This document provides an overview of business model analysis for entrepreneurs. It discusses key questions entrepreneurs should consider, such as how likely revenue will cover costs and how long until cash flow is positive. The document defines the core elements of a business model as revenue sources, cost drivers, investment needs, and critical success factors. It provides examples of analyzing models by determining revenues and costs over time, investment needs, and sensitivity of success factors. Case examples are presented for different business models.

1. Business Model Analysisfor the Entrepreneur Presented by : Group no.4 Manish Balwani Sunil Prajapat Ashish Kothari PrateekSarathe SaketSinghai MayankBhalodia

2. Few questions in mind of an entrepreneur… How Likely is the business to turn cashflow positive ? How much time is required to ramp-up the revenue in order to turn cash flow positive ? How large an investment is required to pursue the business model ? What are the critical success factors and associated risks ?

3. Business Models A business model is the summation of the core business decisions and trade-offs employed by a company to earn a profit. In general, these elements fall into four groups: Revenue Sources Cost Drivers Investment Size Critical Success Factors Source: A Note on Business Model Analysis for the Entrepreneur HBS Note N9-802-048

4. Analyzing the Business Model Determine revenues, timing and key drivers Determine costs/expenses, timing and disaggregate cost data into discrete cost drivers Determine total investment to achieve positive cash flow Plot cash flow versus time to generate a cash curve Systematic sensitivity analysis to identify critical success factors

5. Revenue Sources Single Stream Multiple streams Interdepedent Loss leader

6. Revenue models Subscription/Membership Volume or unit based Advertising based Licensing and syndication Transaction fee

7. Revenue model analysis Revenue streams Revenue model

8. Case Example - 1

9. Cost drivers Fixed Semi-variable Variable Non-recurring

10. Cost structures Payroll centered (Direct) Payroll centered (Support) Inventory Space/Rent Marketing/Advertising

11. Using The Business ModelTo Drive A Forecast Play out the business model over time, looking at P&L and cash flow How much cash is required to get the business to cash flow breakeven

12. Cost driver analysis Cost Driver Cost centre

13. Case Example - 2

14. Investment size The total investment size of a business model depends on several factors including the company’s revenue model cost drivers and critical success factors.

15. Basis of evaluation of a cash flow diagram Maximum financing needs Positive cash flow Cash breakeven

16. Examples of types of business models Software Retail Small consulting firm

17. Case Example - 3

18. Critical success factors It is an operational function or competency that a company must possess in order for it to be sustainable and profitable.

19. Study of revenue models

20. Exhibit 1: Fishbone DiagramFor The Grateful Dead Revenue Model # Concerts Concert Revenue # Tickets Revenue/Concert Price/Ticket # Concerts Total Revenue Merchandise Revenue # Attendees Revenue/Concert Revenue/Attendee Albums Recorded Recording Revenue # Albums Sold Revenue/Album Revenue/Album

21. Square Footage/Store Price/Square Foot Advertising Cost/Store Company-wide Spend Exhibit 2: Fishbone DiagramFor Seven-Eleven Japan Cost Structure Price/SKU Cost of Goods Sold # of Suppliers Inventory Turns Development Costs Information Technology Implementation Costs Maintenance Total Cost Head Office Payroll Payroll Employees/Store Daily Wage/Employee Facilities Marketing/ Advertising

22. Date of First Cash Flow Positive Date of Cash Breakeven Maximum Financing Needs Burn Rate Exhibit 3 :The Cash Flow Cycle For A Venture CumulativeCash Flow in $ Time

23. Exhibit 4: Cumulative Cash Flow DiagramsFor Two Hypothetical Medical Device Ventures Cumulative Cash Flow ($) Medical Devices Company Giving Away Instrument Time Medical Devices Company Selling Instrument

24. Conclusion

25.  Thank you 