aps1015h class 2 - business modeling for social enterprise
DESCRIPTION
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.TRANSCRIPT
APS 1015: Social Entrepreneurship
Class 2: Business Modeling for Social Enterprise
Saturday, September 22, 2012
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Instructors: Norm Tasevski ([email protected]) Karim Harji ([email protected])
© Karim Harji & Norm Tasevski
© Karim Harji & Norm Tasevski
© Karim Harji & Norm Tasevski
Agenda
• Centre for Social Innovation • Business modeling your social venture • What did we learn – Today? • Next week
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Business Modelling for Social Enterprise…
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© Karim Harji & Norm Tasevski
A Caveat…
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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…
© Karim Harji & Norm Tasevski
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A Second Caveat…
“Business Model”
“Business Form/Legal Structure”
© Karim Harji & Norm Tasevski
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A Third Caveat…
“Business Model”
“Business Plan”
Business Model 1st!!! (Business Plan 2nd)
Why business model 1st and plan 2nd?
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© Karim Harji & Norm Tasevski
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Because…
It is a cure for “We Need a Plan-itis”
© Karim Harji & Norm Tasevski
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And…
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)
© Karim Harji & Norm Tasevski
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One More…
It breaks down highly complex business ideas into easily digestible (and visual) chunks
– Gets to the heart of what you need to know to:
Set Strategy
Make a Go No-Go Decision
Make Potential Investors/funders (and business partners) Happy :)
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Are small and visual (1 page with about 10 supporting pages)
Are big and complex (often 50-100+ pages)
Cover many topics (business description, financials, marketing strategy, HR strategy, Operations Strategy management team, etc, etc, etc)
Business Models
Focus on a few topics (Will you make $$? How do the pieces fit together?)
Take weeks/months to create
Take a few days (possibly hours) to create
Are necessary for investors, funders, business partners, etc
Feed the business plan!!
Business Plans
© Karim Harji & Norm Tasevski
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© Karim Harji & Norm Tasevski
Some 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
© Karim Harji & Norm Tasevski
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© Karim Harji & Norm Tasevski
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Customer Segments
What you need to care about is… – Customer “Pain” – Difference between a “customer” and a “client”
© Karim Harji & Norm Tasevski
Empathy Mapping
© Karim Harji & Norm Tasevski
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Value 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
© Karim Harji & Norm Tasevski
Quick…
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What is the last thing you bought?
© Karim Harji & Norm Tasevski
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Customer Utility
© Karim Harji & Norm Tasevski
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Channels
What 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
© Karim Harji & Norm Tasevski
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Relationships
What you need to care about is… – Personal and impersonal interaction with the
customer – The “movement” of information (e.g. marketing,
communication)
© Karim Harji & Norm Tasevski
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Revenue Streams
What you need to care about is… – Cash!!! (specifically, how cash flows into the
enterprise) – “Money In” – Pricing models
© Karim Harji & Norm Tasevski
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Key Resources
What you need to care about is… – Assets… – …and how these assets create value – Includes human, physical, intellectual, and financial
resources
© Karim Harji & Norm Tasevski
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Key Activities
What you need to care about is… – Actions (specifically, the actions you plan to take to
generate value) – Both “direct” and “indirect”
Break
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© Karim Harji & Norm Tasevski
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Key Partners
What 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
What makes a good partnership?
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© Karim Harji & Norm Tasevski
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Common Vision!
Discreet Missions!
Same Core Values!
A Commitment to Invest in
the Partnership!
© Karim Harji & Norm Tasevski
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Cost Structure
What 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 $$)
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So…what does a completedBusiness Model Look Like???
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-Access to space
-Coffee shops
-Personal (Baristas) -Store front sign
-Wireless -35 yr old Young
professional that
wants a place to
relax and work
quietly -Locations
-Coffee making
equipment -Furniture -Internet -Baristas
-Hire staff -Long hours
-Maintain space
-Coffee roasting/brewing
-Interior design -Coffee suppliers
-Staff training
-Asset acquisition -Marketing -Rent
-In-store Purchases (multiple per
visit)
© Karim Harji & Norm Tasevski
Tip…
• 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
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© Karim Harji & Norm Tasevski
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“Sticky Ideation”…
What we Don’t Know!
What we know!
Bridging the Gap!!(turning what we don’t know into what we know)!
© Karim Harji & Norm Tasevski
Next 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…
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