[Mopute 5] en Business Model Syllabus Mere ee snabveing and improvising; Business Plan « Meaning, Scope and Need; Financi , ing, Human Resource and Production/Service Plan; Business plan Formats; Project report preparation and presentation; Why some Business Plan fails ? Contents 9.1. Business Model : Meaning 9.2 Designing and Innovation in Business Model 9.3. Analysing and improvising 9.4 Business Plan 9.5 Business Plan Format 9.6 Project Report Preparation and Presentation 9.7 Why Business Plan and Project Fails ?Ty pel novation = ean ond Entrepreneurship a9 shat the How and what the eustomer sys: Pagng as > Ngan 00 6 yma NS ts growth, pote Tralts of a Good Business Mod ‘hore are some specific attribute of oid business med ing st segment), unique sell ch up with company nd valu “ (customer segment), unique seling 4 they match up with company goals and values rand pos ming, method of delivery, and distribution channels tg + Your business model comes after you define what. ‘Your company is trying to do. a company’s profit potential white + Certain models will match u s nto a sound business stru you start a diamond shop but that a company adopts and essentially no way you'll succeed, Your goals and values, and some won! to implement a freemium model, there's ‘+ All the business processes and pol ‘+ Pick a model that complements your mission and the way you want fo accomplish. ily copy or improve upon your business model 5s still want your solution in the future ? Can © Taking time to big mistake. 3. They leave opportunity for innovation “A business model is supposed | Jel sight the Bist fo answer who your customer is, what value you can createladd sre likely not going to get everything in your business model righ forthe customer and hoe yeu can do that at reasonable costs" * You're likely not g ; model is a description of how a company creates, delivers, and ae ondels ae based on assumptions. Things rarely a well as the customer, + As this is already noted, business me business models can be broken nto thee parts: | 50 as planned. sour esumpinsbeing comet if ‘es to make something : Design, raw materials, manufacturing, model depends heavily on aly and improve upon vee model that you can reevaluate and im + Ifyour business model ¢ too rigid, Create a busin > Everything it takes to sell that thing : Marketing, distribution, delivering a | cover time. service, and processing the sae. ane ost toons Teac ¥ __Manapenertend Enreprmneustp _8-4__________ Busnes Mog) ERE] The Seven Elements of a Strong Business Model Follow these simple steps to securing a strong business model, 1. Identity your specific audience. 1one in on customers , when creating your jence down t0 two or three detailed buyer + Outline each persona's demographic, common challenges and the solutions your company will offer. ‘As an example, Home Depot might appeal to everyone or cary a product the average person needs, but the company’s primary target market is homeowners and builders. 2. Establish business processes. ‘+ Before your business can activities required to make + Determine key business business's offering. , You need to have an understanding of the ess model work. s by first identifying the core aspect of your * In the case of Ticketbis, an online ticket exchange marketplace, key business processes include marketing and product delivery management. 3. Record key business resources. * What does your company need to carry out daily processes, find new customers and reach business goals ? Document essential business n * Common resource examples may include a website, capital, warehouses, intellectual property and customer lists, 4. Develop a strong value proposition, tand out among the competition ? Do you provide an tionary product or a new twist on an old favorite ? your business offers and why it's better than "6 ofa strong value proposition. Establishing exactly competitors is the beginni TECHNICAL PUBLCATIONS® Ang oma ‘nce you've Bot 2 few value Propostons product delivery system to determine hay ver time. ising partners. 4 Using the previous example of Home Depot, key business partners may be umber suppliers, parts wholesalers and k Pane logistics companies. orate a demand generation strategy. ‘+ Unless you're taking a radical approach to launching your company, yoilineed a strategy that builds interest in your business, generates lends ad is designed to lose sales. How will customers find you ? More importantly, what should they do once they become aware of your brand ? Developing a demand generation strategy creates a blueprint of the customer's journey while documenting the key ‘motivators for taking action. eave room for innovation. mec ne nnn ino in is based on many assumptions, Afterall util you bpin © weeone PONE you dott truly