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Overview of business models used in on-line

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We work with startups on daily basis within our accelerator StartupAkademia and we have noticed that despite tones of very good books on lean methods (i.e. Lean Analytics, Running Lean etc.) startups as well as small / medium businesses have problems with applying this knowledge in practice. We have noticed that, especially first time startups, do not really understand their business model (which is totally understandable). That's why, it is very difficult for them to know what they should concentrate on. Most entrepreneurs / startups have more or less clear business idea but quite often they do not know the business models they can chose and end up learning it the hard way, through their mistakes. Some of them have read the Lean analytics, Lean Starup or Running Lean but even then they do not know exactly how to translate it into coherent Excel model. A business model in the form of Excel is very important for evaluating your business, seeing how much cash you need and how your hypothesis and KPIs are translating into the business

Therefore we build a course on Udemy: https://www.udemy.com/on-line-business-models-in-excel-practical-guide/

The presentation you will find here is just a fraction of what you can find in the course

What will this course give you?

The course is a practical, step by step guide loaded with tones of tips and tools that will help you significantly speed up with your business, especially if you are a startup or a small / medium business. There is little theory – mainly examples, a lot of tips from our own experience as well as other notable examples worth mentioning. Our intention is that thanks to the course you will know:

- What your business model is about, what to concentrate on and what are the key KPIs for you?
- How you can translate it into Excel and evaluate your business?
- How to make conclusions on the basis of your business model presented in the form of Excel

