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This presentation will help you drastically improve your knowledge and skills in creating business / simplified financial models in Excel for traditional offline (brick and mortar) business such as: Retail, B2C services (i.e. restaurants) and products, B2B services (i.e. professional services, consulting) and B2B products (commodities). It is designed for those who want to become consultants, business analysts and people who need to be able to analyze any business in Excel. In the presentation you will learn 4 things:
1. What your business model is about, what to concentrate on and what are the most important KPIs for you?
2. How to translate your business model into Excel and evaluate it?
3. How to draw conclusions using your business model in Excel?
4. Estimate what will be the impact of specific changes that you may consider in your business
The presentation is based on my 12 years of experience as a consultant in top consulting companies and as a Board Member responsible for strategy, improvement and turn-arounds in biggest companies from FMCG, SMG, B2B sector that I worked for. On many occasions I had to build business models in in Excel in order to estimate what is the value of the business and find ways in which I can improve it. Business models are also useful for internal purposes: planning, looking for opportunities, analyzing performance, business development.

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Business Modeling of offline businesses in Excel

  1. 1. 1 Business Modeling of offline businesses in Excel Practical Guide how to check whether your business makes sense
  2. 2. 2 Business modeling is about capturing the logic of the business via main KPIs and modeling this in Excel. # transactions Average revenue per transaction Total revenue x % Fee of the marketplace Average transaction value Total searches % conversion x x Total Costs Total margin - Rent People Cost of traffic Ratio of visitors to searches Average cost of 1 visit + x Development
  3. 3. 3 SaaS E-commerce Media site 2-sided market User Generated Content Mobile Applications Retail B2C Service B2B Service FMCG SMCG Commodity There are 6 offline business models and 6 online models. In this presentation I will discuss the offline models
  4. 4. 4 SaaS E-commerce Media site2-sided market UGC B2B Service B2C ServiceRetail Bear in mind that big companies can operate many business models
  5. 5. 5 Retail B2C Service B2B Service FMCG SMCG Commodity I will discuss in details every model and show you how to model it in Excel.
  6. 6. 6 For every model I will discuss 4 different fields Examples of companies Drivers for the business model Things that matter in the business model Step by step business modeling
  7. 7. 7 Thanks to this presentation you will learn how model businesses in Excel and how to draw the right conclusions
  8. 8. 8 This presentation is just a small part of my online course where you will find also all models in Excel. Below link with great discount Click to check my course Business Modeling of offline businesses in Excel $45 $ 0
  9. 9. 9 Difference between a financial model and business model
  10. 10. 10 There are 2 types of models that you will be building Financial Model Business model ▪ Mainly done for budgeting and valuation ▪ Mainly done managing business, searching for opportunities ▪ Financial models look very similar ▪ Business models are specific to the company, the industry and the business model ▪ Used heavily for external purposes: talk with the Supervisor Board, banks, future investors, auditors ▪ Used heavily for internal purposes: planning, looking for opportunities, analyzing performance ▪ Generates financial statements: P&L, BS, CF ▪ Is driven by many KPIs and quantitative elements. Shows in-depth relation between KPIs ▪ Has some KPIs and quantitative elements
  11. 11. 11 Retail business model
  12. 12. 12 Introduction to retailer business model
  13. 13. 13 Retail sounds very simple. You have to get the right stock in front of the right customers at the right moment