know if your business model wil mes he og needs. For this re important to leave room for future eon + Don't make a critical mistake by thinking your intial 2 isa Instead, review it often and implement changes as nes customers, EXE] Tho importance of Business Model * The business model acts a5 Legs success (or failure) as it explains i cesses. used through its decisions and pr ypetitors in the market, entrepreneurs | a roadmap for its cof the business and a 103 ‘business creates and captures value ‘t many com + Ener, when there were" many OPUS ave overt to start a business and its business Tone ea oe eee TEGHWCAL|© CUStOMETS 10 Choose the because didn’t even charge for ERED types and Exampl "Pes of business models, companies may implement several models ‘maximize profits, of Businoss Models. Typical business models include : + User-generated cont © Saas * Franchise Bricks and mortar ret Direct sales or M Advertising based Diversified model (Giving away a free producto sell more later) Tworsides marketplace Manufacturing Distributor 8 of business models You don't have to inven , have to invent an entirely new busines model to start a business, In fact, "96 business models and refine them to find a ‘models you can use to start your own business. competitive edge. Here's alist of business 1. Advertising * The advertising business model has been around a lon, CBRE a ee damentals of the model 9 ye funda 1 Fevolve around crea + [ped or wateh and then displaying regio oe FH ay . an advertising BUSINES Model Youhavetsis ye eRe readers or viewers, and Your advertisers, Your eases eso ovps: you ‘ou, but your advertisers certainly are OF ay toe paying vn advertising business model is sometimes model where you get Your content for fee fe {reators to develop content, {._ gxamples : CBS, The New York Times, YouTube combited wih a cowdsoung Om ses rte of paying content a“ re affiliate business model is related to the advertising business model but has * come specific differences. + Most frequently found online, the affiliate model uses links embedded in content ead of visual advertisements that are easily identifiable. im your reviews that allow people to buy the book you are reviewing, Amazon will pay you a small commission fr every sae that you refer tothem. Examples : TheWireCutter.com, TopTenfeviews com Brokerage + Drokerage businesses connect buyers and sl ‘They charge a fee for each transaction 0 sometimes both. ss goLosaeagny but thre (One of the most common brokerage businesses ‘brokers and brokers who help are many other types of brokerages such as ive tht they excavate (00) PEW" construction companies find buyers for foundations. systems + ReMax, RoadRunner Transportation 9 ss and help facilitate a transaction. either the buyer or the seller and ‘a custom element £0 {customization tuner eisai + Some businesses take exh Pe gen custo the transaction that makes every = a Ee SGHNICAL PUBLICAT TEC ee+ For example, think of custom travel agents who book trips and exy ‘wealthy clients. You can also find customization happening at a large Products like Nike's custom sneakers. Examples : NIKEiD, Journy 5. Crowdsourcing If you can bring together a large number of people to contribute site, then you're crowdsourcing, Crowdsourcing business models are most frequently models to generate revenue, but there are many other Threadless, for example, lets designers submit signers a percentage of sales. Companies that are trying to solve difficult openly for anyone to try and solve. Su ‘company can then grow their business, The ke business i providing the right rewards to entice Examples : Threadless, YouTube, P&G Connect and Develop, Cuusoo 6. Disintermediation * Ifyou want to make and sell something series of middlemen to get your produ + Disintermediation is when directly to consumers, allow and have a direct relationship them as wel Examples : Casper, Dell 7. Fractionatzation * Instead of selling an entire product, you can sell fractionalization business model. ‘One of the best examples of this business mod. People owns only a portion of a vacation home, Certain number of weeks every year, * Examples : Disney Vacation Club, Netfets it designs and gives the problems often publish their problems ccessal solutions 10 a sucessful crowdsourcing the “crowd” while also enabling You to build a viable business in stores, you typically work through ct from the factory to the store shelf, You sidestep everyone in the supply chain and sell ing you to potentially lower costs to your customers Part of that product with a a Busines Mody Periences for scale with ‘content to your Paired with advertising iterations of the model, Bet rewards and the a shares, where a group of ing them to use it for a Innrton ni see ere x ‘ chising is common in the