Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Back-of-the-Napkin Business Model

What it is:

Slang for a draft business model.

How it works (Example):

Ideas often strike in odd places, and more than one entrepreneur has found himself jotting business ideas on any available surface -- including table napkins. Typically, the entrepreneur makes a quick sketch of the idea or writes down a few key, fundamental points that become the basis of the formal business model later.

Why it Matters:

Though a back-of-the-napkin business model is just an outline, it is also the essence of a business venture. Most entrepreneurs know that funding for a new business is very hard to obtain without an ability to summarize the idea concisely and seductively. However, a successful business involves far more than just having a good idea and a table napkin; it requires detailed knowledge of operations, finance and other expertise in order to survive.