Business planning for your business start up. Investigating and using the business model canvas

1. Business planning

2. Todays objectives
• Understand why you should write a business plan
• Learn the different types of business plan
• Learning what to put in a business plan
• Learn how to create a business model canvas

3. Business planning
A business plan is a written document that describes
• The business
• Its Objectives
• Its Strategies
• The Market its in
• Financial Forecasts
There is no one “perfect” business plan template

4. Why write a business plan?
• Can help spot potential pitfalls before they happen
• Structure the financial side of the business
• Focus your development efforts
• Work as a measure of your success

5. Where are
you now?
Where do
you want to
go?
How are
you going
to get there
The business plan

6. The business plan
Do you
know?
Who
What
WhyHow
When

7. Where are you now?
Who
What
Why
When
Your customers
Your product /
service
Is there a pain?
Purchase
occasion?

8. Where are you now?
How
How will your
product be used?
How will you let
people know?
How will people
buy it?

9. 1. Executive Summary
2. Market Research
3. Products and services
4. Marketing and Sales
5. Operational Plan
6. Management
7. Financial Plan / Forecasts
The contents

10. The business model canvas

13. Value proposition
How are we going to create value?
Which one of our customer’s problems are we solving
What’s different about our idea?
A value proposition creates value for a customer through a distinct mix of elements
specifically catering for their needs:
• Newness
• Some value propositions satisfy an entirely new set of needs that
customers previously didn’t perceive
• Performance
• Improving product performance is traditionally a common way to add value
• Customisation
• Tailoring products and services to specific needs of customers.

14. Value proposition
• Design
• Design is an important but difficult element to measure – Apple
• Brand / status
• Customers may find a value in the simple act of using and displaying a
specific brand – brand aspiration
• Price
• Offering similar value at a lower price is a common way of satisfying needs.
• Risk reduction
• Businesses add guarantees to generate value through risk reduction, e.g.
car warranties
• Convenience / Usability
• Making things more convenient to buy or easier to use is a good value
proposition. Apple again is a good example

15. Customer segments
Who are you creating value for to?
Who are your most important customers?
Mass Market – for example Coca Cola– no real differentiation
Niche – a specific and defined target audience
Segmented – a few different niches who have different needs
Diversified – two very different and unrelated customer segments

16. Channels
How do your customers want to be reached?
Channels are touch points that play an important role in the customer experience.
Channels serve several functions:
• Raising awareness among customers about a company
• Helping customers evaluate a company’s value proposition
• Allow customers to purchase specific products and services
• Delivering a value proposition
• Providing post purchase support

17. Customer relationships
What type of relationship does each of our customer segments expect us to establish?
How costly are they to establish?
Personal assistance – email, phone, non specific
Dedicated personal assistance – specific one to one service with a named individual
Self service – no direct relationship with individuals
Automated services – more sophisticated version of self service – recognising
individual preferences
Communities – Many companies are utilising on-line communities to allow users to
exchange knowledge and solve each others problems.
Co-creation – Wikipedia, You Tube, Amazon (through reviews) – co create value

18. Key activities
What key activities do we need to do?
These are the most important things a company must do to make its business work
• Production
• These relate to designing, making and delivering a product
• Problem Solving
• Coming up with new solutions to individual customer problems
• E.g. consultancies, hospitals, physiotherapists, etc
• Platform / Network
• Ebay, dating websites for example
• Visa with its payment platform
• Key activities in this area are platform management, service positioning
and platform production

19. Key resources
What key resources do you require?
These are the most important assets required to make the business work.
• Physical
• For example, manufacturing facilities, vehicles, buildings, specialist
equipment
• Intellectual
• For example, brands, patents, copyright, trademark
• Human
• Crucial in knowledge led (consultancy) and creative industries
• Financial
• Start up costs
• Financial resources

20. Key Partners
Who are our key partners?
Who are our key suppliers
What do we need from them?
The key partners building block describes the network of suppliers and partners that
will make the business work:
Who will we need to make this idea work?
Key suppliers?
Joint ventures?
Page 20

21. Revenue streams
For what value are our customer really willing to pay?
How are they currently paying?
How would they prefer to pay?
A business usually involves one of two different types of revenue streams:
• Transaction revenues resulting from a one off sale to a customer
• Recurring revenues resulting from on going payments to deliver services or to
provide post purchase support

