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Developing a Viable Business Model

Developing a Viable Business Model. Patrick Barry. Agenda. Overview Aligning with Objectives Elements of a Viable Business Model Process of Building Viable Plan Wrap-Up . Viable Business Model. A sound and compelling Business Plan should include: Assessment of Market

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Developing a Viable Business Model

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  1. Developing a Viable Business Model Patrick Barry

  2. Agenda • Overview • Aligning with Objectives • Elements of a Viable Business Model • Process of Building Viable Plan • Wrap-Up

  3. Viable Business Model • A sound and compelling Business Plan should include: • Assessment of Market • Identification of Customer Segments • Description of Key Buyer Values • Assessment of strengths & weaknesses of Competitive Alternatives • Clear Distribution Strategy • Assessment of Risks • 5 year Financial Pro-formas including Cash Flow Model, Income Statement, and Balance Sheet • Detailed Description of Management Team • Clear Exit Strategy with Potential buyers identified

  4. Viable Business Model • A sound and compelling Business Plan should include: • Assessment of Market • Identification of Customer Segments • Description of Key Buyer Values • Assessment of strengths & weaknesses of Competitive Alternatives • Clear Distribution Strategy • Assessment of Risks • 5 year Financial Pro-formas including Cash Flow Model, Income Statement, and Balance Sheet • Detailed Description of Management Team • Clear Exit Strategy with Potential buyers identified • A Story that makes sense

  5. Align Business Model with Objectives • What are you trying to accomplish with this plan? • Win the Competition? • Pass a Class? • Start a Business? • Make a living? • Fame & Fortune? • Make a difference? • Learn?

  6. Key Misconception(s) • Invention = Innovation • Good Plan = Winning Plan = Good Business Model = Successful Business • Good Business Model = Big $ • A Plan = The Answer

  7. A Compelling Story needs to cover the key elements … Sustainability Product / Service Delivery & Execution Financing & Capital Needs Plan to Scale & Leverage Financial Projections Market Need Alternatives ‘Go to Market’ Strategy Management Team Exit Plan

  8. … And it needs to fit together logically Sustainability Product / Service Delivery & Execution Financing & Capital Needs Plan to Scale & Leverage Financial Projections Market Need Alternatives ‘Go to Market’ Strategy Management Team Exit Plan

  9. Key Element: Defining Market Need • Begin with the need not the product or service Economic Buyers End- Users Your Business Distribution Channels Influencers

  10. Key Element: Alternatives • How is need being satisfied or addressed today

  11. Key Element: Meeting Needs • How will your product / service meet identified needs? • Why it is better than alternatives from the customer’s perspective? • What will compel them to buy?

  12. Key Element: Go to Market • Is there alignment with the other elements? • Why is the plan (the distribution channel, the marketing plan, the sales message, etc.) the best / most logical?

  13. Key Element: Identifying Critical Factors • Which aspects of the business are most critical? • Which aspects need to be done well and which ones exceptionally well? • Which aspects, if done marginally, could sink the business?

  14. Key Element: Management • What talent / expertise is needed to meet critical needs of business? • How will you attract that talent? • Begin with needs and align talent with it • Don’t start with people available

  15. Key Element: How will it make $ • Who pays what and why? • Specific customer groups • Sell price - why reasonable? • Volume • Initial, Ramp up rate, Reasonable potential • Cost Structure • COGS • Gross Profit ($ & %) • Distribution Costs • Marketing Costs • Support Costs • Net Potential

  16. Process: How to Build a Viable Plan • Onion Method • Check & Recheck Connections • Versions: • 2 minutes • 20 minutes • 2 hours

  17. Process: How to Build a Viable Plan Tips & Tactics (Top 10 List) 10. Talk to yourself 9. Be an actor 8. Make sure the numbers add 7. Answer the question: “How do I know …?” 6. Answer the question: “How would I find out?” 5. Get testimonials / references from those in the know 4. Sell one (or more) 3. Realize the product / service is only relevant through the market’s eyes 2. Define the Bet 1. Constantly learn and adjust

  18. Wrap - Up • Tell a logical story => the rest is logistics and risk / reward assessments

  19. Wrap - Up • Observations & Questions

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