What is the Back-of-the-Napkin Business Model?

Slang for a draft business model.

How Does the Back-of-the-Napkin Business Model Work?

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 Does the Back-of-the-Napkin Business Model Matter?

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.

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Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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