Designing your business model
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The document discusses business models and their components. It provides examples of how to describe different elements of a business model, such as: 1) The value proposition, target customer, distribution channels, and key resources of Ben & Jerry's in their early years operating an ice cream shop in Burlington. 2) How Ben & Jerry's later expanded their business model to allow for larger distribution and increased revenues through selling prepackaged ice cream in grocery stores. 3) The business model of a hypothetical New England food company focusing on locally sourced, fresh ingredients and sustainability.
Designing your business model
- 1. Designing Your Business Model Speaker: Michael H. Huber, MBA Huber Planning “ Implementing Your Vision Through Integrated Marketing and Financial Planning” Also brought to you by:
- 2. About the Speaker Development of business models, plans, marketing plans, and budgets for numerous businesses in Vermont. Experience in software implementation for manufacturing, retail, hospital industries. Controller for steel fabrication and food processing companies. Wants More Snow!
- 3. Video Managing as Designing - Multiple Models Jim Glymph of Gehry Partners: “ If you freeze an idea too quickly, you fall in love with it. If you refine it too quickly, you become attached to it and it becomes very hard to keep exploring, to keep looking for better. The crudeness of the early models in particular is very deliberate.”
- 4. VALUE PROPOSITION COST STRUCTURE CUSTOMER RELATIONSHIP TARGET CUSTOMER DISTRIBUTION CHANNEL KEY RESOURCES KEY PARTNERS KEY ACTIVITIES REVENUE STREAMS INFRASTRUCTURE CUSTOMER OFFER FINANCE A business model describes the value an organization offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and sustainable revenue streams. Model concept devised by Alexander Osterwalder and Ives Peigner, Authors of Business Model Generation www.businessmodelalchemist.com
- 5. VALUE PROPOSITION COST STRUCTURE CUSTOMER RELATIONSHIP TARGET CUSTOMER DISTRIBUTION CHANNEL KEY RESOURCES KEY PARTNERS KEY ACTIVITIES REVENUE STREAMS gives an overall view of a company's bundle of products and services portrays the network of cooperative agreements with other companies describes the channels to communicate and get in touch with customers describes the arrangement of resources explains the relationships a company establishes with its customers sums up the monetary consequences to run a business model describes the revenue streams through which money is earned describes the customers a company wants to offer value to outlines the activities/ capabilities required to run a company's business model INFRASTRUCTURE CUSTOMER OFFER FINANCE Describing A Company’s Business Model
- 6. Skype free VoIP & value added services software development website global (non segmented) ebay Deliver Voice & Video Quality large scale low margin internet software development free voice-over-IP VoIP telephony & value-added services
- 7. VALUE PROPOSITION Scoops of Premium Ice Cream OFFER Describing a Company’s Offer Example: Ben & Jerry’s Early Years
- 8. VALUE PROPOSITION TARGET CUSTOMER Burlington Area Res. Tourists CUSTOMER OFFER Describing Who a Company Offers Value to Example: Ben & Jerry’s Early Years Scoops of Premium Ice Cream
- 9. VALUE PROPOSITION TARGET CUSTOMER DISTRIBUTION CHANNEL Scoops of Premium Ice Cream Local Store High Visibility Burlington Area Res. Tourists CUSTOMER OFFER Describing How A Company Reaches Its Customers Example: Ben & Jerry’s Early Years
- 10. VALUE PROPOSITION TARGET CUSTOMER CUSTOMER RELATIONSHIP Scoops of Premium Ice Cream Know Owners Fun Local Burlington Res. Tourists CUSTOMER OFFER Describing the Relationships a Company Builds Example: Ben & Jerry’s Early Years
- 11. TARGET CUSTOMER REVENUE STREAM Premium Price Burlington Area Res. Tourist FINANCE VALUE PROPOSITION Scoops of Premium Ice Cream OFFER CUSTOMER Describing How a Company Makes Money Example: Ben & Jerry’s Early Years
- 12. KEY ACTIVITIES VALUE PROPOSITION Making Unique Ice Cream Community Involvement Scoops of Premium Ice Cream OFFER INFRASTRUCTURE Describing What Capabilities/Activities Are Required Example: Ben & Jerry’s Early Years
- 13. Describing What Resources Are Required VALUE PROPOSITION KEY ACTIVITIES KEY RESOURCES Scoops of Premium Ice Cream Ben & Jerry Local Support Making Unique Ice Cream Community Involvement INFRASTRUCTURE OFFER Example: Ben & Jerry’s Early Years
- 14. Describing the Partners That Leverage the Business Model VALUE PROPOSITION PARTNER NETWORK KEY RESOURCES Scoops of Premium Ice Cream Ben & Jerry Local Support Local Dairies Local Restaurants INFRASTRUCTURE OFFER Example: Ben & Jerry’s Early Years
