A framework and process to analyse your business and help you take it to the next level. Topics: Business Models – A Brief Introduction; Stock Take – At the Start; Growth: Sales and Beyond Sales; Valuation and Value Creation; Other Aspects beyond numbers

1. Business Models: Growth & Value Creation
MasterClass @ Microsoft Ventures
Bangalore, 8th April 2015
Anjana Vivek; beanie@venturebean.com

2. VentureBean Consulting Private Limited
Business Models – A Brief Introduction
Stock Take – At the Start
Growth: Sales and Beyond Sales
Valuation and Value Creation
Other Aspects to Consider
Appendix
Agenda
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WHAT IS A BUSINESS MODEL
• Business model
From Wikipedia, the free encyclopedia
A business model describes the rationale of how an
organisation creates, delivers, and captures value
(economic, social, or other forms of value). The
process of business model construction is part of
business strategy.
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EXAMPLES OF INDIAN COMPANIES…
Where the business model was different from
those existing at that point in time:
• Bharti Airtel
• Big Bazaar
• RedBus
• Café Coffee Day
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Business Model Canvas: 9 building blocks
BUSINESS MODEL CANVAS (BMC)
• Customer segments
• Value propositions
• Channels
• Customer relationships
• Revenue streams
• Key resources
• Key activities
• Key partnerships
• Cost structures
SOURCE:http://www.businessmodelgeneration.com/canvas
• Acknowledgements:
– Wikipedia, the free encyclopedia
– http://www.businessmodelgeneration.com
– http://www.businessmodelhub.com
– Alexander Osterwalder
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AT THE START
• Stock Take of where you are today:
– Revenue
– Number of offices
– Employees
– Lines of business/products/service
– Kinds of customers / categories
– Key Cost elements
– etc..
• Create an MIS that you can work with; for eg. to
manage your health & wellness you start with
measuring a few key parameters like Weight (vs.
age); Lipid Profile, Sugar Count, Blood Pressure..
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AT THE START – Plans/Goals/Vision
• Are you able to articulate what your business is
about in 1-2 sentences
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Next Setting Goals/Targets: Planning
• In 3 dimensions of time: short term, medium
term and long term
– Dream: For the long term.. dreams and aspirations
drive you and the business
– Launchpad: For the short term, details are easier to
think through, assumptions are fewer
– Directional: For the medium term it is more of guess
work and trend analysis and less of data
• It is good to periodically go back and forth
between these time zones and check for
patterns, consistency, thought process..
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Setting Goals/Targets
Planning for Alternate scenarios for eg:
• Funded/Non-Funded/Boot-strap
• Pessimistic, realistic and optimistic
• With alternate business models; impacting
strategy and cash flow
• And more..
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Growth
Key Growth Parameters
• Sales / Customers
• Profit
• Cash-flow
• Other such as employees; multiple city branches; retail
outlets etc.
• .. etc
• Value
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Sales: Analysis
• Segments
– B2B
– B2C
– Retail
– online etc.
– Analyse % of sales and quantity of sales in each
category (as applicable)
• What are the activities to reach out and get
revenue from each of these segments?
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Sales: Analysis
• Review findings
– Where is maximum sales coming from?
– Where is maximum effort made for sales?
– Are you spreading yourself too thin?
– Are you missing out on low hanging fruit?
• Can you tweak your sales plan?
• Can you target segment-by-segment sales in a
phased manner?
• Can you unbundle and bundle offerings to be more
meaningful?
• Go beyond sales, where is value to customer, where
is value perceived by customer?
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Sales: More analysis
• Sales – Quantity (In numbers; in amount)
• Sales – Quality: for example
– category A customers – ie Customers with revenue over Rs.1000
cr; MNCs; listed companies; premier organisations etc..