22. Revenue streams
Different ways to generate revenue:
• Asset sale – standard product purchase model
• Usage fee – mobile phones – the more you use something the more it costs
• Subscription – gym membership for example
• Lending / Renting – Temporarily using an asset
• Licensing – Image rights – music / sport
• Brokerage fees – Go Compare etc
• Advertising – fee generated by allowing advertising
Page 22

23. Cost structure
What are the most important costs in our business?
Which resources are most expensive?
Are any prohibitive?
This area describes all of the costs that the business is likely to be charged:
• Cost driven
• Lean delivery such as Easy Jet / Ryan Air
• Value driven
• Some companies look in the opposite way to cost driven
businesses.
• Their focus is on value creation – for example luxury hotels
There are 2 further characteristics
• Fixed Costs
• Variable costs

24. Business model canvas checklist
Use Proper Granularity
Does the level of granularity of your Canvas correspond to your objectives?
Your Canvas should only contain the most important building blocks when your
objective is to explain the essence of your business model, also called the
blueprint of your strategy.
Your Canvas should have much more detail if its objective is to serve as a
blueprint for implementation.

25. Business model canvas checklist
Make Clear Connections
Is every building block in your Canvas connected to one another?
Great Canvases have a story and flow where every building block relates to
another.
You should not have any “orphan” building blocks in your Canvas that don’t
connect to another building block.

26. Business model canvas checklist
Use Precise Language
Is every Building Block in your Canvas precise enough? Make sure every
building business model block is self explanatory. For example, writing
“products” in revenue streams is unclear.
More precise would be “product sales” or “margins on product

27. Business model canvas checklist
Add Visual Imagery
Do you make smart use of both images and words to convey your message?
To avoid ambiguity, the use of an image and a label for a building block is the
most effective.

28. Business model canvas checklist
Apply Color Coding
Do you make good use of color-coding? Using color-coding to explain specific
aspects of your business model is a quick and easy way to clearly
communicate even complex aspects of your business model. For example, you
can use color- coding to highlight two very different segments with very
different value propositions. Or you could use it to distinguish between your
existing model and one you want to build.

29. Business model canvas checklist
Define Present vs Future States
Does your Canvas distinguish between “as-is” and “to-be” (i.e. current state vs
desired future state)?
Make sure you clearly distinguish between what exists in your business model
the “as-is” state and what you want to or plan to build the “to-be” state. Color-
coding can help achieve this distinction easily.

30. Business model canvas checklist
Acknowledge Assumptions
Does your Canvas distinguish between “knowns/facts” and
“unknowns/assumptions”?
When you are designing new business models, make sure you clearly
distinguish between what you know and what you don’t know.
You Have facts to prove what you know, and but only assumptions about the
building blocks you think could work.

31. Questions to ask yourself
1. How can you describe the business...in only one paragraph please?
2. What is your product, or service?
3. Who will buy it?
4. Where should you locate the business?
5. How can you attract customers?
6. What is your competition?
7. How much should you charge for the products or service?
8. What advice do you need and who can provide it?
9. How will you organize the managers and/or workers of the business?
10.How will you split the profits? Who is responsible for the losses?

32. 11.What should you consider to be able to produce the product and get it to the
customer?
12.How much money is needed to get the business started?
13.How many customers will you have per month and how much will they buy per
month?
14.How much does it cost to make the product or provide the service?
15.What are your operating costs? (include your own salary)
16.How much money will your business earn each month by selling your product or
service?
17.How much investment will you need to keep the business going until you make a
profit?
18.What is your potential profit per year for Year I, Year II, and Year III?
19.How much money do you need to borrow to start this business?
20.How will you make the business grow in the future?

33. Summary
• Fail to plan – plan to fail
• Planning in whatever format is important for any business
• There is no set template for a traditional business plan – use one that meets your needs or
the needs of the reader / purpose of writing the plan
• When writing a traditional business plan consistency is key
• A business model canvas is a great way of getting your business thoughts either for an
existing business or a new business down on one page – quickly
• When doing a business model canvas think about
• Brevity
• Present and future
• Linking all of the blocks