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Uodated:  Crafting your Business Model
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Uodated: Crafting your Business Model

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Most recently presented in Kiev, November, 2013

Most recently presented in Kiev, November, 2013

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  • Sandra will go into more detail on this later!

Uodated:  Crafting your Business Model Uodated: Crafting your Business Model Presentation Transcript

  • Crafting Your Business Model Marty Kaszubowski President, General Ideas
  • A Startup Is a Temporary Organization Designed to Search for a Repeatable and Scalable Business Model • Failure is an Integral Part of the Search for the Business Model • No Business Plan Survives First Contact with Customers • Preserve Cash While Searching for a Repeatable Business Model. After It’s Found, Spend • Communicate and Share Learning • Startups Demand Comfort with Chaos and Uncertainty Per Steve Blank, et al
  • But not all startups are the same! There are six distinct organizational paths for entrepreneurs: 1. 2. 3. 4. 5. 6. Lifestyle business Small business Scalable startup Buyable startup Large company Social entrepreneur Per Steve Blank, et al
  • Types of startup ventures 1. Lifestyle Startups: Work to Live their Passion. Examples: Professional Photographers, Healthclubs, Surf Shops, Ski Instructors, Golf Pros 2. Small Business Startups: Work to Feed the Family. Examples: Restaurants, Clothing stores, coffee shops, Cleaning Services, Contractors, Taxi Cabs, Consultants 3. Scalable Startups: Born to Be Big: Examples: Google, Facebook, Skype, Apple, Ford, Boeing, Мобильные Телесистемы, SoftServe, etc.
  • Types of startup ventures 4. Buyable Startups: Born to Flip: Examples: Tumblr (acquired by Yahoo), Instagram (acquired by Facebook), Groupon (should have taken the offer from Google!) 5. Large Company Startups: Innovate or Evaporate: Examples: Boeing (satelites, rockets), Ford Motor Company (Ford credit), Apple Computer (iPod, iPhone, iPad), Hewlett Packard (printers), Research In Motion (?) 6. Social Startups: Driven to Make a Difference: Examples: Tom’s (shoes), Ethos (water), Husk Power Systems (electricity generation)
  • Which type are you planning to build? 1. Lifestyle business 2. Small business 3. Scalable startup 4. Buyable startup 5. Large company 6. Social entrepreneur
  • The best technology doesn’t always win … Being first doesn’t always help …
  • A well-known brand is no guarantee … Being well-funded won’t solve every problem …
  • All of the pieces have to fit Value Proposition(s) Key Partners Customer Relationships Key Resources Channels Cost Structures Revenue Streams Key Activities Customer Segments
  • What is a Business Model? A Business Model describes how a business expects to generate revenue and profits. Your Business Model details your long-term strategy and day-today operations.
  • What is a Business Model? A Business Model is an opportunity to innovate just as you do in your products. A Business Model will evolve as you gain experience and as your market changes. Like your products, it will probably take several versions to get your business model right. You get better with practice.
  • Why do you need a Business Model? You can’t succeed in business without one …  Deliver value to customers at a reasonable price Maintain costs low enough to make a profit. It’s not enough to have the “coolest” product It’s not enough to be “a solution looking for a problem” Every investor will expect you to be able to describe how you plan to make a profit!
  • A Business Model describes the rationale of how an organization creates, delivers, and captures value
  • Without a viable business model, your startup is just a dream.
  • You will see many descriptions of Business Models
  • You will see many descriptions of Business Models
  • You will see many descriptions of Business Models …
  • A Taxonomy of Business Models  Transplanted Real-World Business Models  The mail-order model  The advertising based  The subscription model  The free trial model  The direct marketing model  The real estate model  Incentive scheme  Business to Business  Combinations of the above models  Native Internet Business Models  The library model  The freeware  The information barter  Digital products and the digital delivery model  The access provision  Web site hosting and other Internet services A Taxonomy of Internet Commerce, Paul Bambury, 2006
  • The Business Model Canvas Business Model Generation, Osterwalder, Alexander & Yves Pigneur, Wiley, 2010
  • 9 Elements of a Business Model 1. Customer Segments are the specific types of customer your product or service helps to solve a problem 2. Value Proposition is a description of the problem you solve, why your solution is unique and why a certain customer segment will care. 3. Channels are the way your product or service is delivered to the customer
  • 9 Elements of a Business Model 4. Customer Relationships describe the specific “feelings” your product or service creates for your customers. 5. Cost Structure describes all the costs incurred to operate the business. 6. Key Resources are the assets (inputs) you need to create and deliver value to your customers.
  • 9 Elements of a Business Model 7. Key Activities are the things you and your team must accomplish to create the value you hope to create. 8. Key Partnerships describe the external organizations you need to align with to help your goals. 9. Revenue Streams are the (many?) ways customers pay for the value your product or service creates.
  • Focus – The Revenue Model There are a (seemingly) infinite number of ways a company can make money, but they really all fit into eight categories: 1. Unit sales: Sell a product or service to customers. 2. Advertising fees: Sell others the opportunities to distribute their message on your space. 3. Franchise fees: Sell the right for someone else to operate a version of your business. 4. Utility fees: Sell goods and services on a per-use or asconsumed basis.
  • Focus – The Revenue Model 5. Subscription fees: Charge a fixed price for access to services for a set period of time. 6. Transaction fees: Charge a fee for referring, enabling, or executing a transaction between parties. 7. Professional fees: Provide professional services on a timeand-materials contract. 8. License fees: Sell the rights to use intellectual property.
  • Some Business Model Examples Product or Service The Long Tail Multi-Sided Platforms “Freemium” “Bait & Hook” Open Source
  • You will see many descriptions of Business Models
  • Some things to consider How well does your Value Proposition achieve the result your customer seeks? How many people or companies are there with a similar need? How much importance does the customer place on the need and does she have a budget to spend on it?
  • Some Questions to Ask Yourself  How much do switching costs prevent your customers from leaving?  How scalable is your business model?  Does your business model produce recurring revenues?  Do you earn before you spend?  How much do you get others to do the work?  Does your business model provide built-in protection from competition?  Is your business model based on a game changing cost structure?
  • A Final Consideration … Simplicity Rules!  The winning model almost always emphasizes simplicity over complexity:  How can you take steps out a process?  How can you save your customer from having to learn or remember something?  How can you keep your product focused on doing a single thing very, very well? 1. Go end-to-end. Consider the entire customer experience, from first contact to final support. 2. Cut it. Eliminate features and services that don’t get used. 3. Specialize. Focus on what you know, and outsource the rest. 4. Don’t get distracted. It’s too easy to compromise; always reduce clicks, messages, prompts, and alerts. 5. Measure and Fix it. Constantly ask yourself, can this be done any simpler?
  • Questions?