>Go-To-Market<\/strong><\/h5>\n<ul data-start=\"2579\" data-end=\"2675\">\n<li data-section-id=\"1djnb2w\" data-start=\"2579\" data-end=\"2625\">How do customers learn about your product?<\/li>\n<li data-section-id=\"gxsvuf\" data-start=\"2626\" data-end=\"2675\">Direct sales, partnerships, channel, inbound?<\/li>\n<\/ul>\n<h5 data-section-id=\"yi40j2\" data-start=\"2682\" data-end=\"2693\"><strong>Pricing<\/strong><\/h5>\n<ul data-start=\"2695\" data-end=\"2803\">\n<li data-section-id=\"wfadbj\" data-start=\"2695\" data-end=\"2718\">What do you charge?<\/li>\n<li data-section-id=\"pw35yp\" data-start=\"2719\" data-end=\"2759\">One-time, subscription, usage-based?<\/li>\n<li data-section-id=\"nbh6nu\" data-start=\"2760\" data-end=\"2803\">How does pricing map to customer value?<\/li>\n<\/ul>\n<h5 data-section-id=\"12796fp\" data-start=\"2810\" data-end=\"2828\"><strong>Delivery Model<\/strong><\/h5>\n<ul data-start=\"2830\" data-end=\"2950\">\n<li data-section-id=\"1y1aot3\" data-start=\"2830\" data-end=\"2863\">How is the solution deployed?<\/li>\n<li data-section-id=\"1nr62m0\" data-start=\"2864\" data-end=\"2913\">What does the customer experience day-to-day?<\/li>\n<li data-section-id=\"2iv6cp\" data-start=\"2914\" data-end=\"2950\">What infrastructure is required?<\/li>\n<\/ul>\n<h5 data-section-id=\"skr3lz\" data-start=\"2957\" data-end=\"2976\"><strong>Sales &amp; Support<\/strong><\/h5>\n<ul data-start=\"2978\" data-end=\"3057\">\n<li data-section-id=\"hkqg2n\" data-start=\"2978\" data-end=\"2995\">Who sells it?<\/li>\n<li data-section-id=\"sv8t3c\" data-start=\"2996\" data-end=\"3026\">Who supports it post-sale?<\/li>\n<li data-section-id=\"15jcm6l\" data-start=\"3027\" data-end=\"3057\">What is required to scale?<\/li>\n<\/ul>\n<h5 data-section-id=\"17hka60\" data-start=\"3064\" data-end=\"3082\"><strong>Cost Structure<\/strong><\/h5>\n<ul data-start=\"3084\" data-end=\"3229\">\n<li data-section-id=\"kur3ms\" data-start=\"3084\" data-end=\"3229\">What does it cost to:\n<ul data-start=\"3110\" data-end=\"3229\">\n<li data-section-id=\"1tlbkry\" data-start=\"3110\" data-end=\"3151\">Develop (R&amp;D: Research &amp; Development)<\/li>\n<li data-section-id=\"lbhp55\" data-start=\"3154\" data-end=\"3182\">Produce (unit economics)<\/li>\n<li data-section-id=\"ydm1j8\" data-start=\"3185\" data-end=\"3229\">Deliver (operations, logistics, service)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr data-start=\"3231\" data-end=\"3234\" \/>\n<h3 data-section-id=\"12itvlv\" data-start=\"3236\" data-end=\"3275\"><strong>Build the Model (Even If It\u2019s Rough)<\/strong><\/h3>\n<p data-start=\"3277\" data-end=\"3363\">At this point, you should create a simple financial model (spreadsheet is sufficient). Include:<\/p>\n<ul data-start=\"3375\" data-end=\"3611\">\n<li data-section-id=\"1gaykrs\" data-start=\"3375\" data-end=\"3442\">Revenue assumptions:\n<ul data-start=\"3400\" data-end=\"3442\">\n<li data-section-id=\"n3xp8l\" data-start=\"3400\" data-end=\"3409\">Price<\/li>\n<li data-section-id=\"18t02ow\" data-start=\"3412\" data-end=\"3422\">Volume<\/li>\n<li data-section-id=\"qml958\" data-start=\"3425\" data-end=\"3442\">Adoption rate<\/li>\n<\/ul>\n<\/li>\n<li data-section-id=\"1nqa625\" data-start=\"3443\" data-end=\"3527\">Cost assumptions:\n<ul data-start=\"3465\" data-end=\"3527\">\n<li data-section-id=\"11jl8j\" data-start=\"3465\" data-end=\"3486\">Development costs<\/li>\n<li data-section-id=\"1a2qkvq\" data-start=\"3489\" data-end=\"3503\">Unit costs<\/li>\n<li