- 15. VALUE PROPOSITION COST STRUCTURE Equipment Building/Cart Scoops of Premium Ice Cream FINANCE INFRASTRUCTURE OFFER Describing the Costs of a Business Model KEY RESOURCES Ben & Jerry Local Support Example: Ben & Jerry’s Early Years
- 16. VALUE PROPOSITION COST STRUCTURE CUSTOMER RELATIONSHIP TARGET CUSTOMER DISTRIBUTION CHANNEL KEY RESOURCES KEY PARTNERS KEY ACTIVITIES REVENUE STREAMS Scoops of Premium Ice Cream Make Unique Ice Cream Community Involvement Local Store High Visibility Ben & Jerry Local Support Know Owners Fun Equipment Building/Cart Premium Priced Burlington Area Res. Tourists Local Dairies Restaurants INFRASTRUCTURE CUSTOMER OFFER FINANCE Example: Ben & Jerry’s Early Years
- 17. VALUE PROPOSITION COST STRUCTURE CUSTOMER RELATIONSHIP TARGET CUSTOMER DISTRIBUTION CHANNEL KEY RESOURCES KEY PARTNERS KEY ACTIVITIES REVENUE STREAMS Scoops of Premium Ice Cream Make Unique Ice Cream Community Involvement Local Store High Visibility Ben & Jerry Local Support Know Owners Fun Equipment Building/Cart Premium Priced Burlington Area Res. Tourists Local Dairies Non-Profits INFRASTRUCTURE CUSTOMER OFFER FINANCE Example: Ben & Jerry’s Limitations for Larger Distribution/Revenue
- 18. VALUE PROPOSITION COST STRUCTURE CUSTOMER RELATIONSHIP TARGET CUSTOMER DISTRIBUTION CHANNEL KEY RESOURCES KEY PARTNERS KEY ACTIVITIES REVENUE STREAMS Scoops & Pints Of Premium Ice Cream (Now a Variety of products) Make Unique Ice Cream Social Action Shopping Areas Big Box Grocers Brand Mass Many Scoop Shops Large Manufacturing Premium Priced Higher Income Shoppers Socially Conscious National Distributor National Marketing INFRASTRUCTURE CUSTOMER OFFER FINANCE Example: Ben & Jerry’s Larger Distribution/Revenue
- 19. VALUE PROPOSITION COST STRUCTURE CUSTOMER RELATIONSHIP TARGET CUSTOMER DISTRIBUTION CHANNEL KEY RESOURCES KEY PARTNERS KEY ACTIVITIES REVENUE STREAMS Bottled Delicious Food Fresh Ingredients Locally Sourced Complete Traceability Develop Recipes Sourcing Ingredients Strategically Quality Control Local Cooperatives Health Food Stores Independent Markets Consumer Products Goods Background Chef Mass- Customized Direct Feedback R&D Inventory Production Costs Premium Priced Retail Local Farms Co-Packer Trade Associations INFRASTRUCTURE CUSTOMER OFFER FINANCE Health & Sustainability Conscious New England Area
- 20. Test Your Model Value Proposition Product/Service, Market Type, Competition Customer Segments Problem, Customer, User, Payer Channels Key Partners Cost and Revenue Streams …Enough fun! Now write a Business Plan!
- 21. Resources Open Innovation: http://www.openinnovation.net/ Business Model Generation: www.businessmodelalchemist.com Business Model Canvas: www.businessmodelgeneration.com/downloads Steve Blank – Entrepreneur, Instructor at Columbia: www.steveblank.com
- 22. Any Questions? Huber Planning “ Implementing Your Vision Through Integrated Marketing and Financial Planning”
Editor's Notes
- #4: Do many many many designs before you start the business plan!
- #5: A business model describes the value an organization offers to various customers and portrays the capabilities and partners required for creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and sustainable revenue streams.
- #8: Two Value Propositions for Ben & Jerry’s gives an overall view of a company's bundle of products and services
- #9: Two Target Customers of Ben & Jerry’s Scoop Shop describes the customers a company wants to offer value to
- #10: Two Distribution Channels describes the channels to communicate and get in touch with customers
- #11: explains the relationships a company establishes with its customers
- #12: Examples of two Revenue Streams describes the revenue streams through which money is earned
- #13: Examples of two core Capabilities outlines the capabilities required to run a company's business model
- #14: describes the arrangement of activities and resources
- #15: portrays the network of cooperative agreements with other companies
- #16: $12K to start business sums up the monetary consequences to run a business model
- #18: This model is very similar to a consultant, lawyer, accountant – Owners are key to the revenue
- #21: How needed is your Product or Service, do some surveys to determine this, test groups. Market Type – Existing (Faster,Better), Resegmented (Niche, Cheaper), New Market (Cheaper, Innovation) Competition – what are they doing, is there any, other market areas Problem – does your product solve the problem for the customer segment you chose Customer – is this really the right customer User – who actually uses the product Payer – who actually is paying Channels – discuss with the channels you are planning on working with Key Partners – discuss with them Cost and Revenue Streams – what is your level of certainty?