– Number of high value customers
– Percentage of revenue from top few custumers
– in terms of product/service/vertical/location etc
• Customers churn/T.O : lost and gained in a period
• Average revenue per customer
• Profitability: segment-category wise
• Pricing plans, alternates, for differently bundled offerings
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Sales Pipeline
• Categorise and list names as:
– Existing/Existing Biz
– Existing/New Biz
– New Customers/New Biz
– Not yet on horizon (particularly when you are looking
at sales forecast say 6 months from today, some
potential customers may not yet be on horizon
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Sales Pipeline
• How can you increase the pipeline funnel
– List network contacts
– Cold calls
– move out of your comfort zone and set
ambitious/aggressive targets: for eg. how can you double
number of meetings this week
– .. etc..other?
• Periodically review sales/marketing strategy and
execution with results.. i.e. track performance with
activity
• What could be barriers to sales growth; how can you
overcome these?
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Governance
• Is your billing timely?
• What is the mode of receipt?
• Are you collecting on time? .. Advance/upfront?
• Is there an MIS to monitor performance; Health
check is not a one-time exercise, it is periodic.
More on MIS at Small Data .. not just ..Big Data – Part 1 :
Check Appendix 1
These basics are often ignored..
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Valuation
• Identify valuation methods and drivers in your
industry
– Number of customers?
– Revenue?
– GMV?
– Number of unique views?
– Average revenue per customer?
– Profitability?
– Cash Flow generated?
– Combination of above?
– Other?
• What could be
– Value drivers
– Value depleters
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Valuation
• Valuation is based on
– intangibles and
– tangibles
• Valuation is often computed as a multiple of
– Revenue
– EBIDTA
– PAT
– Cash Flow
– Capacity/Quantity
– Key value driver for industry; this changes from time to
time; especially in initial stages of industry development
(i.e. page views; user base, clicks etc..)
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Valuation
• At the start value is mostly intangible, look at
how this can be made tangible..
• For eg. service – through content, follow up
calls, showcasing feedback, etc.
• Can you think of how you can demo value in
early days of your business
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Valuation
Some examples of value demonstrated:
• Association with credible organisations (incubation, acceleration etc..)
• Team: Reputed/trustworthy; experienced/multi-disciplinary
• Marquee/discerning customers
• Other stakeholders associated – Advisors, investors, bankers, well
known professional service firms etc.
• Feedback/testimonials from reputed persons
• Ability to charge premium pricing
• Ability to address a huge market – i.e. ecommerce companies, value
without profits
For more: 5 Points on Valuation and Negotiations… OR … how You can get
a better price
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Other Aspects to consider
• Are You Ready for Growth and getting into the
Next Orbit, all rockets do not get to next stage,
some fall back into this orbit. Think through:
– Stepping out of comfort zone
– Execution issues
– Risk of failure
– Leading a larger company, ability to let go
– Inclination to grow into next level of leadership
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In Summary
• Thank you for the patient hearing
• Delighted to invite you to view/follow for periodic insights,
class notes & more, from thought leaders, academicians…
@ The VentureBean K.Hub: (Knowledge Hub)
http://www.linkedin.com/company/venturebean-consulting-
private-limited
www.slideshare.net/anjanavivek
https://twitter.com/VentureBean
• Contact for more information and inputs:
beanie@venturebean.com
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Appendix 1- Sample MIS items
• Quantity of Revenue: Sales amount - Invoices raised for the month
• Quality of revenue : (Illustrative)
– Per lines of business (i.e. SBUs/product varieties/Service Offerings etc.)
– Franchise/own/other models
– Location/National/International
– No of clients/customers billed
– New clients added / Repeat clients
– Cash inflow for the month from sales
– Write/off i.e. non payment by customers
– Customers attrition
– Pipeline customers – order book
• Expenses – key heads and total monthly expense;
• Cash balances, cash inflow and cash outflow
• Unusual events and impact, eg. sale of land in the period reported
• … AND so on
• Add a couple of points explaining any increase/decrease; i.e.
management comments/observations and next steps needed
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Thank You!
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