"A business model is the proprietary methodology used to acquire, service, and retain customers.” -- Jim Muehlhausen Author “The 51 Fatal Business Errors and How to Avoid Them”

1. What is a
business model ?
Summary from
And other resources

2. "A business model is
the proprietary
methodology used to
acquire, service, and
retain customers.” --
Jim Muehlhausen Author “The 51 Fatal
Business Errors and How to Avoid Them”

3. Your business model is:
• your secret sauce.
• what makes your business unique.
• the formula you use to outsmart
your competitors, provide ongoing
value to customers, and continually
grow your business.

5. Business Model

7. Eight essential areas to a
business model
• Must have excellent margins
• Must be easy to sell
• Must have The Four Capitals©: Intellectual Capital,
Financial Capital, Human Capital and Brand Capital
• Must be able to maintain ongoing competitive
advantage
• Must have quality customers
• Must have longevity of the industry
• Must provide for the owner’s graceful exit
• Must avoid pitfalls

8. Criteria #1: Excellent Margin
Margin is the fuel that drives the business.All
meaningful components of your business are
paid for with a sufficient dollar volume of
margin:
• Marketing/Branding/Sales
• Paying quality staff
• Rent/Equipment/Facilities
• R & D, Business Development
• Fair return on your equity
Margin is oxygen for a business. Without adequate margin, all
functions in your business will be short of breath.

11. Criteria #2: Easy to sell
• Is your product or service offering
“sellable?”
• Relatively easy to sell and have a
proven and repeatable sales process.
• “Selling ice to Eskimos,” the market is
telling you something: either “We don’t
like your current offering that much,” or
“We have better options than yours,” or
“Your value proposition is so weak that
you have to add an ingredient called a
talented salesperson into the mix in
order to make your offering worth
bothering with.”
• With ordinary skill can sell a reasonable
amount.

12. Criteria #3: The Four Capitals©
Intellectual Capital
• Patents, trademarks, copyrights, business processes, best practices and
trade secrets.
• Intimate knowledge of customers, vendors, or a good CEO.
Financial Capital
• Strong balance sheet
• Strong cash position
• Low break even
• Likelihood additional fundraising will be needed
• Good cash flow
Human Capital
• The ability to attract and retain top talent
• Talent of ownership
Brand Capital
• Is your brand meaningful to the market?
• Your brand is what your product or service “means” to your customers and
prospects.

13. Criteria #4: Ongoing competitive
advantage
• Harvard Professor Michael Porter
determined that competitive advantage
occurs when an organization acquires or
develops an attribute or combination of
attributes that allows it to outperform its
competitors.
• Access to natural resources
• Access to highly trained and skilled
personnel human resources.
• New technologies and information
technology either to be included as a part of
the product, or to assist making it.

16. The Five Forces Model
Michael Porter

17. Criteria #5: Quality Customers
Quality customers are important because:
• Price-conscious customers tend to be not only
lower-margin customers, but typically are more
demanding of customer service and
organizational resources
• Quality customers create the financial foundation
of your business
• If you never create a base of quality customers,
you will spend the bulk of organizational
resources attracting new customers

18. Some of the factors that do NOT
constitute a quality customer are: high
percentage of your total revenues, high
cost of attraction, slow pay, stressful for
customer service employees, or could
become a competitor.

19. Criteria #6: Longevity of
business/industry
• Over half of the startup businesses fail after
four years.
• If you continue “business as usual,” you will
always have to worry about how much longer
your business can last.
• What similar customers can you serve?
• What related offerings can you attack?

20. Criteria #7: Graceful Exit
• King vs Rich
• Over 30% of small business are never sold, but
there are no employees or children to take over
the business and it simply closes.
There are many ways to gracefully exit a business:
• Using a business broker
• Selling to a competitor or vendor
• Initial Public Offering
• Transfer or Sell to a Key Employee
• Take the CEO Emeritus Role

21. Criteria #8: Avoidance of Pitfalls
• Hiring cheap employees.
• Focusing on only one area of your business.
• Not testing or measuring anything.
• Trying to cost-cut your way to success.
• Competing on price and price alone.
• Taking on a wrong business partner.
• Thinking the business idea will make the
company.
• Thinking too small.

23. © Wong Poh Kam
What is a Business Plan?
A feasible Business Model
+
A FinancingModel that aligns
the purposes of Stakeholders
and Entrepreneurs