data-section-id=\"13yy1hk\" data-start=\"3506\" data-end=\"3527\">Operational costs<\/li>\n<\/ul>\n<\/li>\n<li data-section-id=\"4tc1iv\" data-start=\"3528\" data-end=\"3611\">Go-to-market costs:\n<ul data-start=\"3552\" data-end=\"3611\">\n<li data-section-id=\"sc1xmt\" data-start=\"3552\" data-end=\"3576\">Customer acquisition<\/li>\n<li data-section-id=\"1mrrnvw\" data-start=\"3579\" data-end=\"3595\">Sales effort<\/li>\n<li data-section-id=\"m6xjvw\" data-start=\"3598\" data-end=\"3611\">Marketing<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p data-start=\"3613\" data-end=\"3627\">Also consider:<\/p>\n<ul data-start=\"3629\" data-end=\"3737\">\n<li data-section-id=\"15j35wv\" data-start=\"3629\" data-end=\"3646\">Payment terms<\/li>\n<li data-section-id=\"1bsmeq\" data-start=\"3647\" data-end=\"3690\">Channel margins (if using distributors)<\/li>\n<li data-section-id=\"wz6bk9\" data-start=\"3691\" data-end=\"3717\">Financing requirements<\/li>\n<li data-section-id=\"1dgbf4b\" data-start=\"3718\" data-end=\"3737\">Working capital<\/li>\n<\/ul>\n<p data-start=\"3739\" data-end=\"3840\">This does not need to be precise. It needs to be <strong data-start=\"3788\" data-end=\"3839\">directionally correct and internally consistent<\/strong>.<\/p>\n<hr data-start=\"3842\" data-end=\"3845\" \/>\n<h3 data-section-id=\"1u9nex9\" data-start=\"3847\" data-end=\"3866\"><strong>Why This Matters<\/strong><\/h3>\n<p data-start=\"3868\" data-end=\"3902\">Most weak opportunities fail here. Common failure modes:<\/p>\n<ul data-start=\"3927\" data-end=\"4100\">\n<li data-section-id=\"gidct9\" data-start=\"3927\" data-end=\"3976\">Revenue assumptions disconnected from reality<\/li>\n<li data-section-id=\"1bai37a\" data-start=\"3977\" data-end=\"4010\">Underestimated delivery costs<\/li>\n<li data-section-id=\"ft8pjp\" data-start=\"4011\" data-end=\"4040\">Overly complex operations<\/li>\n<li data-section-id=\"1xjbrum\" data-start=\"4041\" data-end=\"4100\">Business model misaligned with customer buying behavior<\/li>\n<\/ul>\n<p data-start=\"4102\" data-end=\"4155\">These issues are not fixed later\u2014they are structural.<\/p>\n<hr data-start=\"4157\" data-end=\"4160\" \/>\n<h3 data-section-id=\"1e5ssy0\" data-start=\"4162\" data-end=\"4183\"><strong>Evaluate the Model<\/strong><\/h3>\n<p data-start=\"4185\" data-end=\"4198\">Ask directly:<\/p>\n<ul data-start=\"4200\" data-end=\"4391\">\n<li data-section-id=\"1j9zgop\" data-start=\"4200\" data-end=\"4250\">Can this generate meaningful revenue at scale?<\/li>\n<li data-section-id=\"1ehkb70\" data-start=\"4251\" data-end=\"4298\">Are margins sufficient to sustain and grow?<\/li>\n<li data-section-id=\"z8f4ug\" data-start=\"4299\" data-end=\"4340\">Is the model operationally realistic?<\/li>\n<li data-section-id=\"o617u\" data-start=\"4341\" data-end=\"4391\">Does it align with how customers actually buy?<\/li>\n<\/ul>\n<p data-start=\"4393\" data-end=\"4442\">If not, adjust the model\u2014or kill the opportunity.<\/p>\n<hr data-start=\"4444\" data-end=\"4447\" \/>\n<h3 data-section-id=\"1jicrl8\" data-start=\"4449\" data-end=\"4469\"><strong>Guiding Principle<\/strong><\/h3>\n<ul data-start=\"4471\" data-end=\"4557\">\n<li data-section-id=\"3suyny\" data-start=\"4471\" data-end=\"4500\"><strong data-start=\"4473\" data-end=\"4498\">Product defines value<\/strong><\/li>\n<li data-section-id=\"wox7ys\" data-start=\"4501\" data-end=\"4557\"><strong data-start=\"4503\" data-end=\"4555\">Business model determines whether you capture it<\/strong><\/li>\n<\/ul>\n<p data-start=\"4559\" data-end=\"4626\">You can have a strong product and still fail if the model is wrong.