  14. 14. 14 Yet there are some issues that simple make it difficult in execution You have many segments of customers Their come with different missions Product Range is huge Demand is very erratic / seasonal Your supply chain is very complex
  15. 15. 15 Let’s have a look at the example of a home improvement /DIY store You have many segments of customers Their come with different missions Product Range is huge Demand is very erratic / seasonal Your supply chain is very complex ▪ Regular people that do renovation infrequently ▪ Fans of renovation you are constantly doing something ▪ B2B customers ▪ Building new house ▪ Preparing the apartment to move in ▪ Renovation ▪ Small improvements ▪ Small refill purchases ▪ 60 K SKUs regular ▪ 15 K SKUs seasonal ▪ Peaks in the Spring and summer ▪ Low season in winter ▪ You have local suppliers of heavy things (i.e. bricks), ▪ National suppliers ▪ Foreign regional suppliers (i.e. European) ▪ Asian suppliers (especially China)
  16. 16. 16 Let’s have a look at another example of a kids’ ware retail chain You have many segments of customers Their come with different missions Product Range is huge Demand is very erratic / seasonal Your supply chain is very complex ▪ Parents ▪ Non-parents ▪ Pre-born purchase ▪ Regular purchases ▪ Gifting ▪ Education and Development ▪ 40 K SKUs regular ▪ 10 K SKUs seasonal ▪ Short life of SKUs – Toys last in most cases up to 1 year; Fashion – 6 months ▪ Peaks in the Christmas and around special gifting days ▪ Low season in Summer and after Christmas ▪ Regional brand suppliers ▪ Asian suppliers (especially China, India, Bangladesh)
  17. 17. 17 Main challenges in Retail
  18. 18. 18 Let’s have a look at the main challenges in Retail Margin Management Stock / Inventory Management Multichannel Strategy Managing price across channels Expansion to new markets Saturation of existing markets New product development Managing customer experience across channels Format evolution (possible death) People rotation and knowledge management Disruption esp. from external forces / business models Automation
  19. 19. 19 Business model of Retailer in Excel
  20. 20. 20 We start by estimating the total sales of Stores. That depend on average transaction value (ATV) and the number of transactions # Transactions Average Value Transaction Total store revenue x
  21. 21. 21 We can estimate the number of transaction using the number of visits and conversion rate # Transactions Average Value Transaction Total store revenue x # of Visitors % Conversion x
  22. 22. 22 Average Transaction Value depends on the average value of basic purchase as well as some suggested purchases (i.e. suggested products) # Transactions Average Value Transaction Total store revenue x Average Value Transaction of basic purchase Average Value Transaction of additional purchase # of Visitors % Conversion + x
  23. 23. 23 If we have the % Gross margin we can use it to estimate the total gross margin generated by stores # Transactions Average Value Transaction Total store revenue x Average Value Transaction of basic purchase Average Value Transaction of additional purchase # of Visitors % Conversion + x % Gross Margin Gross Margin generated by the store x
  24. 24. 24 The last piece is getting the fixed costs (esp. rent and people # Transactions Average Value Transaction Total store revenue Total store costs x Store EBITDA Average Value Transaction of basic purchase Average Value Transaction of additional purchase # of Visitors % Conversion Rent People + x Others + % Gross Margin Gross Margin generated by the store x -
  25. 25. 25 We can also show what drives rent and salaries costs # Transactions Average Value Transaction Total store revenue Total store costs x Store EBITDA Average Value Transaction of basic purchase Average Value Transaction of additional purchase # of Visitors % Conversion Rent People # of People Average wages + x x Others + # of sq. m Fee per sq. m x % Gross Margin Gross Margin generated by the store x -
  26. 26. 26 To see how to build the model in Excel go to my on-line course. Below link with great discount Click to check my course Business Modeling of offline businesses in Excel $45 $ 0
