201906 getting started- define your business model · existing business models. • it is a visual...
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Getting Started: Define Your Business Model
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Business Model CanvasDesigned by: Business Model Foundry AG, the makers of Business Model Generation and Strategize
Types of Business Plans• Those that fail to plan….plan to fail……..Winston
Churchill• You can't get anywhere if you don't know where you
want to go.=================================Types of plans & when needed:• Early stage- Business Model Canvas - identify
problems/issues early/validation of business concept• Marketing plans – how to promote your business• Financial plans – projecting sales, expenses & cash flow• The BMC and the Marketing and Financial plans can be
incorporated into a full Business Plan = overall strategy to drive the business CAPE COD SCORE
Purposes of a Business Plan• A guide:– to measuring performance– to managing the business
• A means to communicate:– to employees– to investors– to the bank
What is a Business Model?
• "A business model describes the rationale of how an organization creates, delivers, and captures value"
• Source: Business model canvas
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The Business Model Canvas• Created by Alexander Osterwalder,
Strategyzer.com• The Business Model Canvas is a strategic
management and lean startup template for developing new or documenting existing business models.
• It is a visual chart with elements describing a firm's or product's value proposition, infrastructure, customers, and finances
• It is a validation tool to help you formalize and validate your business concepts
CAPE COD SCORE
ThePreludetoBusinessPlanning:The
BusinessModelCanvas(BMC)
The Business Model: Customer Segments
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• Forwhomarewecreatingvalue?•Whatproblemsdotheyneedtosolve?•Whatneedsdotheywanttosatisfy?• Howdotheysolvethemnow?
Customer Segment
Examples
• Mass Market: A large group with similar needs (consumer electronics)
• Niche Market: Very specific, specialized needs
• Segmented Markets: Similar but slightly different needs (banks)
• Diversified Markets: Totally unrelated (Amazon books vs. Amazon cloud computing services)
• Multi-sided Markets: Two or more interdependent markets (magazines or credit card issuers)
The Business Model: Value Proposition
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•Whatvaluedowedelivertoourcustomers?•Whatcustomerproblemsarewesolving?•Whichcustomerneedsarewesatisfying?
Value Proposition
Examples
• Quantitative:– Price– Speed of Service– Customization– Product Performance– Getting the Job Done– Accessibility/Convenience
• Qualitative:– Newness– Brand/Status– Design– Risk reduction
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5 Minute ExerciseUse the Value Proposition Canvas to capture
your customers’ wants, fears & needsHow does your product or service solve for
those?
The Business Model: Customer Relationships
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•WhatkindofrelationshipsdoourCustomerSegmentsexpectustoestablishandmaintain?
Customer Relationship
Examples
• Personal: human interaction, either remote or face to face
• Dedicated personal assistance: face to face, ongoing
• Automated: self service• Communities: online information exchange• Co-creation: user creation on established
platform (YouTube)
Customer Relationships Drive:• Customer Acquisition• Customer Retention• Customer Upselling
The Business Model: Channels
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• CustomerTouchPoints• Throughwhichchannelsdoourcustomersegmentswanttobereached?• Howarewereachingthemnow?• Howarethechannelsintegrated?•Whichchannelsaremosteffective?
Channels Examples
• Tools to raise awareness (social media, advertising, networking, referrals)
• Tools to help clients evaluate the value proposition (website, blogs, brochures, articles, Yelp reviews)
• Allows for purchase and delivery of products or services
• Provides post purchase support• Can be direct or indirect (via partners
such as distributors or retailers)
The Business Model: Revenue Streams
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• Forwhatvalueareourcustomerswillingtopay?• Forwhatdotheycurrentlypay?• Howwouldtheyprefertopay?• HowmuchdoeseachRevenueStreamcontribute?
Revenue Streams
Examples
• Basic Types:– Transactional: One time, one and done– Recurring: Ongoing delivery of the value
proposition– Repeat: Back for more
• Unit of sales:– Sale of an asset or physical product– Sale of a service (consulting/hours)– Usage Fee (hotel, car rental, lending)– Subscription fee (continuous access:
membership or subscription)– Leasing or long term rental (recurring
over time)– Licensing (use of intellectual property or
content: media)
ThisPhoto byUnknownAuthorislicensedunderCCBY-SA
RightBrainEmotionRightCanvas
LeftBrainLogic
LeftCanvas
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10 minute breakRest Your Right Brain!
The Business Model: Key Activities
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•WhatkeyactivitiesdoesourValuePropositionrequire?• Ourdistributionchannels?• Customerrelationships?•Mostimportanttaskstomadethemodelwork?
Key Activities Examples
• Production: Design, make & deliver a product (manufacturing)
• Problem Solving: Devise and deliver new or better solutions to customer problems (consultants, service organizations)
• Platform/Network Management: Development, maintenance, matchmaking, interface
• Sales & Marketing: To support main activities by generating customers (salespeople, social media, advertising)
The Business Model:Key Partners
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•Whoareourkeypartners?•Whoareourkeysuppliers?•Whatkeyresourcesareweacquiringfromourpartners?•Whatkeyactivitiesdoourpartnersperform?
Key Partner
Examples
• Buyer – Supplier Relationships: Ensure reliable delivery of product
• Outsourcing Partners: reduce cost by outsourcing or sharing infrastructure
• Risk Reduction: Strategic alliances to develop or market products
• Acquisition of Knowledge: Licenses, technical support, access to new customers
• Trusted Advisors: CPA, Attorney, Banker, SCORE Mentor
The Business Model: Key Resources
WashingtonDCSCORE
•WhatkeyresourcesdoesourValuePropositionrequire?•Ourdistributionchannels?•Customerrelationships?
Key Resources Examples
• Human: Knowledge intensive/creative or repetitive tasks
• Financial: Equity, loans/leases, trade credit
• Physical: Manufacturing facilities, offices, brick & mortar, vehicles, machines, point of sales systems
• Networks: Supply chain, distribution, logistics
• Intellectual: brands, proprietary knowledge, software, patents/copyrights, databases
The Business Model: Cost Structure
WashingtonDCSCORE
•Whatarethemostimportantcostsinherentinthebusiness?•WhatKeyResourcesaremostexpensive?•WhatKeyActivitiesaremostexpensive?
Cost Structure Examples
• Cost Driven Models: The lowest possible cost structure to match a low price Value Proposition; uses maximum automation & outsourcing (online retail, budget airlines)
• Value Driven Models: Support a premium priced Value Proposition with personalized service (luxury hotels)
• Types of Costs:– Variable: Varies with sales volume, per unit
cost (materials, contract labor)– Fixed: Constant regardless of sales volume:
(salaries, rent, plant & equipment, software)
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Group BMC PracticeThe Cozy Coffee Corner Case
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10 minute breakRest Both Sides of Your Brain!
Create Your Own Business Model
Canvas
• Get a partner• Take 15 minutes each
to brainstorm each business idea into a Canvas
• Total time = 30 minutes
• Volunteer Presentations
Next Steps
• Develop a Marketing Plan• Develop a Financial Plan• Use the Canvas as a precursor to a full
Business Plan• Review your Canvas with a SCORE
Mentor• Additional Resources
– https://www.youtube.com/watch?v=QoAOzMTLP5s&feature=youtu.be
– www.strategyzer.com– www.canvanizer.com
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