Session 5 - Business Models PDF

ENGG 525 – Business Models Dr. Ghada Nafie Schulich School of Engineering Winter 2022 1 © Ghada Nafie | Schulich School of Engineering  Business Plans - Develop well written business plans that cover everything about - Technology – Market –...

ENGG 525 – Business Models Dr. Ghada Nafie Schulich School of Engineering Winter 2022 1 © Ghada Nafie | Schulich School of Engineering  Business Plans - Develop well written business plans that cover everything about - Technology – Market – Competition – Team – Finance - Sales Channels - One-page executive summary 2 © Ghada Nafie | Schulich School of Engineering  No Business Plan Survives First Lean Start-up Contact with Customers. - Steve Blank – The Lean Startup INSTEAD OF CREATING A COMPLEX SUMMARIZE YOUR HYPOTHESIS IN BUSINESS PLAN A FRAMEWORK CALLED BUSINESS MODEL CANVAS 3 © Ghada Nafie | Schulich School of Engineering  What is a Business Model? A method by which a startup makes money through dedicating some resources to offer value to its customers in a market segment. A business model quickly shows who pays, how much and for what. 4 © Ghada Nafie | Schulich School of Engineering 4  Business Model REVENUE MARKET CUSTOMERS How can you Must have an Identify your generate revenue understanding of the customers and how from your solution market and how will are you going to sell you enter it to them 5 © Ghada Nafie | Schulich School of Engineering 5  Generalized Business Models Some examples to know the common type Some could be hybrid of these models You don’t have to choose one of them Come up with an innovative, creative, and effective business model 6 © Ghada Nafie | Schulich School of Engineering  COST Examples of business models Customer pays a certain percentage PLUS over the cost of the product. HOURLY Rewards activity rather than progress RATE LEASING An agreed upon periodic payment MODEL 7 © Ghada Nafie | Schulich School of Engineering  1 Time + Examples of business models Mainte- Customers pay a large upfront charge nance with ongoing upgrades or maintenance Licensing Customers license IP and pay royalties Consum- Customers pay low upfront cost with ables ongoing costs that are based on the usage 8 © Ghada Nafie | Schulich School of Engineering  Add- Examples of business models On Customers buy the main product at a low Products cost and pay more for addon products Money comes in through third parties Advertising who want access to a customer base Reselling Reselling customer data and receive Data money from third party 9 © Ghada Nafie | Schulich School of Engineering  Examples of business models Transaction Earning a commission from a party for a purchase that a customer makes Fee Usage Customers only pay for the amount Model they use Cell Customers pay for a certain amount of Phone committed usage Plans 10 © Ghada Nafie | Schulich School of Engineering  Examples of business models Penalty Customers pay a small fee for the base Fees offering with a substantial charge or penalty Micro Customers provide their credit card to Transactions make very small purchases (digital) Others pay you for a business that you Franchise create 11 © Ghada Nafie | Schulich School of Engineering  Business models Don’t only consider these! Innovative There are more models to come Models up with or hybrids that could be implemented! 12 © Ghada Nafie | Schulich School of Engineering  Takeaways Business model = how to extract value There are many options Innovative business models Customers are open to new ideas 13 © Ghada Nafie | Schulich School of Engineering  ACTIVITY Identify Business Models 14 © Ghada Nafie | Schulich School of Engineering  Identify Business Models 15 © Ghada Nafie | Schulich School of Engineering  Very important choice impacts Hard to change profitability 16 © Ghada Nafie | Schulich School of Engineering  Business Model Canvas 17 © Ghada Nafie | Schulich School of Engineering Business Model Canvas Knowing your customers and understanding their needs through your value proposition are two very important things that would setup a start up for success 18 © Ghada Nafie | Schulich School of Engineering 18  THANKS! 19 © Ghada Nafie | Schulich School of Engineering 19