  27. 27. 27 Introduction to e-commerce
  28. 28. 28 In e-commerce you will have 3 types of players depending on their presence in off-line and their approach to both channels E-commerce Pure players Off-line players with separate on-line presence Multichannel /Omni players
  29. 29. 29 Customer behaviors has huge impact on the business model and on what the e-commerce should concentrate on ▪ Less than 40% of the buyers will buy this year ▪ Focus is on customer acquisition ▪ Loyalty program are not good investment ▪ 70% of e-commerce businesses are in this model Acquisition mode Description of the business model Examples ▪ E-commerce selling only 1 type of Slow Moving Consumer Goods (SMCG) bought infrequently i.e. vacuum cleaner, scuba diving, furniture ▪ E-commerce for 1-time in the life event: strollers, ▪ 40%-60% of the buyers will buy this year ▪ You have a nice mix of new and returning customers ▪ Focus is on customer acquisition as well increasing the value of the customer (increased frequency and increased purchase per visit) Hybrid mode ▪ E-commerce that sells SMCG with relatively big frequency of purchase(1.0-2.5 times a year ) i.e. shoes (Zappos) ▪ More than 60% of the buyers will buy this year ▪ Focus is on increasing the value of the customer (increased frequency and increased purchase per visit) ▪ 10% of businesses are in this modelLoyalty mode ▪ Very strong brands with high frequency of purchase (i.e. Zara, Amazon) ▪ Marketplaces i.e. Udemy, Uber Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz
  30. 30. 30 Just to remind you some examples of well known e-commerce businesses Products sold On-line / Off-line situation ▪ Virtually everything esp. books, toys, fashion Mode ▪ Pure on-line player ▪ Loyalty mode ▪ Fashion ▪ Multichannel player ▪ Loyalty mode ▪ Tickets for events ▪ Pure on-line player ▪ Acquisition mode ▪ Groceries ▪ Multichannel player ▪ Hybrid mode ▪ Razors and cosmetics for men ▪ Pure on-line player ▪ Loyalty mode ▪ Fashion ▪ Pure on-line player ▪ Hybrid mode
  31. 31. 31 VISIT PAID DIRECT SEARCH To understand the logic of e-commerce business model have a look at the visualization of how it works RECO ENGINENAVIGATION BOUNCED NOT INTERESTED ABANDONED UNSATISFIED ONE-TIME BUYER UNSOCIAL BUYERCALL TO ACTION OPEN RATE SEARCH CART ADDITIONS CONVERSION LOGISTICS, DELAYS VIRALRETURNING CAC PageRank Bounce rate Sharing rate Abandonment, conversion rates Ratings, delivery issues Signups Mail/RSS/TwitterReturning rate Customer Lifetime Value Transaction size Emphasis on repurchase rate, frequency, click-through rate, lifetime value Emphasis on maximizing cart value, minimizing acquisition costs DELIVERY SHARINGENROLLMENT Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz
  32. 32. 32 There are some KPIs for e-commerce model that you have to follow… ▪ Percentage of visitors that buy products ▪ Should be calculated by sources of traffic ▪ Use funnel analysis to get to the stage / factor that kills your conversion rate Conversion rates Definition Why it is important? ▪ Shows you whether you have good selection of products, how good is the customer experience, pricing. ▪ Average value of purchases done by a single customer during a single transaction ▪ Should be calculated by groups of customersAverage shopping cart size / Average transaction value (ATV) ▪ Shows you how much a customer spends during one visit to your site ▪ Look also at the number of items in the basket ▪ Compare the average transaction to the average which should be if you were doing proper cross selling and sales of complementary products ▪ % of people who abandon their basket – stop the purchase although they had intent Abandonment rate ▪ Tells you that there is some sort of friction at the very end of the process – customers despite the intent does not buy ▪ High abandonment rate can be caused by: too complicated procedure of buying, hidden costs that are shown at last moment, shipping costs, limited payment methods (you do not have some method very popular in a given country) etc.
