Back Of The Napkin Business Model

AAA

DEFINITION of 'Back Of The Napkin Business Model'

A slang term that refers to the representation of the basic components of a business model excluding any fine details. It incorporates only the core ideas and success factors of the business. The name comes from the notion that a quick outline of a business can be easily sketched on the back of a napkin to sufficiently demonstrate its fundamental concepts.

INVESTOPEDIA EXPLAINS 'Back Of The Napkin Business Model'

The slang term comes from a hypothetical scenario in which an entrepreneur pitches an idea to a potential investor over coffee, dinner or a drink. The entrepreneur quickly sketches the business model on the back of a napkin to demonstrate the feasibility of the business.

This type of business model should probably only be used as part of the initial stages of planning. A final business model should be drafted for clarity and color, including complete details on all operations as well as the short-term and long-term visions of the business. Without a clear understanding of how a business will operate and bring in sustainable revenues, the probability of building a successful company is low.

RELATED TERMS
  1. Escalator Pitch

    A slang term used to describe the quick delivery of a presentation ...
  2. Business Model

    The plan implemented by a company to generate revenue and make ...
  3. Triage

    A process-management term predominantly seen in hospital and ...
  4. Elevator Pitch

    A slang term used to describe a brief speech that outlines an ...
  5. Core Earnings

    The revenue derived from a company's main or principal business, ...
  6. Operating Income

    The amount of profit realized from a business's operations after ...
Related Articles
  1. Interpreting A Company's IPO Prospectus ...
    Fundamental Analysis

    Interpreting A Company's IPO Prospectus ...

  2. Getting To Know Business Models
    Entrepreneurship

    Getting To Know Business Models

  3. Core Earnings Strip Away
    Options & Futures

    Core Earnings Strip Away "Creative" ...

  4. 9 Tips For Growing A Successful Business
    Entrepreneurship

    9 Tips For Growing A Successful Business

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center