APS1015H Class 2 - Business Modeling for Social Enterprise


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This lecture focuses on providing an overview of the business modeling process. Students will apply this concept to building a business model around their entrepreneurial idea.

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APS1015H Class 2 - Business Modeling for Social Enterprise

  1. 1. APS 1015: Social Entrepreneurship Class 2: Business Modeling for Social Enterprise Saturday, September 22, 2012Instructors:Norm Tasevski (norm@socialentrepreneurship.ca)Karim Harji (karim@socialentrepreneurship.ca) 1
  2. 2. © Karim Harji & Norm Tasevski
  3. 3. © Karim Harji & Norm Tasevski
  4. 4. © Karim Harji & Norm TasevskiAgenda•  Centre for Social Innovation•  Business modeling your social venture•  What did we learn – Today?•  Next week 4
  5. 5. Business Modelling for SocialEnterprise… 5
  6. 6. © Karim Harji & Norm TasevskiA Caveat… When we business model for social enterprise, we focus on the “business”, not the “social”… But don’t worry, we will come back to the “social” later… 6
  7. 7. © Karim Harji & Norm TasevskiA Second Caveat… “Business   “Business Form/Legal   Model” Structure”   7
  8. 8. © Karim Harji & Norm TasevskiA Third Caveat… “Business “Business   Model” Plan”   Business  Model  1st!!!   (Business  Plan  2nd)   8
  9. 9. Why business model 1st and plan 2nd? 9
  10. 10. © Karim Harji & Norm TasevskiBecause…It is a cure for “We Need a Plan-itis” 10
  11. 11. © Karim Harji & Norm TasevskiAnd…It is a Quick way to assess Profitability/Sustainability –  Why spend months building a plan if you don’t have a real sense of profitability/sustainability? –  If your model doesn’t make money, even with the most ideal conditions… …STOP! (…and rethink your business model) 11
  12. 12. © Karim Harji & Norm TasevskiOne More…It breaks down highly complex business ideas intoeasily digestible (and visual) chunks –  Gets to the heart of what you need to know to: Make a Go No- Go Decision Set Strategy Make Potential Investors/funders (and business partners) Happy :) 12
  13. 13. Business Plans Business ModelsAre big and complex Are small and visual (often 50-100+ pages) (1 page with about 10 supporting pages)Cover many topics Focus on a few topics(business description, financials,marketing strategy, HR strategy, (Will you make $$? How do theOperations Strategy management team, pieces fit together?)etc, etc, etc)Take weeks/months to Take a few days (possiblycreate hours) to create Are necessary for Feed the business plan!! investors, funders, business partners, etc 13
  14. 14. © Karim Harji & Norm Tasevski 14
  15. 15. © Karim Harji & Norm TasevskiSome Definitions•  “A business model describes the rationale of how an organization creates, delivers and captures value – economic, social, or other forms of value” Wikipedia•  “A description of the means and methods a firm employs to earn the revenue projected in its plans. It views the business as a system and answers the question, “How are we going to make money to survive and grow?” BusinessDictionary.com•  “A business model describes the specific way the business expects to make money. While a business plan is on paper (lots of paper!) a business model should be small enough to stay in the heads of the owner and staff. If a business model is on paper, it should be one page, and it would be more clearly shown as a diagram than as words.” AudienceDialogue.net 15
  16. 16. © Karim Harji & Norm Tasevski 16
  17. 17. © Karim Harji & Norm TasevskiCustomer SegmentsWhat you need to care about is…–  Customer “Pain”–  Difference between a “customer” and a “client” 17
  18. 18. © Karim Harji & Norm TasevskiEmpathy Mapping
  19. 19. © Karim Harji & Norm TasevskiValue Proposition (the “Offer”)What you need to care about is…–  The “value” you are creating for customers (in terms of products/services), and the “pain” you are alleviating–  An exchange of value 19
  20. 20. © Karim Harji & Norm TasevskiQuick… What is the last thing you bought? 20
  21. 21. © Karim Harji & Norm TasevskiCustomer Utility 21
  22. 22. © Karim Harji & Norm TasevskiChannelsWhat you need to care about is…–  How the customer receives the offer/value prop–  The physical “movement” of the offer into the hands of the customer 22
  23. 23. © Karim Harji & Norm TasevskiRelationshipsWhat you need to care about is…–  Personal and impersonal interaction with the customer–  The “movement” of information (e.g. marketing, communication) 23
  24. 24. © Karim Harji & Norm TasevskiRevenue StreamsWhat you need to care about is…–  Cash!!! (specifically, how cash flows into the enterprise) – “Money In”–  Pricing models 24
  25. 25. © Karim Harji & Norm TasevskiKey ResourcesWhat you need to care about is…–  Assets…–  …and how these assets create value–  Includes human, physical, intellectual, and financial resources 25
  26. 26. © Karim Harji & Norm TasevskiKey ActivitiesWhat you need to care about is…–  Actions (specifically, the actions you plan to take to generate value)–  Both “direct” and “indirect” 26
  27. 27. Break 27
  28. 28. © Karim Harji & Norm TasevskiKey PartnersWhat you need to care about is…–  People/organizations that are integral to enabling you to do business–  How you partner, and what you partner on 28
  29. 29. What makes a good partnership? 29
  30. 30. © Karim Harji & Norm Tasevski A Common Commitment Vision! to Invest in the Partnership!Same CoreValues! Discreet Missions! 30
  31. 31. © Karim Harji & Norm TasevskiCost StructureWhat you need to care about is…–  Fixed costs, variable costs, economies of scale…“money out”–  At this stage, focus on your cost assumptions! (don’t worry about actual $$) 31
  32. 32. © Karim Harji & Norm Tasevski 32
  33. 33. So…whatdoes acompletedBusinessModelLookLike??? 33
  34. 34. © Karim Harji & Norm Tasevski -Hire staff -Personal -Long hours ce (Baristas) -Maintain spa sign -Store front -Coffee ing -Access to -Wireless roasting/brew -35 yr old You ng-Coffee n space -Interior desig professional thatsuppliers to wants a place k relax and wor quietly -Locations -Coffee shop s g -Coffee makin equipment -Furniture -Internet g -Baristas-Staff trainin -In-store-Asset Purchasesacquisition (multiple per -Marketing visit) -Rent 34
  35. 35. © Karim Harji & Norm TasevskiTip…•  Be a Business Model “Alchemist” – You need to go through the business model process many times in order to figure out which model best fits 35
  36. 36. © Karim Harji & Norm Tasevski“Sticky Ideation”… What we know! What we Don’t Know! Bridging the Gap! ! (turning what we don’t know into what we know)! 36
  37. 37. © Karim Harji & Norm TasevskiNext Week•  Engineers without Borders “Hot Seat” –  Review EWB materials (to be emailed this weekend) –  Be prepared to ask questions! You WILL be graded on it… 37