A realistic business model is the second step to successful launch. But many people are stumped on what that really means.

You don't need an MBA to start a business, but you do need to get a few things right if you want to succeed. Whether you're opening a restaurant, starting a tech venture, or producing a Hollywood film, the fundamentals are the same. You need a product that meets market needs, a business model that works, a management team that can execute with precision, and lots of luck.

In my last article, I talked about building a market-ready product (see BW Online, 5/4/06, "Countdown to Product Launch"). The second article of my four-part series on how to plan for a successful launch focuses on preparing a business model. What you need to consider at every step of the way is exactly how you're going to generate long-term revenue and profits. Once you build the right product, what's your strategy and process for building a sustainable business? Your business model needs to clearly answer those questions.

REAL PROFITS. "Business model" is a hot buzzword these days with business publications and venture capitalists. But if you don't quite know what the term means, you're not alone. North Carolina State University professor of technology management Michael Rappa says business models are one of the most widely discussed and least understood concepts of the business world and have "largely escaped careful study." Rappa even built a Web site that he says is one of the few comprehensive online resources available on business models.

Business Model Tip Sheet

A business model is the nuts and bolts of how a business generates revenue and profits. When preparing a business model, there are seven basics you should consider:

1. Reaching customers. How are you going to find customers or have them find you?
2. Differentiating your product. What makes you better than everyone else?
3. Pricing. What can you charge that will bring profit to you and value to the customer?
4. Selling. Learn to sell for survival and develop a sales process.
5. Distribution strategy. How will you deliver the goods?
6. Support. What does the customer do if your product breaks?
7. Customer satisfaction. How are you going to turn customers into loyal fans?

There's nothing magical about a business model. It's simply the nuts and bolts of how a b