  33. 33. 33 There are some KPIs for e-commerce model that you have to follow… Definition Why it is important? ▪ Total margin generated by customer from start to end of his relation with you ▪ LTV=Average transaction*% Gross Margin* Number of transaction during the relation with the customer ▪ Analyze it by cohorts / segments Life Time Value of the Customer (LTV) ▪ Shows you how much your customer is worth from cradle to grave ▪ Helps you take decisions on acquisition techniques ▪ % of traffic generated by your efforts to create brand, understand and connect with the customer (incl. loyalty program), SEO, affiliate programs ▪ Measure it by methods / sources of traffic % traffic generated by non-ad methods ▪ Tells you how much traffic you are able to create regardless of advertisements ▪ Average cost of acquiring a customer ▪ Should be calculated by methods of acquisition ▪ Should be calculated by groups of customersCustomer Acquisition Cost (CAC) ▪ Tells you how much you have to spend to acquire a new customer ▪ Helps you estimate your CF burned with scaling of the business ▪ Helps you optimize acquisition methods and select the right source of traffic ▪ Number of purchases done by unique customer per year with you ▪ Compare it to the average ideal number of purchases ▪ Should be calculated by groups of customers Number of purchases per visitors per year ▪ Helps you understand how important you are to the customer, how much do you weight in his basket of purchases of this category ▪ Helps you estimate the potential to grow with your current customers
  34. 34. 34 There are some operational KPIs for e-commerce model that you have to follow… Definition Why it is important? ▪ % of goods return by customers due to not matching their expectation ▪ Extremely important for pure players Return rate ▪ Shows you how many customers where not pleased with the products and what is the operational burden of the customer promise not met ▪ Average additional sales generated for multichannel players by customers who ordered on-line but pick up the product at the store ▪ Extremely important for multichannel players Average additional sales for click and collet ▪ Multichannel player to stay competitive should generate additional sales during the visit of customer picking up the goods at the store. ▪ Small value shows future problems in competing with pure players ▪ % of click and collect orders in orders generated on the web ▪ Extremely important for multichannel players % click and collect orders ▪ Shows you how willing the customers are to visit your off-line shop to collect the product and thus to experience the brand promise represented by the shop ▪ Small value shows future problems in competing with pure players
  35. 35. 35 Have a look a the typical values of KPIs for the e-commerce ▪ Most sites will have 2-3% ▪ For some very niche sales this should be much higher (>15- 20%) Conversion rates Values which are ok Best practice values ▪ For sites with strong blog you should exclude the traffic for the blog to get the right picture Average transaction Abandonment rate Return rate Comments ▪ General sites – 10- 15% (Amazon, Tickets.com, eBay) ▪ Niche sites – up to 40 % ▪ Depends very `much on industry ▪ In multichannel you should see 50% bigger ATV for on- line than for off-line ▪ Look at ways in which you can improve it: cross-selling, complementary sales, playing with shipping costs (with lower or subsidize above some threshold people ten to buy more), up-selling, ▪ In multichannel you should see up to 400% bigger ATV for on-line than for off- line ▪ < 50% ▪ Analyze it by reasons of abandonment and solve them as soon as possible ▪ 10-25% ▪ 10-25% ▪ Depends heavily on the industry – the more customizable, dependent on customer features product is the higher the return rate will be ▪ 2-5%
  36. 36. 36 You should test and find optimal solution for the following key topics in e-commerce ▪ Due to easiness with which you can establish the e- commerce business it becomes vital to be able to attract cheaply / for free loads of traffic ▪ This includes SEO, loyalty, content marketing and others Getting a lot of cheap traffic Description Goal ▪ More important is to find ways to get free search, entries from newsletters and social media than direct entry to the webpage ▪ Pricing is very complicated in the e-commerce due to existence of aggregators and sites comparing offers. ▪ You have to be on comparable products competitive and earn on the non-comparables and long tail items, obscuring comparables, bundles ▪ In a multichannel environment you may have different prices for the same product bought on-line an off-line Pricing ▪ You are looking for such pricing policy that optimizes total margin generated ▪ You have to gather as much information on your customers and create automated actions build into your website as well as your other assets (i.e. email list, blog, YouTube channel) Understanding your customer and automate marketing ▪ Increase conversion, ▪ Increase AVT ▪ Get more free traffic ▪ Increase purchasing frequency
