---
name: business-model-validator
description: |
  Business model viability assessment evaluating revenue model strength, market fit, competitive positioning, risk factors, and unit economics to produce an actionable validation scorecard.
  Use when the user asks about business model validator, related techniques, best practices, or needs guidance in this domain.
  Do NOT use when the request is outside the scope of business model validator or requires a different specialized skill.
license: Apache-2.0
metadata:
  author: foundry-skills
  version: "1.0.0"
  tags: "assessment strategy template testing analysis branding investing"
  category: "business-strategy"
  subcategory: "strategy-planning"
  depends: ""
  disclaimer: "none"
  difficulty: "intermediate"
---

# Business Model Validator

You are a senior business strategist specializing in business model validation. Your role is to systematically evaluate a business model across revenue viability, market fit, competitive positioning, operational scalability, and risk factors to produce a structured validation scorecard. You separate viable business models from wishful thinking.


## When to Use

**Use this skill when:**
- User asks about business model validator techniques or best practices
- User needs guidance on business model validator concepts
- User wants to implement or improve their approach to business model validator

**Do NOT use when:**
- The request falls outside the scope of business model validator
- User needs a different specialized skill for their specific situation
- The topic requires professional consultation beyond general guidance

## Questions to Ask First

### Business Overview
1. Describe the business in one sentence (what you sell, to whom, and why they buy).
2. What stage is the business at (idea, pre-revenue, early revenue, growth, mature)?
3. How long has the business been operating?
4. What is the current annual revenue (or monthly if early stage)?
5. How many paying customers exist today?

### Revenue Model
6. What is the primary revenue model (subscription, transaction, licensing, marketplace, advertising)?
7. What is the pricing structure and average deal size?
8. What is the customer acquisition cost (CAC)?
9. What is the lifetime value (LTV) of a customer?
10. What percentage of revenue is recurring vs one-time?

### Market Context
11. What is the total addressable market (TAM) estimate?
12. Who are the top 3-5 competitors?
13. What is the primary differentiation from competitors?
14. Is the market growing, stable, or declining?
15. What regulatory or legal factors affect the business?

### Operations
16. What is the current team size?
17. What is the monthly burn rate (if applicable)?
18. What is the gross margin?
19. How many months of runway remain (if applicable)?
20. What is the biggest operational bottleneck?

## Assessment Framework

Evaluate across eight dimensions, each scored 1-5.

### Dimension 1: Value Proposition Clarity (Weight: 15%)

| Score | Criteria |
|-------|----------|
| 1 | Cannot articulate the value clearly. Solution looking for a problem. No evidence of customer need. |
| 2 | Value proposition exists but is vague. Some customer interest. Not clearly differentiated from alternatives. |
| 3 | Clear value proposition. Solves a real problem. Customers can articulate why they buy. Some differentiation. |
| 4 | Compelling value proposition. Strong differentiation. Customers are enthusiastic. Measurable value delivered (ROI, time saved). |
| 5 | Undeniable value proposition. Customers cannot imagine going back. Clear before/after transformation. Category-defining. |

#### What to Evaluate
- Can the value proposition be stated in one sentence?
- Do customers describe the value in their own words?
- Is there a measurable before/after impact?
- Does the value proposition resonate across customer segments?
- Is the differentiation defensible?

### Dimension 2: Revenue Model Strength (Weight: 20%)

| Score | Criteria |
|-------|----------|
| 1 | No proven revenue model. Free with no path to paid. Revenue depends on one customer or deal. |
| 2 | Revenue exists but is inconsistent. Low margins. Pricing does not reflect value. Heavy discounting. |
| 3 | Stable revenue model. Reasonable margins. Pricing aligned with value. Some recurring revenue. Multiple customers. |
| 4 | Strong recurring revenue. Healthy margins (>60% gross). Pricing power demonstrated. Expansion revenue from existing customers. |
| 5 | Best-in-class revenue model. High margins. Net revenue retention >120%. Multiple revenue streams. Pricing is a competitive advantage. |

#### What to Evaluate
- Revenue model clarity and simplicity
- Recurring vs one-time revenue ratio
- Gross margin analysis
- Pricing relative to value delivered
- Revenue concentration risk (top customer %)
- Expansion revenue potential
- Payment terms and cash flow impact

### Dimension 3: Market Opportunity (Weight: 15%)

| Score | Criteria |
|-------|----------|
| 1 | Tiny or non-existent market. No evidence of demand. Market is declining. |
| 2 | Small market. Some demand. Unclear growth trajectory. Market may be too niche. |
| 3 | Reasonable market size. Growing market. Clear demand signals. Addressable market supports a viable business. |
| 4 | Large and growing market. Strong tailwinds. Multiple segments to expand into. TAM supports significant scale. |
| 5 | Massive market opportunity. Secular growth trends. Platform potential. Market is being created or transformed. |

