Developing a Business Model

Starting Starting up aup a Business BusinessStarting Starting up aup a Business Business

Key business vocabularyKey business vocabularyKey business vocabularyKey business vocabulary

Start-upStart-up phaseStart-upStart-up phase

ContentsContents

The Business ModelThe Business ModelThe Business ModelThe Business Model

Before you start Before you start Before you start Before you start

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The Business Model

How to make money from the products and How to make money from the products and services offered services offered

The Business Concept

A concise description of an opportunity that A concise description of an opportunity that contains four essential elements:contains four essential elements:

1.1. The customer definitionThe customer definition

2.2. The value proposition and compelling storyThe value proposition and compelling story

3.3. The product/serviceThe product/service

4.4. The distribution channel The distribution channel

(production, wholesale, retail, customer)(production, wholesale, retail, customer)

The Five Stages of a Business’s Life CycleThe Five Stages of a Business’s Life Cycle

• Pre Start-up

• Start-up

• Growth

• Maturity

• Rebirth or Decline

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Pre-start-up phasePre-start-up phase

Four key issues:

1. Opportunity recognition

2. Testing concept feasibility

3. Developing a business plan

4. Acquiring resources and personnel

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Opportunity Recognition Opportunity Recognition

The process of using creative skills to identify a new innovation - a product, service, process, or marketing method.

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Testing concept feasibility Testing concept feasibility

Three essential elements required to testa potential business idea:

1.What is the product and/or service that is the basis for the business?

2.Who is the customer likely to be?

3.What is the benefit of your product/service to the customer?

Developing a business plan Developing a business plan

• So what if …?

• Who cares…?

• Why you…?

• Where are you going…?

• How will you get there…?

• Advantages and disadvantages of running

your own business?

• How do you make money…?

Before you start Before you start

It is critical to choose the right legal structure

of your business.

Legal structures for start-ups Legal structures for start-ups The most popular are:

• Sole trader (creating your own business)

• Partnership

• Limited liability companies

Business modelsBusiness models

• Established Businesses or Franchises

• Social enterprises

A franchise A franchise

• In cases when one wants to run a business but does not have a specific business idea.

• When the franchisor (owner of a business) grants a license to another person or business (the franchisee) to use his business idea.

• The franchisee trades under the brand name of the franchising business that gives help and support.

A social enterprise A social enterprise

• A business with primarily social objectives.

• The profit is reinvested for social purpose of the business or of the community.

• If it is a charity, it gets a number of benefits, including tax relief.

Test for a start up business Test for a start up business

• Am I really interested in this business opportunity?

• Is anyone else interested?

• Will people pay for what is being offered?

• Why me?

Why me? - - Are you:Are you:Why me? - - Are you:Are you:

• open vs. closedopen vs. closed• supportive vs. supportive vs.

controllingcontrolling• secure vs. risk aversesecure vs. risk averse• genuine vs. hypocriticalgenuine vs. hypocritical• respectful vs. respectful vs.

disrespectfuldisrespectful• negative vs. positivenegative vs. positive• egalitarian vs. superioregalitarian vs. superior

• warm and accepting vs. warm and accepting vs. cold and distantcold and distant

• dependable vs. dependable vs. conflictingconflicting

• cooperative and cooperative and collaborative vs. collaborative vs. competitivecompetitive

• knowledgeable and knowledgeable and skilled vs. inept skilled vs. inept (incompetent)(incompetent)

Start-up phaseStart-up phase

Three key issues:

1) Finding customers

2) Building a structure

3) Financing

Finding customersFinding customers

1.Who is most likely to purchase the product or service at market introduction?

2.What do these customers typically buy, how do they buy it, and how do they hear about it?

3.What is their buying pattern? How often do they buy?

4.What are the customers’ needs and how can the new venture meet those needs?

Feasibility analysisFeasibility analysis

• Are there customers and a market of sufficient size to make the concept feasible?

• Do the capital requirements to start, based on estimates of sales and expenses, make sense?

• Can an appropriate start-up team be put together to make it happen?

Financing - sources of funding Financing - sources of funding

• Personal savings

• Money from family and friends

• Bank loans

• You will be required to pay government tax on the profit you make.

Key business vocabularyKey business vocabulary

1. Business ideas • To develop business ideas

2. Government tax• To pay government tax

3. A sales forecast • To make a sales forecast

 

4. Your turnover

• To predict your turnover

5. Financial projections

• To create financial projections

6. An estimate of your costs

• To make an estimate of your costs

Key business vocabularyKey business vocabulary

7. The right legal structure• To choose the right legal structure

8. Investors’ attention• To draw investors’ attention

9. Your business idea• To develop your business idea

 

Key business vocabularyKey business vocabulary

10. Market research

• To carry out market research

11. Advice on business plans

• To seek advice on business plans

12. A company

• To launch a company

Key business vocabularyKey business vocabulary

Answer the following questions:Answer the following questions:

1. What steps does an entrepreneur have to take before opening a business?

2. What are the ways of financing a start-up?

3. What are the advantages of opening a franchise over running your own private business? Are there any drawbacks?

4. What does a social enterprise spend its profit on?

1. A self-employed person who directs the affairs of the enterprise, bears all the risks and takes the profits and benefits:

Sole trader

2. A type of non-profit business that uses its profit to help in solving social or environmental issues:

Social enterprise

3. A type of business organization in which two or more individuals invest money, skills, and other resources, and share profit and loss:

Partnership

Find the words which have the following meaning:Find the words which have the following meaning:

4. An enterprise in its early stage of operations or trading:

A start up enterprise

5. A type of company whose shareholders’ responsibility is limited by the amount they have invested in case the company goes out of business:

Limited liability company

6. A business ( often a store or a restaurant) that operates under a license granted by a company to market its products or service in a particular territory:

A franchise

Find the words which have the following meaning:Find the words which have the following meaning:

Synonyms - antonymsSynonyms - antonyms

• Launch

• Massive

• Failure

• High

• Whether