restaurant * of service industries from cleaning ndusty, bat yout Ee Ba You aso fee iin a "asinesses to staff eat ae na franchise business model, you tesling tere . successful business to someone ese cama . also selling access to serves 4 You're often also sling acco ational band and the new franchise owner get up and running owe 04 6 In effect, you're a successfull business model that you've developed, Mime aces spies: Ace Hardware, McDonald's, Allstate ext 9.Freomium + With 2 freemium business mode, you'r giving away par of your product ot service for free and charging for premium features or services, for unlimited use of basic features for free and only charge customers who want access to more advanced functionality, Examples : MailChimp, Evernote, Linkedin 10. Leasing . . ‘© Leasing might seem similar to fractionalization, but they are actually very 1 tn en ngpeucmortei Jher hand, is like renting, At the end of a lease agreement, a customer ee ns + ening mat ony oscar not be able to af for a while. ‘© Examples : Cars, DirectCapital viding i their prices by prow ae eee coma we * eaer comes Some of te ba oT ee eng nse ee TECHNCALPURUCATOAS®- An roa ape anon acess me a Teowwen ————7 Business Mode) Menaperent ong Ereepreneursne __ 9: 0_________Cisinss Mogey -touch business model means that customers no chase additional services or do some things themselves in order tg ‘+ Examples: IKEA. Ryan Air 12. Marketplace + Marketplaces allow sellers to lis tems for sale and provide customers with easy tools for connecting to sellers ‘+ The marketplace business model can generate revenue from a variety of sources including fees to the buyer or the seller for a successful transaction, additional serviees for helping advertise seller's products, and insurance so buyers have peace of mind. The marketplace model has been used for both products and services. ‘+ Examples : eBay, Airbnb 13. Payas-yousgo * Instead of pre-purchasing a certain amount of something, such as electricity of cell ‘Phone minutes, customers get charged for actual usage at the end of a billing period. ‘model is most common in home utilities, but it has been printer ink. ter companies, HP Instant Ink 14. Razor blade * The razor blade business model is named after the invented the mode : sell a durable product below 4 high-margin, disposable component of that product. ‘* This is why razor blade companies pra assuming that you'll continue to buy a large product that essentially to increase volume sales of * The goal is to tie a customer into a additional, ongoing purchases over time, TEOHUCAL PLBLEATONS Ang matt iroumage it simi “eosystem of products But, unlike the the big sale Where a company makes most ofits to keep customers using the initially expensive roduc, «amples + Apple's Pod & iTunes, and now Mactos Page, Numbers and Keynote qneverse auction auction business model tums auctions upside down and has sles present their lowest prices to buyers. Buyers then have the option to choose the Jowest price presented to them, 4 You can see reverse auctions in action when contractors bid to do work on a construction project. You also see reverse auctions anytime you shop for a mortgage or other type of loan. examples : Priceline.com, LendingTree subscription ; . i i i and more common. In this ‘© Subscription business models are becoming more 5 ‘business model, consumers get charged a subscription fee to get access to service. ; around for a Tong time, ‘and newspaper subscriptions have been Wie magn A dum ee ix, Salesforce, Comeast i i del Hi Designing and innovation in Business Mod 7 Te ‘© All business model design projects are ‘unique and present ew participants because there is no oné evolve. formula or prediction mobilize, understand, design implemen and f ie phases: me ork which all businesses regardless 0 i fir +The process consists of five phases: manage. This process provides ae aadee. their industry or context can apPIY Test moras et TECHNICAL PUBL eeTechnological Inovation 1 Managerment and Enrpreneurio 982 ‘made with one of the no other product or company arg » create an evolution in the market or ife into the industry, 4. Target and give birth to a whole new market, FEE) Notivation of Business Mode! Innovation When an already business model, it is usu J+ Anemergency or perceived near disaster due tothe current business model, 2 Ensuring that the current business model is flexible enough to meet and ‘withstand possible changes in the business and industry, 3. Being fi EEX] starting Point for Business Model Design Innovation ‘The impetus for creating or innovating in existin number of factors. Each of these 1g business model is driven by a relevant set of challenges that co factors represents contextual elements that have their me with them, TECHIACAL PLBLCATONS®. Ang rate nome 1 ve company Wants 0 answer an un 3, THES ample of such an organiz, jangladesh and has a unique meen Bank extends micro-tedi to pep pore because they aren conamicaty en vanes ats kind, Grameen Bank operates on a relationship of trust and t torrowers and docs not take any avute ae pay off loans in the event of the loan candi scemingly improbable to most banks, has been pushing Grameen Bank tothe current standard Grameen Banks bed r And 2 fis of skid busines model, ful and resulted in Microfinance banks in the fresh product or service to its ilectual property to dos. 3, Bring positive innovation or simply change an existing market. 