Business Modeling for Start-Ups – Module 1

Yorkville Media Centre (YMC)

Monday, January 17, 2011

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Facilitator: Norm Tasevski (norm@venturedeli.com)

Why am I here?

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Expectations…

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Me

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Business Modelling for Start-Ups…

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A Caveat…

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“In the coffee shop/basement” stuff…

“Talk to people” stuff…

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A Second Caveat…

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“Business Model”

“Business Form/Legal Structure”

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A Third Caveat…

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“Business Model”

“Business Plan”

Business Model 1st!!! (Business Plan 2nd)

Why Should I “Model 1st” and “Plan 2nd”?

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Because…

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It is a cure for “We Need a Plan-itis”

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And…

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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)

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One more…

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It breaks down highly complex business ideas into easily digestible (and visual) chunks

–  Gets to the heart of what you need to know to:

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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 Plans 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!!

“In the coffee shop/basement” stuff… How do I create a business model?

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freemium!

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user networks!franchising!

web ads!

licensing!micro-finance!retail!

subscription!

nonprofit (donation)!

open-source!loyalty!

solution shops!

etc…etc…etc…!

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What you need to care about is… –  Customer “Pain” –  Difference between a “customer” and a “client”

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Quick…

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What is the last thing you bought?

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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 –  The exchange of value

Break

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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

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What you need to care about is… –  Personal and impersonal interaction with the customer –  The “movement” of information (e.g. marketing, communication)

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What you need to care about is… –  Cash!!! (specifically, how cash flows into the enterprise) – “Money In” –  Pricing models

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What you need to care about is… –  Assets… –  …and how these assets create value –  Includes human, physical, intellectual, and financial resources

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What you need to care about is… –  Actions (specifically, the actions you plan to take to generate value) –  Both “direct” and “indirect”

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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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Common Vision!

Discreet Missions!

Same Core Values!

A Commitment to Invest in

the Partnership!

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What you need to care about is… –  Fixed costs, variable costs, economies of scale… –  …basically, “money out” –  At this stage, focus on your cost assumptions! (don’t worry about actual $$)

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So…what does the Starbucks Business Model Look Like???

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“Here’s how it works…”

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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)

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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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Break

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“Talk to people” stuff… Who do I talk to/What do I talk about? And who/what do I listen to?

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What do we know? What do we not Know?

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“Sticky Ideation”…

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What we Don’t Know!

What we know!

Bridging the Gap!

(turning what we don’t know into what we know)!

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What Do You Need?

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Data!!!

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Data Sources

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Call key industry players (suppliers, competitors, etc)

Search databases (industry, scholastic, etc)

Conduct web search (Google, etc)

Ask people!!! (friends, potential customers, etc)

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A point on “asking people”…

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There are…

Lovers Don’t give a %&$#ers

Haters

Listen to HALF of what they say!!!

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What did we learn?

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