<\/p>\n<hr data-start=\"4628\" data-end=\"4631\" \/>\n<h3 data-section-id=\"1a70lui\" data-start=\"4633\" data-end=\"4656\"><strong>Output of This Phase<\/strong><\/h3>\n<p data-start=\"4658\" data-end=\"4678\">You should now have:<\/p>\n<ul data-start=\"4680\" data-end=\"4876\">\n<li data-section-id=\"1hupri5\" data-start=\"4680\" data-end=\"4723\">A defined and tested <strong data-start=\"4703\" data-end=\"4721\">business model<\/strong><\/li>\n<li data-section-id=\"eoif53\" data-start=\"4724\" data-end=\"4768\">A rough but coherent <strong data-start=\"4747\" data-end=\"4766\">financial model<\/strong><\/li>\n<li data-section-id=\"52dm3e\" data-start=\"4769\" data-end=\"4830\">A clear understanding of <strong data-start=\"4796\" data-end=\"4828\">costs, pricing, and delivery<\/strong><\/li>\n<li data-section-id=\"1yynu5q\" data-start=\"4831\" data-end=\"4876\">Identified risks in scaling and execution<\/li>\n<\/ul>\n<hr data-start=\"4878\" data-end=\"4881\" \/>\n<h3 data-section-id=\"11w4tt6\" data-start=\"4883\" data-end=\"4896\"><strong>Transition<\/strong><\/h3>\n<p data-start=\"4898\" data-end=\"5060\">With a viable business model in place, the next step is to <a href=\"http:\/\/www.justinmcclellan.com\/blog\/2016\/11\/prove-the-technology-and-the-market\/\">validate both the technology and the market<\/a> through real-world deployment and early revenue generation.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>At this stage, you are approaching product\/market fit. You have a defined problem, a validated customer, a solution concept, and a working elevator pitch. The next question\u2014especially from investors\u2014is simple: How do you actually make money? You likely already have a rough idea of the &hellip; <a href=\"http:\/\/www.justinmcclellan.com\/blog\/2026\/03\/business-models-and-business-plans\/\" class=\"more-link\"><span>Continue reading<span class=\"screen-reader-text\">Business Model Refinement \u2014 How This Actually Makes Money<\/span><\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":623,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,18,7,19,17],"tags":[],"class_list":["post-285","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-commercialization","category-finance","category-marketing","category-product-management"],"_links":{"self":[{"href":"http:\/\/www.justinmcclellan.com\/blog\/wp-json\/wp\/v2\/posts\/285","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.justinmcclellan.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.justinmcclellan.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.justinmcclellan.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.justinmcclellan.com\/blog\/wp-json\/wp\/v2\/comments?post=285"}],"version-history":[{"count":17,"href":"http:\/\/www.justinmcclellan.com\/blog\/wp-json\/wp\/v2\/posts\/285\/revisions"}],"predecessor-version":[{"id":760,"href":"http:\/\/www.justinmcclellan.com\/blog\/wp-json\/wp\/v2\/posts\/285\/revisions\/760"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.justinmcclellan.com\/blog\/wp-json\/wp\/v2\/media\/623"}],"wp:attachment":[{"href":"http:\/\/www.justinmcclellan.com\/blog\/wp-json\/wp\/v2\/media?parent=285"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.justinmcclellan.com\/blog\/wp-json\/wp\/v2\/categories?post=285"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.justinmcclellan.com\/blog\/wp-json\/wp\/v2\/tags?post=285"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}