Published in: Business

Overview of business models used in on-line

  1. 1. 1 Business models Practical guide for startups and entrepreneurs
  2. 2. 2 Introduction
  3. 3. 3 SaaS E-commerce Media site 2-sided market User Generated Content Mobile Applications B2B Service Retail B2C Service B2C Products B2B Products Freelancing In this section we will be talking about 12 different business models We will discuss for every model ▪ Definition of the business model ▪ Examples ▪ KPIs ▪ Most important issues ▪ How to analyze it in Excel
  4. 4. 4 Each model we will evaluate according to 3 criteria: difficulty of implementation, money needed to achieve the break even, the scale that has to be achieved for the business to be sustainable Difficulty level Money needed Scale ▪ How difficult it is on a scale from 1 to 5 (where 5 is very difficult) to build a startup in a given model ▪ In the assessment we take into account not only the coding but also the operational and sales aspect ▪ It is a subjective assessment based on our experience ☺ ▪ How expensive it is on a scale from 1 to 5 (where 5 is very expensive) to build a startup in a specific model? ▪ In the assessment, we take into account both cash expenditures as well as opex for people on human resources, that sometimes do not require cash (certain aspect covered by founder) ▪ Here you can determine at what market you need to be a leader for the startup to be sustainable business ▪ To simplify the matter we will use 3 levels:  Country Level  Regional Level (more countries i.e. Europe)  Global
  5. 5. 5 What we will show in this presentation is a part of extensive on- line course where I show the business models along with how to calculate whether they make sense or not in Excel Click to check my course On-line Business Models in Excel – Practical Guide $45 $15
  6. 6. 6 I recommend reading the following books to get more insight into business models. Click on the chosen cover to see details on each and every book Click for moreClick for moreClick for more
  7. 7. 7 SaaS
  8. 8. 8 SaaS should not be confused with subscription models ▪ Software as a Service ▪ SaaS company offers software on an on-demand basis, usually delivered through a website it operates SaaS = SaaS ≠ Subscription model ▪ Many SaaS generates revenue from monthly subscription fee but there are plenty of SaaS that are free or charger per usage
  9. 9. 9 Difficulty level Required funds Scale Country level Regional level The product must be global SaaS is not that difficult and requires relatively small budget. If you are interested in this model you immediately have to think at least about the regional market. Your country (provided it is not USA or China) does not suffice
  10. 10. 10 Just to remind you some examples of well known SaaS businesses Service provided Revenue model ▪ Virtual drive for storage and sharing files Main sales tactics ▪ Subscription fee ▪ Freemium ▪ Mail service ▪ Free to users ▪ Revenue from ads ▪ Free ▪ Designing graphics – drag and drop ready made elements ▪ Pay per used elements ▪ Freemium ▪ Access to books (library) ▪ Subscription fee ▪ Pay per page/book ▪ Free trial ▪ Creation of animation movies ▪ Subscription fee ▪ Freemium ▪ Creation of webpages esp. blogs ▪ Subscription fee ▪ Freemium more more more
  11. 11. 11 When you look just at the sales funnel you can see how SaaS takes the visitor to trial and then to paid user. Some of the paid users may become your ambassadors and help you get new customers Visitor Freemium / Trial User Paid User Engaged Heavy User Ambassador Conversion
  12. 12. 12 Conversion rates Churn rate Customer Acquisition Cost (CAC) Customer payback time Average revenue per user (ARPU) Life Time Value of the Customer (LTV) Monthly Recurring Revenues (MRR) Engagement metric There are some KPIs for revenue side of SaaS model that you have to follow…
  13. 13. 13 Quick achievement of theproduct-market fit Minimizing Churn rate Acquisition tactics – customer acquisition plan Integration with other SaaS and IT systems You should test and find optimal solution for the following key topics
  14. 14. 14 To get the Excels showing the models and more details go to my on-line course Click to check my course On-line Business Models in Excel – Practical Guide $45 $15
  15. 15. 15 E-commerce
  16. 16. 16 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
  17. 17. 17 E-commerce due to the low margins (for physical products) is very difficult. It requires not that big budget but quite often country level is enough to have stable, profitable business Difficulty level Required funds Scale Country level Regional level The product must be global
  18. 18. 18 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 model Loyalty 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
  19. 19. 19 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 more more more
  20. 20. 20 Conversion rates Average shopping cart size / Average transaction value (ATV) Abandonment rate Life Time Value of the Customer (LTV) % traffic generated by non-ad methods Customer Acquisition Cost (CAC) Number of purchases per visitors per year Return rate Average additional sales for click and collet % click and collect orders There are some KPIs for e-commerce model that you have to follow…
  21. 21. 21 Getting a lot of cheap traffic Pricing – (multi-tier pricing, dynamic pricing) Understanding your customer and marketing automation Managing the long tail (both in terms of offer and logistics / availability) Continuous optimization of your site - conversions, SEO, usability, etc. You should test and find optimal solution for the following key topics in e-commerce
  22. 22. 22 To get the Excels showing the models and more details go to my on-line course Click to check my course On-line Business Models in Excel – Practical Guide $45 $15
  23. 23. 23 Have also a look at my presentation how to conduct properly market research Market research Practical guide for startups and entrepreneurs presentation
  24. 24. 24 Media site
  25. 25. 25 Media site model is all about creating inventory of content and monetizing it Create interesting content Draw attention Monetize the attention
  26. 26. 26 As you guess on the most important aspects is content creation and monetization. There are many options available ▪ You Content creation ▪ Outsourced ▪ Aggregate other people’s content ▪ Mix Channels used ▪ 1 on-line channel ▪ Multichannel yet only online ▪ Multichannel – both on-line and off-line Revenue sources ▪ Ads (CPM, CPC, CPA,CPS) ▪ Affiliation ▪ Sponsorship ▪ Licenses ▪ E-commerce ▪ Paywalls▪ User Generated Content Getting the traffic ▪ Direct ▪ Subscription (membership clubs) ▪ Emails ▪ Notification (from site where you subscribe to i.e. YouTube, mobile apps) ▪ Product placement ▪ Native advertising ▪ SEO ▪ Interlinking ▪ Social Media