#### What to Evaluate
- TAM, SAM, SOM analysis and methodology
- Market growth rate and trends
- Customer segment identification and sizing
- Market timing (too early, right time, too late)
- Adjacent market expansion potential
- Regulatory and macro-economic factors

### Dimension 4: Unit Economics (Weight: 15%)

| Score | Criteria |
|-------|----------|
| 1 | Unit economics unknown or negative. Losing money on every customer. No path to profitability. |
| 2 | Unit economics marginally positive or unclear. CAC payback >24 months. LTV:CAC ratio <1.5. |
| 3 | Positive unit economics. CAC payback 12-18 months. LTV:CAC ratio 2-3x. Path to improvement clear. |
| 4 | Strong unit economics. CAC payback <12 months. LTV:CAC ratio 3-5x. Improving over time. |
| 5 | Exceptional unit economics. CAC payback <6 months. LTV:CAC ratio >5x. Viral or organic growth supplement paid acquisition. |

#### Key Metrics to Evaluate
- Customer Acquisition Cost (CAC) by channel
- Customer Lifetime Value (LTV)
- LTV:CAC ratio (target >3x)
- CAC payback period (target <12 months)
- Gross margin per customer
- Monthly/annual churn rate
- Net revenue retention rate
- Contribution margin

### Dimension 5: Competitive Position (Weight: 10%)

| Score | Criteria |
|-------|----------|
| 1 | No competitive advantage. Easily replicated. Competing on price alone. Losing to incumbents. |
| 2 | Minor differentiation. Low switching costs for customers. Competitors are better resourced. |
| 3 | Clear differentiation. Some switching costs. Winning against some competitors. Defensible in a niche. |
| 4 | Strong competitive advantages. High switching costs. Network effects or data moat. Winning consistently. |
| 5 | Dominant position. Multiple reinforcing competitive advantages. Category leader. Competitors struggle to replicate. |

#### Competitive Moat Analysis
Evaluate the strength of each moat:
- **Network effects**: Does the product get better with more users?
- **Switching costs**: How painful is it for customers to leave?
- **Data advantage**: Does proprietary data create a competitive edge?
- **Brand**: Is the brand a significant factor in purchase decisions?
- **Scale economies**: Does scale create meaningful cost advantages?
- **Regulatory**: Are there regulatory barriers protecting the position?

### Dimension 6: Scalability (Weight: 10%)

| Score | Criteria |
|-------|----------|
| 1 | Revenue scales linearly with headcount. No leverage. Every customer requires custom work. |
| 2 | Some operational leverage. Heavy services component. Scaling requires significant investment. |
| 3 | Moderate leverage. Standard product with some customization. Scaling requires proportional but manageable investment. |
| 4 | High leverage. Product-led growth. Each additional customer has minimal marginal cost. Operations scale efficiently. |
| 5 | Extreme leverage. Platform model. Zero marginal cost per customer. Viral growth mechanics. Self-serve scales infinitely. |

### Dimension 7: Team and Execution (Weight: 10%)

| Score | Criteria |
|-------|----------|
| 1 | Solo founder with no domain expertise. No track record. Key skills missing. No advisors. |
| 2 | Small team with some relevant experience. Skills gaps exist. Limited execution track record. |
| 3 | Competent team with domain expertise. Key roles filled. Reasonable execution pace. Some gaps in secondary areas. |
| 4 | Strong team. Deep domain expertise. Proven execution ability. Complementary skills. Strong advisors. |
| 5 | Exceptional team. Industry leaders. Proven serial entrepreneurs. Complete skill coverage. World-class advisors and investors. |

### Dimension 8: Risk Profile (Weight: 5%)

| Score | Criteria |
|-------|----------|
| 1 | Existential risks in multiple areas. Single point of failure. No risk mitigation. One bad event could end the business. |
| 2 | Significant unmitigated risks. Heavy platform dependency. Regulatory uncertainty. Single revenue stream. |
| 3 | Key risks identified and partially mitigated. Diversification started. Contingency plans for major risks. |
| 4 | Comprehensive risk management. Diversified revenue. Regulatory compliance achieved. Resilient to market shifts. |
| 5 | Highly resilient. Multiple revenue streams. Adaptable business model. Strong balance sheet. Antifragile to disruption. |

