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.