4, Provide the genesis for a new market. ‘ Td anges faced by new organizations when introducing a new business model in the market are; : ‘ 1, Discovering and selecting a mode tat fs you rearement ae 2, Experimenting with the mode to discover any limitation oF gh actually launching, co 3. Creating buy-in in the industry so more people wie " 4, Tweaking the model as and when needed due 10 ; 5, Handling the ambiguity. Ex Analysing and improvising s 19.3.1) Business Model Ané shether a venture i, 0 yng your busines mode! cin ap odes ie and late Aer comping «Bs ing questions: business model, designers often ask the xiones + Where are ourrevenuesonin6 OP ‘© What values delivered to which pao What costs are involved in detivering en et om TegANCAL PUBLICAEtro “ dloes not produce more sales, he EX1 Business Pian oA a lan isa written document that des and how you plan to achieve them over a set scribes your core busi iness objecti aan period of time, a Signed to hel money sa te lp You, and others, underst your business sustainable ind how you plan to generate +A business plan ten includes informati marbetiae information ting and sales plans and financial forecasts, about your goals, strategies, Sree TN anal ooape uctured w “tay of organising your gh and, nut your goals an Your Boals and spt any pote problems [HA cusinoss Plan Purpose 1m typically serves quite a few diferent purposes including the following, An indepth business plan the Financial Future sm of interest in the busines plan, for many people, isa picture of the The plan projects the performance of the company, for owners Investor and pot ture economic situation and financial investors. ‘and Measures Risks ‘An in-depth business plan Identifies and measures senior! Fak for he bse ‘These are events that would lead to different Granda stations and Gran performance results. The document must herefore also present strategies for dating swith threats and managing risks. 43, Deseribes the Business Mode! ; ww coda i any's business model. ‘The business plan defines and outines the SP ys oe shows where and how the company expects to spend moneys ‘gross margin, operating ™ble becau plan is val con the entrepreneur's chaacty background checks igh rates of return "nveprencus must try 0 view thelr bushes through the eect In analysis of the busines opportunity and eats am ‘s porepoctive .prencur must be able to clearly articulate what the verureis al set. us on why this is a good opportunity wide an overview of the marketing program business plan may be read by employees, investors venture capita spp, \dvisers and consultants, Westments, product or mi EZ] Scope and Value of the Business Plan {sa written document prepared by the entrepreneur that describes ing a new venture, stom fy Financial Plan + The financial plan isa reasonable estimate of your compu the body of the busines plas Ite should considered the ; Entrepreneur's perspective, marketing perspective sfisanca fate tor’s perspective. ial detail peti iclude too much financial detail in - cpt an dtl in the business plan depend on: Je projeions and supporting casi ren * Size and scope of the proposed new venture. lowing are the most important financial documents + Size of the market. TECHNICAL PUBLEATIONS® ho up at ax bnowndge cea nest TECHNICALA Tiemonth cash-flow — Projection and a three-year cast A pce le + Arte innit nto te reak-even calculation Be re te gD SSS Ro np rl tn fxone stent eT & attres 2 Spore eae BE Pace to star. i mpc ator cheer ts to include in lance sheet. Of = Business reflecting when sal In the business ow Projection (quan of the coms PORES the mar mt eae te ‘The product (or service) and why itis valuable to customers. '. The focused and detailed description ofthe target matiet ‘s The positioning of the product or service - how it shana be perceived customers, - * “The pricing strategy with specific price points at which the producto service wil be sold. ‘The sales and distribution channels that willbe use to get the product or service to the customer. 