4. BUSINESS MODEL 1
Units Sold 1,000,000
Price per unit $1
Monthly Revenue 1,000,000
Monthly Cost 990,000
Monthly Profit 10,000
Profit Margin 1%
BUSINESS MODEL 2
Units Sold 100,000
Price per unit $1
Monthly Revenue 100,000
Monthly Cost 50,000
Monthly Profit 50,000
Profit Margin 50%
a million in revenue for a
million units sold doesn’t look
so sexy now, does it?
10. margin =
profit
revenue
= (volume x price) – cost
volume x price
= revenue – cost
revenue
=
(volume x price) – (volume x unit cost)
volume x price
Expand out
profit to (r - c)
Expand out
revenue to (v x p)
Expand out
cost to (v x c)
11. margin =
=
=
=
(volume x price) – (volume x unit cost)
volume x price
volume x (price – unit cost)
volume x price
price – unit cost
price
From the last
slide
Simplify!
price
price
unit cost
price
-
34. due to the limitations of
slideshare, you must
download this deck to make
the tool work
35. please download and then
view the next two slides in
native power point.
it’s free.
36. here is a tiny version of what
you’ll find on the next slide
WARNING: you must manually
use the scroll bars in order to
use it
37. Cultivate
Productive
Assets
Cultivate
Productive
Assets
Produce
Product /
Service
Produce
Product /
Service
Distribute
Product /
Service
Distribute
Product /
Service
Administrate
Firm
Administrate
Firm
Operational Activities are defined as a set of business
processes required to execute business strategy. Not all firms
will have the same activities but they probably all have the same
core of 4 and most start-ups and small companies will not be all
that far off.
As a small company, you won’t have time to fix everything, but
you should 1) know where you stand in terms of operational
maturity (by mapping out processes as is the case here, and
assigning maturity ratings) and 2) have a plan as to what things
you will invest in improving. For example, you might target the
“red” items in the map. Or you might find that you’ll get better
ROI by focusing on 4 of the yellow processes.
Whatever the case, this is an example map (scroll left, right, up
and down to explore) of operational processes that seem
generic enough to me that they might be useful as a baseline for
whatever company you are running.
Activities mature and working smoothly
Activities are being performed, but there are opportunities to improve efficiency and/or effectiveness
Activities are not being performed, but should be
Activities are not being performed, but are not relevant for our business at this time
Scroll to see processes!
Scroll to see more!
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