SME Consulting - Business Models

Business Models
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Business Model
• A business model is a way in which organizations capture value.
• Not only the economic value but also the social values an organization can
foster and the cultural values it can sustain in the long run.
• The aim of having a sharp understanding of your business model is critical
to provide strategic insights about your customers, product/service, and
financial structure.
• There isn’t a single way to design and assess a business model. However,
the business model canvas is a holistic model that takes into account nine
factors or building blocks.

Business Model Canvas
• The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in the book Business Model
Generation enabling the design of business models through nine building blocks comprising:

UBER Business Model Canvas

Business Models
• It sells its expertise to improve its customers’ operations – Consulting model. Ex: IBM, Consulting Pad
Customer Solutions Model
• Producing all kinds of the product (high & low quality) (high & low price) (All segments) in order to close out by any niches
where a competitor might find a position. Ex: General Motors
Profit Pyramid Model
• Make a product like system, and sell its components- No profit in the system but profit from the components. Ex: HP, Gillette
Multicomponent system / Installed Based Model
• It’s basic product free in order to make money on advertising . Ex: Google, Free Mobile applications with Ads areas
Advertising Model
• A firm acts as an intermediary to connect multiple sellers to multiple buyers. Ex: Amazon, Souq, Jumia
Switchboard Model
• Being the first to market with a new innovation allows a pioneer to earn high profit & once it spreads and make low profit it is
time to move on. Ex: Sony
Time Model

Business Models
• Company waits until a product becomes standardized and then enter the market with a low-prices, low margin product that
appeals to mass market. Ex: Walmart, Carrefour
Efficiency model
• Profitability is driven by a few key products. The focus is on high investment in a few products with high potential payoff –
especially if it is protected by patent. Ex: Pharmaceuticals, pfizer
Blockbuster Model
• Developing a concept that may or may not make money on its won but, through synergy, can spin off many profitable products..
Ex Walt Disney - Cartoons
Profit Multiplier Model
• Company offers specialized products / services to market niches that are too small to be worthwhile to large competitors but
have potential to grow quickly. Ex: Microsoft, Harmonica dating, Vezeeta
Entrepreneurial model
• A company offers product free or at a very low price in order to saturate the market and become industry standard. Once users
are locked in, the company offers higher margin products using this standard. Ex: Microsoft with Internet explorer, Uber
De Facto industry standard Model

Business Models
Free Model
Buy one get
one free
• Retail shops at
discount time
Someone
else pays
• Google (Via ads)
Cross subsidy
• Gillette
• Free dental
examination
service
Freemium
• LinkedIn
premium
• Truecaller
premium
Gift economy
• Bekia
Application.
Free for trial
• Shahid & Watch
it free trail ,
• Expand Card

Online Business Models

Online Business Models
SaaS
E-
commerce
Media site
2-sided
market

Software as service “SaaS”
• SaaS company offers software on demand basis, usually delivered through
website it operates.
• Many SaaS generates revenue from monthly subscription fee but there are
plenty of SaaS that are free or charger per usage.
Dropbox Gmail Canva
Service provided Virtual drive for storage
& sharing
Mail service Designing graphics- drag
and drop ready made
elements
Revenue model Subscription fees Free to users
Revenue from ads
Free
Main sales tactics Freemium Free Freemium

Software as service “SaaS”
KPIs for revenue side of SaaS model
• Life Time Value of the Customer (LTV)
• Churn rate
• Engagement
• Customer Acquisition Cost (CAC)
• Customer payback time
• Average revenue per user (ARPU)
• Monthly Recurring Revenues (MRR)
Sales Funnel

E-Commerce
• Is the activity of electronically buying or selling of products on online services or over
the internet.
• Customer behaviors has huge impact on the business model and on what the e-commerce
should concentrate on.
Acquisition Mode Model Hybrid Mode Model Loyalty Mode Model

E-Commerce
Acquisition Mode Model
Focus is on customer acquisition
Loyalty program are not good investment
70% of e-commerce businesses are in this
model
Ex: E-commerce selling only 1 type of Slow
Moving Consumer Goods (SMCG) bought
infrequently i.e. vacuum cleaner, scuba diving,
furniture
Hybrid Mode Model
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)
Ex: E-commerce that sells SMCG with relatively
big frequency of purchase(1.0-2.5 times a year )
i.e. shoes (Zappos)
Loyalty Mode Model
Focus is on increasing the value of the customer
(increased frequency and increased purchase
per visit)
10% of businesses are in this model
Ex: Very strong brands with high frequency of
purchase (i.e. Zara, Amazon)
Marketplaces i.e. Udemy, Uber,
SWYFT

