The handbook we use is the Business Model Generation written by Alexander Osterwalder & Yves Pigneur and Co-Created by “An amazing crowd of 470 practitioners from 45 countries.”
A business model describes the rational of how an organization creates, delivers, and captures value.
We describe our business model through nine basic building blocks that show the logic of how our companies intend to make money:
- Customer Segments – An organization serves one or several Customer Segments.
- Value Propositions – It seeks to solve customer problems and satisfy customer needs with value propositions.
- Channels – Value propositions are delivered to customers through communication, distribution, and sales Channels.
- Customer Relations – Customer relationships are established and maintained with each Customer Segment.
- Revenue Streams – Revenue streams result from value propositions successfully offered to customers.
- Key Resources – Key resources are the assets required to offer and deliver the previously described elements . . .
- Key Activities . . . by performing a number of Key Activities.
- Key Partnerships – Some activities are outsourced and some resources are acquired outside the enterprise.
- Cost Structure – The business model elements in the cost structure.
The nine blocks cover four main areas of a business: Customers, Offer, Infrastructure, and Financial Viability. The business model is like a blueprint for a strategy to be implemented through organizational structures, processes and systems.
Every business model design project is unique and presents its own challenges, obstacles and critical success factors. This design process provides a starting point upon which we can customize our approach to each entity. The process has five phases:
- Mobilize – Prepare for a successful business model design project.
- Understand – Research and analyze elements needed for the business model design effort.
- Design – Generate and test viable business model options, and select the best.
- Implement – Implement the business model prototype in the field.
- Manage – Adapt and modify the business model in response to the market reaction.
The work that is done designing and thinking through a Business Model is the basis for writing a strong Business Plan. It is suggested that the business plan have a six-section structure:
- The Team
- Management Profile
- Why We Are a Winning Team
- The Business Model
- Vision, Mission and Values
- How Our Business Model Works
- Value Proposition
- Target Markets
- Marketing Plan
- Key Resources and Activities
- Financial Analysis
- Breakeven Analysis
- Sales Scenarios and Projections
- Capital Spending
- Operational Costs
- Funding Requirements
- External Environment
- The Economy
- Market Analysis and Key Trends
- Competitor Analysis
- Competitive Advantages of Our Business Model
- Implementation Roadmap
- Risk Analysis
- Limiting Factors and Obstacles
- Critical Success Factors
- Specific Risks and Countermeasures