Business Models and Strategy

Business Models and Business Strategy

• A business model describes the logic of a business system for creating value, representing the foundation for implementing business processes.

4 Parts of a Business Model

• Part 1: The Offering

  • Describes the products and services the business offers and why customers will be compelled to buy them.
  • Value proposition: describes the problem customers are experiencing and how the products/services will solve it.

• Part 2: Infrastructure

  • Describes the basic facilities, skills, manpower, partnerships, and production process needed to exploit the business opportunity.
  • Core capabilities: capabilities and core competencies necessary to operate the business.
  • Partner network: business alliances needed to operate the business.
  • Value configuration: the process by which products or services are produced and presented to the customer.

• Part 3: Customers

  • Describes the target customer demographics, purchasing patterns, and location.
  • Distribution channel: the means by which the business delivers products and services to customers.
  • Customer relationships: the process of interacting with customers, including communicating, selling, supporting, and assisting them.

• Part 4: Finances

  • Describes the investment needed to obtain facilities, equipment, and working capital.
  • Cost structure: expenses required to produce the products or services described in the value proposition.
  • Revenue: income from sales of products or services, including sales volume and revenue projections.

Business Model and Business Plan

• A business model is the centerpiece of a business plan, but it is not the entire business plan.
• A business plan should include additional information such as administrative information, company details, purpose of the business, business objectives, and marketing plan.

Business Models and Business Strategy

• A business model describes the logic of a business system for creating value, representing the foundation for implementing business processes.

4 Parts of a Business Model

• Part 1: The Offering

  • Describes the products and services the business offers and why customers will be compelled to buy them.
  • Value proposition: describes the problem customers are experiencing and how the products/services will solve it.

• Part 2: Infrastructure

  • Describes the basic facilities, skills, manpower, partnerships, and production process needed to exploit the business opportunity.
  • Core capabilities: capabilities and core competencies necessary to operate the business.
  • Partner network: business alliances needed to operate the business.
  • Value configuration: the process by which products or services are produced and presented to the customer.

• Part 3: Customers

  • Describes the target customer demographics, purchasing patterns, and location.
  • Distribution channel: the means by which the business delivers products and services to customers.
  • Customer relationships: the process of interacting with customers, including communicating, selling, supporting, and assisting them.

• Part 4: Finances

  • Describes the investment needed to obtain facilities, equipment, and working capital.
  • Cost structure: expenses required to produce the products or services described in the value proposition.
  • Revenue: income from sales of products or services, including sales volume and revenue projections.

Business Model and Business Plan

• A business model is the centerpiece of a business plan, but it is not the entire business plan.
• A business plan should include additional information such as administrative information, company details, purpose of the business, business objectives, and marketing plan.

Customer Validation

• Customer validation is crucial to avoid building a product nobody wants
• It helps prove assumptions about the business before investing too much money
• Validation forces you to get out of the building and talk to real customers
• It allows for iteration and change if the initial product is not successful
• Customer validation is essential to ensure customers will actually buy the product

Customer Creation

• This step is taken after finding initial customers and making initial sales
• The main goal is to provide an experience that drives market demand into the sales channel
• It involves enlisting the market's major influencers and early evangelists to validate the value proposition
• Customer creation helps prevent wasting time and money on the wrong market

Customer Discovery

• Asking the right questions is crucial in customer discovery
• Target people who are potential customers, not friends or family
• Ask questions to validate assumptions about the business

Evaluating and Refining

• Evaluate customer responses to refine the business idea
• Revise the original idea if necessary to build something customers want
• Revising early on is better than after investing significant time and money

Customer Creation Strategy

• The four parts of customer creation are:
  • Year one objectives: define specific and reasonable goals
  • Company and product positioning: position the product and company within the market
  • Company and product launch: define goals for the launch
  • Demand creation: create a strategy to continuously create demand

Company Building

• Company building is when the business transitions from a start-up to a fully-fledged business
• It involves formal departments and a scaled business development model