E-Commerce
Amazon Zara
Tickets.co
m
Tesco direct
Product
sold
Virtually
everything
(books, toys,
fashion)
Fashion
Tickets Groceries
Online
/offline
situation
Pure Online
player
Multichanne
l player
Pure on line
player
Multichannel
player
Mode
Loyalty mode Loyalty
mode
Acquisition
mode Hybrid mode
Some KPIs for e-commerce model
• Conversion rates
• Abandonment rate
• % traffic generated by non-ad methods
• Number of purchases per visitors per year
• Average shopping cart size / Average transaction value (ATV)
• Average additional sales for click and collect orders
• Return rate
• % click and collect orders

Media site
• Is all about creating inventory of content and monetizing it
• Media site is still cheap and relatively easy business –provided that you will find your niche
and you will not be too greedy.
Create interesting
content
Draw attention
Monetize the
attention

Media site
Content creation
•You
•Outsourced
•Aggregate other people’s
•Mix
•User generated content
Channels used
•Online
•Offline
•Multichannel both offline
& online
Revenue sources
•Ads
•Affiliation
•Sponsorship
• Licenses
• E-commerce
•Paywalls
•Subscription
•Product placement
•Native advertising
Getting the traffic
•Direct
•Email
•Notification from site
where you subscribe
(Youtube, mobile apps)
•SEO
•Interlinking
•Social media

Media site
BUZZFeed AGORA The Smart Blog
Content creation
• In-house and subcontractors
• Some generated by users
• In-house and subcontractors
• Some generated by users • In-house and subcontractors
Channels used
• www and mobile apps
• YouTube
• Social media (Facebook)
• Printed newspapers
• www and mobile apps
• Social media (Facebook)
• www / blog / podcast
• Social media (YouTube,
Facebook, Twitter)
• Email list
Revenue sources
• Native advertising
• Product placement
• Payment for newspapers –
digital (paywalls ) and printed
• Ads
• Native advertising
• Affiliate
• Sponsorship
• Affiliate
• E-commerce (books,
trainings)
• Ads

Media site
Basic KPIs for media sites track the content
creation side of the business
• Page inventory
• Page per visit
• Average # of visits per UV
• Unique visitors (UV)
• Ad rates
• Conversion rate
• Click Through Rate (CTR) for ads
• Average time per visit
• Number of emails subscribing to your site
• Churn
YouTube KPIs
• Number of subscribers
• Views per movie
• Total numbers of movie

2-sided market
• Defined by the relationship the intermediary has with the external groups or agents on
its platform.
• Trying to create a connection between the demand and supply enabling them to match
and do the transaction
Types of 2
sided market
Market place like
Udemy
Networks
Sharing platform
like Bia Bia car &
Wikipedia
Matching model like
LinkedIn &
Facebook

2-sided market
Udemy Bia Bia car Wikipedia LinkedIn Ebay
Type Marketplace Sharing platform
Sharing
platform
Matching model Marketplace
Product
offered
On line courses Sharing trips
Sharing
knowledge
Peoples CVs and
their strength
appraisal
All sorts of
mainly
physical
products
Revenue
sources
Commission from sold
through Udemy
courses (3%-50%)
Reservation fee
around 10%
Donations
Advertising
Added services (for
recruiters)
Commission
from sellers
–above 10%

2-sided market
Basic KPIs for 2-sided market are connected with the supply and demand creation
• Total searches
• Transaction to searches ratio
• Average transaction
• Active suppliers
• Average number of products per supplier
• Supplier Acquisition Cost (SAC)
• Average number of searches per engaged buyer
• Engaged buyers

25
Our Services
25
Process Analysis & Improvement
Analysis is carried out to determine which
processes and process steps are value-adding or
non-value-adding and then work on enhancing the
effectiveness of each process.
Marketing Services
We offer to prepare your market
research, competition analysis &
marketing plan in Egypt or abroad.
Besides, we develop an international
market entry strategy if you want to go
global.
Operations Manual
The operations manual will contain the
basic knowledge that shows how the
brand will succeed and how the
franchisees will operate the business.
Feasibility Study
Performance Review
Financial Services
Business Startup in Egypt
Strategic Planning
Marketing Services
International Business
Wherever you perform an
International Business Venture, SME
Consulting will be there to help you
to give powers to your business to
perform smoothly and easily.
Business Transformation
We help you to plan and choose the
suitable tools for your business
transformation and empower your
staff to apply the transformation
successfully.
Recruitment
We can help you to find the right
candidates, interviewing, selecting,
and outsource the right team.

Get in Touch
We’d Love to Hear From You
Send us a message or visit us whenever you like
13 El Tayaran St, Manteqet Al Cinema, Nasr City,
Cairo Governorate.
(+20) 1204538024 - (+20) 0224047915
11321 - Kingdom Centre - 28th floor – Riyadh,
Saudi.
(009) 66541549143
Egypt Office
KSA Office
info@smecastle.com
company/sme-consulting-egypt/
/SMECastleConsulting

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YOU

SME Consulting - Business Models

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