  27. 27. 27 Media site is still cheap and relatively easy business – provided that you will find your niche and you will not be too greedy. Usually suffice to find a nice niche within the country to be profitable and stable Country level Regional level The product must be global Difficulty level Necessary money Scale
  28. 28. 28 Just to remind you some examples media site businesses Content creation Channels used ▪ In-house and subcontractors ▪ Some generated by users Revenue sources ▪ www and mobile apps ▪ YouTube ▪ Social media (esp. Facebook) ▪ Native advertising ▪ Product placement ▪ In-house and subcontractors ▪ Some generated by users ▪ Printed newspapers ▪ www and mobile apps ▪ Social media (esp. Facebook) ▪ Payment for newspapers – digital (paywalls ) and printed ▪ Ads ▪ Native advertising ▪ Product placement ▪ Affiliate ▪ In-house and subcontractors ▪ www / blog / podcast ▪ Social media (esp. YouTube, Facebook, Twitter) ▪ Email list ▪ Sponsorship ▪ Product placement ▪ Affiliate ▪ E-commerce (books, trainings) ▪ Ads ▪ In-house and subcontractors ▪ Mainly YouTube ▪ Social media to spread the movies ▪ Ads ▪ E-commerce (courses, clothes) ▪ Sponsorship ▪ Product placement ▪ Affiliate more
  29. 29. 29 Page inventory Unique visitors (UV) Average # of visits per UV Average time per visit Page per visit Number of emails subscribing to your site Click Through Rate (CTR) for ads Conversion rate Ad rates Churn Number of subscribers Views per movie Total numbers of movies Basic KPIs for media sites track the content creation side of the business
  30. 30. 30 Getting a lot of cheap traffic Segmentation of the audience and achieving content-segment-fit Creating community Finding way to monetize the audience attention Cross-selling (content and product) You should test and find optimal solution for the following key topics in media site business
  31. 31. 31 To get the Excels showing the models and more details go to my on-line course Click to check my course On-line Business Models in Excel – Practical Guide $45 $15
  32. 32. 32 2-sided markets
  33. 33. 33 2-sided market is trying to create a connection between the demand and supply enabling them to match and do the transaction Patient DoctorMarketplace • On-line booking • Reviews • Statistics for doctors
  34. 34. 34 There are different types of 2-sided markets ▪ On-line sale of physical products Marketplace ▪ On-line sale of on-line products ▪ Purchase of services ▪ Crowdfunding Networks ▪ Infrastructure ▪ Energy market ▪ Telecommunication market Sharing platforms ▪ Sharing physical resources ▪ Sharing on-line resources Matching models ▪ Dating sites ▪ Work Platform
  35. 35. 35 2-sided market is one of the most difficult and the most expensive type of business. Increasingly, you have to be a regional player for the business to make sense and to be stable in the long run Country level Regional level The product must be global Difficulty level Required funds Scale
  36. 36. 36 Just to remind you some examples of 2-sided markets Type of 2-sided market Product offered ▪ Marketplace Revenue sources ▪ On-line courses ▪ Commission from sold through Udemy courses (3%-50%) ▪ Marketplace ▪ Driving / taxi services ▪ Commission from trips made (20%) ▪ Marketplace ▪ Designs; mainly delivered through ▪ Commission from contest (5-40%) ▪ Revenue from sold ready- made designs ▪ Sharing platform ▪ Shared trips ▪ Reservation fee around 10% ▪ Sharing platform ▪ Sharing knowledge ▪ Donations ▪ Marketplace ▪ Apartments rental ▪ Commission from provider – 3% and from guests 6-12% more more more more more
  37. 37. 37 Just to remind you some examples of 2-sided markets Type of 2-sided market Product offered ▪ Matching model Revenue sources ▪ Peoples CVs and their strength appraisal ▪ Advertising ▪ Added services (for recruiters) ▪ Matching model ▪ Tinder paid version▪ Hot or not selection of interesting people with a chat service ▪ Marketplace ▪ Subscription plan from 0-25 EUR per month for doctors ▪ Booking visits at the doctor of your choosing ▪ Marketplace ▪ Commission from sellers – above 10% ▪ All sorts of mainly physical products ▪ Marketplace ▪ Markup on store prices ▪ Commission from stores ▪ Delivery of groceries fro chosen shop more more more
  38. 38. 38 Engaged buyers Active suppliersTotal searches Average transaction Transaction to searches ratio Average number of products per supplier Average number of searches per engaged buyer Life Time Value of the Customer (LTV) Customer Acquisition Cost (CAC) Supplier Acquisition Cost (SAC) Basic KPIs for 2-sided market are connected with the supply and demand creation
  39. 39. 39 Chicken-and-egg problem Level of centralization Liquidity Understanding the customer and loving the problem Choosing the right side to concentrate on Distribution and Activation You should test and find optimal solution for the following key topics in 2-sided market
  40. 40. 40 To get the Excels showing the models and more details go to my on-line course Click to check my course On-line Business Models in Excel – Practical Guide $45 $15
  41. 41. 41 Check my extensive presentation on productivity hacks to see how you can me 10x more productive Management consultant productivity hacks How to be lazy and still get things done presentation
  42. 42. 42 I recommend also looking at some techniques to improve your business. Click on the cover below to go to the presentation How to become world class analyst A practical guide presentation
  43. 43. 43 If you want to learn how to make in Excel advanced analysis that you would do as a business analyst go to my on-line course Click to check my course How to become world class Business Analyst? Cases in Excel $45 $15
  44. 44. 44 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
  45. 45. 45 Check my presentation on starting and running consulting company How to create management consulting presentations? A practical guide presentation
  46. 46. 46 Subscribe to our channels: www
  47. 47. 47 Check my presentation on on-line models to understand them properly Market research Practical guide for startups and entrepreneurs presentation
  48. 48. 48 You can also find useful some tips on Excel Essential Excel for Business Analysts and Consultants A practical guide presentation
  49. 49. 49 Check also my other presentaions Management Consulting Presentations Practical guide how to prepare a great presentation presentation
  50. 50. 50 Check also my other presentations Production for Management Consultants Practical guide presentation
  51. 51. 51 Check my presentation that will help you get into consulting How to get into consulting Practical guide how to pass the case part presentation
  52. 52. 52 Check my presentation on on-line models to understand them properly How to become world class analyst A practical guide presentation
  53. 53. 53 Check my presentation on on-line models to understand them properly How to open a successful restaurant A practical guide presentation
  54. 54. 54 Subscribe to our channels: www

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