Thinking properly about the business model of my business is very difficult and requires a lot of creativity, but it’s relatively easy to determine if my Biz model makes sense and looks attractive from the outside.

1. Study finance very little to learn the concepts of income statement and statement of financial position.
   No matter how little you understand, you can study quickly enough in a week.
2. Combining the two, I summarize the amount of investment I consume (the investment here does not refer to the capital investment that has entered my company, but refers to the money I put into facilities, facilities, inventory, accounts, etc. to do business) and the income statement. It is called Free Cash Flow, and most startups have a simple business structure, so it can be made in just a day or two after the first business is completed.
3. For this year’s business, the next year’s business is organized on a monthly basis, and the next year’s half-yearly FCF is organized on a quarterly basis. The important thing here is to write down the sales and cost by the product/service group you think of. The cost is also as small as I think. If you believe the product is attractive as 10 million won if you spend the marketing cost this quarter, sales will increase by 1 billion won in the next quarter, that’s how it is expressed.
4. For benchmarking, the financial statements of the role model company for my business, the competitors I think of, and potential competitors are obtained. The long-term financial statements of their start-up are obtained and the data are organized in FCF format. (In Korea, thankfully, if it becomes a little small, the financial statements come up to Dart. Early start-up data may be difficult to obtain, but if you look back, it is often up from quite early on.)
5. Their sales growth rate, cost growth rate, and growth rate by major cost items are calculated. Additionally, each item’s share of sales is calculated. For instance, 10% of sales are advertising costs if sales are 10 billion won and advertising costs are 10 billion.
6. For their growth rate and ratio to sales, I compare the sales growth rate of my business and the ratio of cost/cost items to sales.
7. If their growth rate is very high compared to their growth rate, or if their cost or major cost items have a significantly lower proportion to sales, it means that I am far better at something than them, or that my business’s Biz model doesn’t make sense. For example, if my benchmarking company spends 10% of its initial sales per year on advertising, while I plan to grow 50% by spending only 1% on advertising, my products, technology, and customer appeal should be far superior to these benchmarking companies. If I can’t think of exactly what it is, I’m good at preparing for the business, and if I can’t think of it well, it means that I’ve inflated my financial numbers by setting up a false business model.
8. In fact, these are things that I have done or am trying to do if I had invested in stocks or taken basic corporate finance classes in college.
9. The business model should be clearly reflected in the future FCF of the business I think. This is because the term business model itself is based on modeling, and the meaning of modeling in a company means that numbers will eventually be confirmed financially.
10. When I go around for investment, if I keep getting questions about my business model or discriminatory competitiveness, I can clearly see what the problem is when I financially project the model and competitiveness I claim and compare it with a company that is good at it.
11. It’s difficult when you do it for the first time, but it’s easy to get help if you have someone working in the finance field, so I recommend checking it periodically.

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