4s ‘The promotion strategy including public relations acivites, specie Prosccens: advertising and intended viral marketing activities, Product's pricing will play a role in the success of business You need ensure at your pices cover costs and find ways of lowering Your cos YS PSS sped ako reflect the dynamics of cost, demand, changes in the market and response {© your competition, ‘When deciding on the distribution process of your product or service, analyse Your competitors to ee fe chamee hey are sg an Grose yeu want EE i ‘could provide you with an advantage “ ‘The channel er depend on teins and ef he AAG YE ‘the options available to you include direct ‘sales OEM. Or as et) sales, manwfacture’s TEPTSENBNSS whsienle dieses ibutors and direct mail. FEBS Human Resource Plan —mub tg weee Weis must for och busines terete an HR FN SEES reer develop an retain employees BOARS F orient the word But dont forget tal ee een RE sit“As well, support new. hires via a buddy program and regular one-on-one sitedowns When someone takes on a new role, assign them a buddy who di * Retention -A positive inspiring work climate is vital. Money cour sincere appreciation, clear expectations an People really want to be past of a powerful important, of dan inspiring company story and a winning re planning to expand capabilites you will Jah descriptions - Outline the each position. n smaller Your product or service in Desrbethe eel oryourproducsorsenices eePhiC ce ze ofthe market and th units of, ——— Your product or servi a pie potential repeat purchase volume, and hog an nt __ Beatty sonnicrdenoprphic cages van how the mae, Estimate the volume and value of yo ee Your sales in compatison wit sumpsit hls o summarize he real in ble form > as markt that you ny seor a . busines intends to target Describe any helpful barziers ; competion ste ents 0 entsy that may protect your b Sepriton suchas aces to capital technology, regulations employe stone employee ski sets, Business Section 4: ae 4 Sales and Marketing Plan lescription of how you ini tend to entice customers to buy your prod i product(s) or service(s), includi onan rie seieproman sg tte Mapplicable, les and distributic yution, and Product or Service offerings * Describe Your product or servi apart from competitor offernee Ga ny ene the customs rings (.e, whats your Unique Sling Preece roposition?). + DF te your products tothe customer f applic th ie will yoube selling w" feat? Wil iyeet puaingetere ie Trove wilt product) be sipped What meds wile ser 7 ‘ica avertsing and Promotion semat the different media you wil se to ge You MESES S social madi, taitoal metia ke rewspapess x (eg business website emall se sale J methods such 25 free samples, product ete demonstrations, ec! ‘What marketing materials youl use such as business cand yrs, bros € What about product launches and iradeshows 7 lndude an aprossate Dt for advertising and promotion. a 8 Ownership and Management Pan section 5 : Ownership and Manage as anon ‘Tris section describes the Tegal Sic: covenership, irements of your buses management, and staffing 7 Ownership Structure eeDeseribe the Tegal suctre of y (eB imited Liab oc soe pspstostlo ipa sole proprietors applicable Ifthe business sey employe postions an Management Team «Describe managers and thei res compensated: jnclude briet resumes: External Resources and Sor’ List any external Pro at at ers such TECHINCAL PUB TONS? «An op tratex xt I ee ported 4 of any specialized equi Ny Sper TUE needed, nude the cast an wher ” i” advisony boon o. 38/4. supplemental management Fesou ree ved debt financing or want to atrac inva, The franca plan fast redhat your business wil grow ard be pfu To doth, you wir chains, specialized equipm, uments, cash flovs statements, and balance sheets For a new ent, and very detailed multiple employees, Development (it applicable) ow Sources of equipment, ifying possible locati 7 ‘supply chains, si , came Statements Do Production tc. Describe your production workflow. " oe The income statement shows your projected reverses, losard cz Pro eee i thiscon a monthly bass for at leat the is ear for 252287 be able to start produ - She timeframe of Cash Flow Projections sex mony ast coh re 2 Factiyes ee «The cash flow projection shows ¥ for demonstrating tat YOO - ‘ for expenses. It is important aaa disbursements * Meagan antsk bon, he PhYSiCal location of the business j | manage your cash flow and ms ding requirement, Inne square fone ns, netuding location, tend, and bites, and exit of if expected. Indlude the mo: "Ge estimates with room for expansion es eee mmary of he 2585 THB onthe day erPected maintenance, ulti ney Also include estimates of 4 "The balance shes 6 Taps TT orate Ss abe PProvals and other permissione gon ott Svethiead costs, Include zoning | ‘your business at a particule pint snes wil Be 00 2 mpl fot suttg ‘ons necessary to operate your