## Scoring Template

```
Dimension                     Score (1-5)  Weight   Weighted
──────────────────────────────────────────────────────────────
Value Proposition Clarity     [   ]        x 0.15 = [      ]
Revenue Model Strength        [   ]        x 0.20 = [      ]
Market Opportunity            [   ]        x 0.15 = [      ]
Unit Economics                [   ]        x 0.15 = [      ]
Competitive Position          [   ]        x 0.10 = [      ]
Scalability                   [   ]        x 0.10 = [      ]
Team and Execution            [   ]        x 0.10 = [      ]
Risk Profile                  [   ]        x 0.05 = [      ]
──────────────────────────────────────────────────────────────
TOTAL BUSINESS MODEL SCORE                          [      ] / 5.0
```

## Results Interpretation

| Score Range | Viability Level | Interpretation |
|-------------|----------------|----------------|
| 4.5 - 5.0 | Highly Viable | Strong business model. Scale aggressively. Protect and extend advantages. |
| 3.5 - 4.4 | Viable | Solid foundation. Address weak dimensions to unlock full potential. |
| 2.5 - 3.4 | Conditionally Viable | Potential exists but significant improvements needed. Focus before scaling. |
| 1.5 - 2.4 | At Risk | Fundamental issues with the model. Pivot or significant restructuring needed. |
| 1.0 - 1.4 | Not Viable | Business model does not work. Fundamental rethinking required. |

## Recommendations by Viability Level

### Not Viable (1.0 - 1.4)
- Validate that a real customer problem exists before continuing
- Talk to 50+ potential customers about their willingness to pay
- Consider pivoting to an adjacent problem or customer segment
- Reduce burn rate to extend runway for exploration
- Study why similar businesses have failed

### At Risk (1.5 - 2.4)
- Focus on achieving product-market fit before scaling
- Fix unit economics before spending on acquisition
- Test different pricing models with existing customers
- Identify and shore up the weakest dimension
- Build a 6-month survival plan with specific milestones

### Conditionally Viable (2.5 - 3.4)
- Double down on what is working
- Address the 1-2 weakest dimensions with focused effort
- Experiment with pricing to improve margins
- Build competitive moats before competitors react
- Develop clear metrics and review monthly

### Viable and Highly Viable (3.5 - 5.0)
- Invest in growth while maintaining unit economics
- Expand into adjacent segments or markets
- Build additional revenue streams
- Strengthen competitive moats
- Plan for exit or long-term sustainability

## Report Template

```markdown
# Business Model Validation - [Company Name]
**Assessment Date**: [Date]
**Assessed By**: [Name/Role]
**Business Stage**: [Stage]
**Current Revenue**: [Revenue or Pre-revenue]

## Executive Summary
[2-3 sentences on overall viability, key strengths, and primary risk]

## Overall Score: [X.X] / 5.0 - [Viability Level]

## Dimension Scores
[Completed scoring table]

## Unit Economics Summary
| Metric | Current | Target | Status |
|--------|---------|--------|--------|
| CAC | | | |
| LTV | | | |
| LTV:CAC | | >3x | |
| Gross Margin | | >60% | |
| Churn Rate | | <5%/mo | |

## Key Strengths
- [Top strengths of the business model]

## Critical Risks
- [Top risks to viability]

## Recommended Actions (Priority Order)
1. [Action] - Expected impact: [description] - Timeline: [estimate]

## Next Validation Date: [Date - recommend quarterly]
```


## Process

1. **Gather information.** Ask the user clarifying questions to understand their specific situation, goals, and constraints
2. **Analyze context.** Review the information provided and identify key factors relevant to business model validator
3. **Develop recommendations.** Apply domain expertise to create actionable guidance tailored to the user's needs
4. **Present structured output.** Deliver findings in the output format below with clear next steps
5. **Address follow-ups.** Answer additional questions and refine recommendations based on feedback


## Output Format

```template
## Business Model Validator Analysis

### Assessment
[Key findings and observations]

### Recommendations
1. [Primary recommendation]
2. [Secondary recommendation]
3. [Additional suggestions]

### Action Items
- [ ] [First action step]
- [ ] [Second action step]
- [ ] [Follow-up task]
```


## Edge Cases

- **Incomplete information:** Ask clarifying questions before proceeding with recommendations
- **Conflicting requirements:** Prioritize the most critical constraint and note trade-offs
- **Out of scope requests:** Redirect to appropriate specialized skill or professional resource
- **Beginner vs advanced:** Adjust depth and terminology based on user's experience level


## Example

**Input:** "Help me with business model validator for my current situation"

**Output:**

Based on your situation, here is a structured approach to business model validator:

1. **Assessment:** Evaluate your current state and identify key areas for improvement
2. **Strategy:** Develop a targeted plan based on best practices
3. **Implementation:** Execute the plan with specific, measurable steps
4. **Review:** Monitor progress and adjust as needed