  37. 37. 37 You should test and find optimal solution for the following key topics in e-commerce ▪ Although it is easier than in physical store to keep wide range of products you will be not able to satisfy customer needs only on the basis of your own stock ▪ You have to integrate yourself with other suppliers to get access to wide range of stock Managing the long tail Description Goal ▪ Depending on your concept and brand you have to decide what is your target in terms of long tail products availability and how you meet it (own stock or 3rd parties) ▪ Maximize gross margin ▪ Minimize stock-outs ▪ Your site – the way it is designed, its features may have big impact on how you convert traffic into customers therefore you have to optimize it through series of A/B testing ▪ This also includes following the trends in the way customers purchase (i.e. the mobile trend) Continuous optimization of your site ▪ Increase conversion, ▪ Increase AVT ▪ Get more free traffic ▪ Increase purchasing frequency
  38. 38. 38 To see how to build the model in Excel go to my on-line course. You will also get there the model in Excel. Below link with great discount Click to check my course Business Modeling of offline businesses in Excel $45 $ 0
  39. 39. 39 Business model of e- commerce in Excel
  40. 40. 40 Before we go to Excel let’s talk about the logic we used to build the e-commerce Excel model ▪ Conversion rate Visits # of transactions Revenues Gross Margin Net Margin Operating Profit ▪ ATV ▪ Cost of traffic ▪ Cost of logistics ▪ Transaction fees ▪ Fixed Costs ▪ % Gross Margin
  41. 41. 41 B2C Services business model
  42. 42. 42 Introduction to B2C services business model
  43. 43. 43 We can be talking about 3 different models here Services performed at specialized place no production involved Services performed at customer place Services performed at specialized place with some production
  44. 44. 44 Main challenges in B2C Services
  45. 45. 45 We can be talking about 3 different models here Services performed at specialized place no production involved Services performed at customer place Services performed at specialized place with some production
  46. 46. 46 Let’s see what are the main challenges in the 1st type of services Services performed at specialized place no production involved Services performed at customer place Services performed at specialized place with some production
  47. 47. 47 The 1st type of services (hairdressers, beauty shops, repair garages) have to face the following challenges Location Minimizing and Managing Fixed Costs Optimizing Capex Seasonality of Demand Upsell and cross-sell Standardization of services Queue ManagementPrice Discrimination Capacity management People rotation and knowledge management Growing customer base despite infrequent purchases Utilization of people
  48. 48. 48 Now let’s move on to 2nd group – services with some production Services performed at specialized place no production involved Services performed at customer place Services performed at specialized place with some production
  49. 49. 49 The 2nd type of services (restaurant chains) have to face the following challenges Location Minimizing and Managing Fixed Costs Optimizing Capex Seasonality of Demand Upsell and cross-sell Standardization of services Queue ManagementPrice Discrimination Capacity management People rotation and knowledge management Growing customer base despite infrequent purchases Utilization of people
  50. 50. 50 The 3rd group will differ significantly from the first two Services performed at specialized place no production involved Services performed at customer place Services performed at specialized place with some production
  51. 51. 51 The 3rd type of services (plumber, electricians) have to face the following challenges Location Minimizing and Managing Fixed Costs Optimizing Capex Seasonality of Demand Upsell and cross-sell Standardization of services Queue ManagementPrice Discrimination Capacity management People rotation and knowledge management Growing customer base despite infrequent purchases Utilization of people
  52. 52. 52 Introduction to modeling B2C services in Excel
  53. 53. 53 In the next lecture I will show you the main drivers of the B2C model and on the basis of this we will create a business model in Excel # transactions Average revenue per transaction Total revenue x % Fee of the marketplace Average transaction value Total searches % conversion x x Total Costs Total margin - Rent People Cost of traffic Ratio of visitors to searches Average cost of 1 visit + x Development
  54. 54. 54 To show you how to model B2C service we will use the example of a restaurant Services performed at specialized place no production involved Services performed at customer place Services performed at specialized place with some production
  55. 55. 55 Restaurant model in Excel
  56. 56. 56 When you want to set up a restaurant you have to not only face the monthly recurring costs but also invest a huge amount of money into the place