business, the business opens. Note tht 3 TA tbe Bae Spas neil te ‘balance sheet. N ees: Ince ceamings + Outline ex entries on the pout emo? ogee ected staffing needs and rated businesses W! sare the key employees, Den the main duties of staff membe ; unincorporated bases bres employment rlatonsign ne Mt employees wil be soured eae ne are only applicable to ao vat relationship (i sourced and the employee trai * sonia fulltime, pa F ining needed and how it Part-time, etc), Detail any will de will be provided, eakever beater Nomakea pest cof sales youre ORRSection 8: Appendices and Exhibits The appendices and exhibits section contains any detailed information nceded tg support other sections of the plan, oT btain the opinions of experts fom vatious flay 10 Possible AppendivExhibit tems es financial appraisal of the prt by fran sen a ce Aer coats ages . sea Site/building/oftice plans References from business colleagues priate technology * Links to your business website * Any other supporting material that may impress potential lenders ot investors if Dearth of technically qualified personnel you are looking for financing . Resource mobilization : regulations seen ee «+ Knowledge about government regu Meaning of project report Elements of project report * A Project Report is written document pertaining to any investment proposal tt contains data, on the basis of which the project has been appraised and found relevant to the entrepreneur, * A project Report is prepared by the expert after detailed. study & analysis of the » Financial aspects Various aspects of a project. * Economic viability ner) Features of the project report + Total income, operative net Prot demand. € i iy, matketing Feet + ltisbasically a business plan, ing technical feasibility * loutlines the desired goals, * Information regarding t + Mdescribes all the necessary inputs to the enterprises Stops in the preparation ofa project #pot plains the mode of utilization ofthe resources © Gener: tails the strategies forthe execution of the project ives + Preliminary analysis of alterna * Project description TECHOUCAL PUBLCATIONS® An op Oras iownapeting requirement and costs + Financial analysis ‘+ Economic analysis + Miscellaneous analysis the best passport fr obtaining the required asistance from +H will also be of great assistance for obtaining necessary Government clearances \eeting the hurdles of procedure formalities, "epoint the matters for which govemment sanctions have tobe obtained, "il provide an independent assessment of the feasibility of obtaining the ions based on the existing goverment polices, mulation analysis * Techno-economic analysis * Project design and network analysis + Input analysis + Financial analysis * Social cost benefit analysis + Project appraisal Project selection * Economic size ‘* Status of industry or scope * Raw material availability * Cost of production + Capital cost Utility requirements * Infrastructure facilities needed © Profitability Government policy of project formulation preparation 1. Premio sty \ 2. Grup eesti y 3. Prepare pevectrepa, 4 4, Oban goverment earance \ 5, Submit the application tac iatens 4 Singer 4 7 Revew Fig. 084 {3 Prepare pet report mt { Prepare par ata g Persomel Projectoet wore Tectmical Senty ety eEstmate Demand 8 Toschai coat ‘© Prepare time, come ‘Estimate * Danisaion estimates me ‘product price 094 Tes age rman agus joe ey Prepare Oa FO at Set ae xs pa up ret (PUBLEAT Teac TEOWUCAL PLBLEATNS® haa atl roompeTeche iaraton Mangrtars and Cnvegrane eth now: iaopctons 4, Obtain government clearance v Insost | Sentolier of 6.6 clearance a capil issues cs spl goods Fovegn coaboration ‘appro! 5. Sutra he eprlicaion to financial instiutons RTP clearence Procure ssncton * Prelimina : HY analysis of alternati eee Hernatives : Markting plan »Pital requirements and cost ts usinoss Plan and Project Fails 7 sands of DUBIN plans ate ced ery ey yan a oy ee bs 2 yal fucton o Mee Yar ay tain vo, x specific reasons and their (reat ae Snrd bade © the drei, 9 true of projects within a company, iy plans ot when emote al wlan be pipe. s.they don't know how to plan. ee Lack of planning, is when you ignore the value of planning and dort bose to Jearn the methodology of planing, short and longterm goals as well a8 a wa) 12 «A good plan should inetude both measure goals and results. ists, benchmarks; and milestones. 1s Ttshould also have clear todoli 2.Thoy don't know how to provide I — s Leadership is about motivation and inapiring the oops with 9 . yelping peopl fa het aspirations within «Tt starts with building 79pP°" ard to make good decision OF take . pis essential witout : rove producvely POV «Leadership affects every Pt of a busine tambo work to how operations congas’ aot manne TECHCAL PiBDEAT Rama inonietge