  57. 57. 57 Have a look what you will spend your money on long before opening of the restaurant Purchase of the place Furniture Design Kitchen equipemt Domestic Appliances Computer, cash till, POS Uniforms for employees
  58. 58. 58 There are plenty of monthly costs that have to be paid every month Food and drinksUtilities (water, electricity, gas, waste) Stock Rental of the place Services i.e. book-keeping Cleaning costs Personel
  59. 59. 59 Remember that apart from current costs you usually froze a lot of cash in the stock
  60. 60. 60 Let’s have a look at the simple model ▪ Number of meals per day ▪ Number of days Restaurant # of transactions Revenues Gross Margin Net Margin Operating Profit ▪ ATV - average ▪ Cost of marketing ▪ Franchising Fee ▪ Other Variable costs ▪ Fixed Costs ▪ % Gross Margin ▪ % Food ratio
  61. 61. 61 In the part about the using store checks for location analysis we were Passing by Engaged / stopping Leaving Taking away In store
  62. 62. 62 Before we go to Excel let’s talk about the logic we used to build the e-commerce Excel model ▪ Conversion rate to consumption at the restaurant ▪ Conversion rate into takeaways Visits # of transactions Revenues Gross Margin Net Margin Operating Profit ▪ ATV for both subgroups ▪ Cost of marketing ▪ Franchising Fee ▪ Other Variable costs ▪ Fixed Costs ▪ % Gross Margin ▪ % Food ratio
  63. 63. 63 To see how to build the model in Excel go to my on-line course. You will also get there the model in Excel. Below link with great discount Click to check my course Business Modeling of offline businesses in Excel $45 $ 0
  64. 64. 64 KPIs for restaurants
  65. 65. 65 There are some important KPIs you should pay attention to Daily Capacity % utilization % of Take-Aways Average Transaction Value (ATV) % of Ordered via on-demand marketplaces # of daily customers % of Loyal Customers % Conversion rate % Gross Margin Inventory in days of sales Sales Density Margin Density
  66. 66. 66 B2B Services business model
  67. 67. 67 Introduction to B2B services business model
  68. 68. 68 Due to margins and integration with you we can divide the B2B services into 3 groups Professional service Other external servicesOutsourcing of your process ▪ Lawyer ▪ Auditors ▪ Consultants ▪ Marketers ▪ Production Process ▪ Maintenance Process ▪ Book keeping and reporting ▪ Shared Service Canters run by external companies ▪ Logistics ▪ IT ▪ Measuring
  69. 69. 69 Main challenges in B2B Services
  70. 70. 70 Let’s have a look at the main challenges in B2B services Utilization of people People rotation and knowledge management Upsell and cross-sell Seasonality of Demand Optimizing Capex and Opex Automation Standardization of services Price Discrimination Capacity management Productization of services Growing new businesses using customer base Minimizing and Managing Fixed Costs
  71. 71. 71 Introduction to service companies
  72. 72. 72 Service companies in general are all about converting your workers time into money Man-hours
  73. 73. 73 There are some general rules that you should follow Measure man-hours Measure tasks Stay productive and efficient Make sure supply matches demand Forecast and create demand Manage supply ahead of time Make sure that margins are OK
  74. 74. 74 Introduction to modeling B2B services in Excel
  75. 75. 75 To show you the business modelling in Excel I will use the consulting business model as an example Professional service Other external servicesOutsourcing of your process
  76. 76. 76 The typical model of a service model can be presented using this logic ▪ % Utilization# hours available # of billable hours Revenues Gross Margin Operational Profit Net Profit ▪ Hourly fee ▪ HQ costs ▪ Bonuses ▪ Interest ▪ % Gross Margin ▪ Wages
  77. 77. 77 To see how to build the model in Excel go to my on-line course. You will also get there the model in Excel. Below link with great discount Click to check my course Business Modeling of offline businesses in Excel $45 $ 0
  78. 78. 78 FMCG Business Model
  79. 79. 79 Introduction to FMCG Business Model
  80. 80. 80 We can be talking about 2 different models here Branded FMCG with strong brand awareness Private labels Private label
  81. 81. 81 Main challenges in FMCG
  82. 82. 82 For branded FMCG product I propose to have a look at the following aspects Brand Awareness Reach (Weighted and numeric distribution) Your strategy across many channels Managing price across channels Leveraging the brand Spreading beyond original target group Product lifecycle Managing customer experience across channels Efficiency of marketing activities Lifecycle of your target groups Seasonality
  83. 83. 83 Introduction to modeling FMCG in Excel
  84. 84. 84 In the modeling phase I will concentrate on branded FMCG products. The model will be created for cosmetics Branded FMCG with strong brand awareness Private labels Private label
  85. 85. 85 In the next lecture I will show you the main drivers of the FMCG model and on the basis of this we will create a business model in Excel # transactions Average revenue per transaction Total revenue x % Fee of the marketplace Average transaction value Total searches % conversion x x Total Costs Total margin - Rent People Cost of traffic Ratio of visitors to searches Average cost of 1 visit + x Development
  86. 86. 86 Drivers of FMCG Model
  87. 87. 87 The FMCG business model is driven by some basic KPIs # sold Unit production cost Gross Margin Head office Operational profit Fixed Cost / Quantity produced Unit variable cost + Cost of sales & marketing Net Margin - - Average price Unit Gross Margin - x Market share Market size
  88. 88. 88 To see how to build the model in Excel go to my on-line course. You will also get there the model in Excel. Below link with great discount Click to check my course Business Modeling of offline businesses in Excel $45 $ 0
  89. 89. 89 FMCG business model – modeling in Excel
  90. 90. 90 Let’s go through basic assumptions of the model FMCG product MarketingSales Channels ▪ Cosmetics – 1 product ▪ 1 production site ▪ Traditional small stores ▪ Retail chain ▪ TV ads ▪ Market research ▪ Social Media ▪ Mailing ▪ Loyalty program ▪ Outdoor campaigns
  91. 91. 91 Commodity Business Model
  92. 92. 92 Introduction to Commodity Business Model
  93. 93. 93 The commodity is one of the most difficult business. You have a non- differentiated product and the price pressure is destroying the margins
  94. 94. 94 The commodities are characterized by some important things Very low margins Usually high Capex Cyclical demand connected with GDP growth Natural tendency to consolidate Mature industries Low growth Transparency Educated buyers esp. in B2B
  95. 95. 95 Main challenges in Commodity Business Model
  96. 96. 96 Let’s have a look at the main challenges in Commodities Operational Excellence Market Structure – oligopoly or monopoly Cyclicity of demand Capacity Management Catchment analyses (supplier, customer) Creating barriers of entry Product differentiation Reaching strong buyer position Turning the product into service Investments enabling the demand for your product Changing economics of facilities - lower Capex Vertical integration esp. downstream
  97. 97. 97 Drivers of Commodity Model
  98. 98. 98 The commodity business model is driven by some basic KPIs # sold Unit production cost Gross Margin Head office Operational profit Fixed Cost / Quantity produced Unit variable cost + Cost of sales & marketing Net Margin - - Average price Unit Gross Margin - x Customer catchment area Supplier Catchment Area
  99. 99. 99 To see how to build the model in Excel go to my on-line course. You will also get there the model in Excel. Below link with great discount Click to check my course Business Modeling of offline businesses in Excel $45 $ 0
  100. 100. 100 Check also business modeling of online businesses in Excel Business models Practical guide for startups and entrepreneurs presentation
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  109. 109. 109 ….and how to perform market research Market research Practical guide for startups and entrepreneurs presentation
  110. 110. 110 Check my presentation on starting and running consulting company How to create management consulting presentations? A practical guide presentation
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  112. 112. 112 If you need more detailed version on productivity hacks you can check our course on productivity hacks Click to check my course Management Consulting Productivity Hacks $45 $15
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This presentation will help you drastically improve your knowledge and skills in creating business / simplified financial models in Excel for traditional offline (brick and mortar) business such as: Retail, B2C services (i.e. restaurants) and products, B2B services (i.e. professional services, consulting) and B2B products (commodities). It is designed for those who want to become consultants, business analysts and people who need to be able to analyze any business in Excel. In the presentation you will learn 4 things: 1. What your business model is about, what to concentrate on and what are the most important KPIs for you? 2. How to translate your business model into Excel and evaluate it? 3. How to draw conclusions using your business model in Excel? 4. Estimate what will be the impact of specific changes that you may consider in your business The presentation is based on my 12 years of experience as a consultant in top consulting companies and as a Board Member responsible for strategy, improvement and turn-arounds in biggest companies from FMCG, SMG, B2B sector that I worked for. On many occasions I had to build business models in in Excel in order to estimate what is the value of the business and find ways in which I can improve it. Business models are also useful for internal purposes: planning, looking for opportunities, analyzing performance, business development.

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