BUSINESS MODEL CANVAS LEAN BUSINESS MODEL BUSINESS PLAN

BUSINESS MODEL CANVAS , LEAN BUSINESS MODEL & BUSINESS PLAN

Who am I? Instructor at Bilkent since 2002. . . Major : Computer Science. . . Spent 10 years at CTP and CTE departments. . . Programming courses combined with business activities. . . Member of FBA (Faculty of Business Administration) since 2011. . . Business Plan by Tolga Baycan / 2017 2

BUSINESS MODEL CANVAS VSLEAN BUSINESS MODEL Visual, Dynamic, Action oriented and Focus on Key Activities. . . Business Model Canvas : - Outlines several prescriptions which form the building blocks for the activities - A strategic management and lean startup template for developing new or documenting existing business models. - A visual chart with elements describing a firm's or product's value proposition, infrastructure, customers, and finances. Lean Canvas : (why Answer is here. . . ) here. . . - Outlines a more problem focused approach and it majorly targets entrepreneurs and startup businesses - Adaptation of Business Model Canvas which Ash Maurya created in the Lean Startup spirit (Fast, Concise and Effective startup). - Lean Canvas promises an actionable and entrepreneurfocused business plan. - Focuses on problems, solutions, key metrics and competitive advantages.

MAURYA (Lean Business Model) OSTERWALDER (Business Model Canvas) 1 Business Plan by Tolga Baycan / 2017 2 9 8 3 7 4 5 4 6

Business Model Canvas vs Lean Canvas Element Target Focus Business Model Canvas New and existing businesses Lean Canvas Startup businesses purely Customers, Investors, Entrepreneurs, Consultants, Advisors Entrepreneurs purely Customers Lays emphasis on customer segments, channels and customer relationships for all businesses Does not lay much emphasis on customer segments because startups have no Approach It lays down the infrastructure, lists the nature and sources of financing and the anticipated revenue streams of the business It begins with the problem, a proposed Competition It focuses on value proposition in quantitative and qualitative terms as way to stay smart in the market It assesses whether the business has an Application It fosters creativity, discussion and constructive analysis It is a simple problem-solution oriented Business Plan by Tolga Baycan / 2017 known or tested products to sell solution, the channels to achieving the solution, costs involved and the anticipated revenue streams unfair advantage over the rest and how to capitalize on it for better grounding approach which enables the entrepreneur to develop step-by-step 5

Canvas or Business Plan? Canvas Model Approach : Visual, Dynamic, Action oriented and Focus on Key Activities. Based on an idea, innovation, entrepreneur facility etc. A Business Plan conveys the organizational structure of your business, including titles of directors or officers and their individual duties. It also acts as a management tool that can be referred to regularly to ensure the business is on course with meeting goals, sales targets or operational milestones. «Daily business operations and decisions should be aligned to long term company objectives and strategies, which are detailed in the business plan» Not only for use by third-parties, but for internal use! Business Plan by Tolga Baycan / 2017 6

A Business Plan. . . Assume that you have an innovative idea (ex: developing a new application for androids), what are your concerns & expectations? - Is there a need for it? - Who are my customers and how can I reach them? - Is it something new (innovation) or an improvement of an existing product/service ? (incremental innovation) - How can I form the supply-chain process? - Incorporation! Do I need an organization? What type? - What will be the correct price? - Is it possible to make a profit in short run? How much time (weeks, months or years) do I need to reach the break-even? In order to find the answers of these quesitons you need a BUSINESS PLAN! Business Plan by Tolga Baycan / 2017 7

New Idea Innovation. . . • A new idea, device or process. . . • • Application of better solutions that meet new requirements, inarticulated (uncertain, ambigious etc. ) needs, or existing market needs. . . More effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society. . . Smart Watches Innovation or NOT?

New Idea or Not? How to understand?

Incremental Innovation. . . A series of small improvements to an existing product or product line that usually helps maintain or improve its competitive position over time. This process is regularly used within the high technology business by companies that need to continue to improve their products to include new features increasingly desired by consumers. Applications for Smart Watches. . . Innovation or Incremental Innovation? new versions of i. Phone IF it’s the first financial application for a smart watch and we are not customizing the product itself, it’s an INNOVATION!

What is a Business Plan? A formal statement of : A set of business goals & objectives. . . Reasons (why you believe that they are attainable). . . Action Plan for reaching those goals. . . Background information about the organization or team attempting to reach those goals. . . A decision making tool so, NO fixed content! The content is determined by the goals and audience. . . Business Plan by Tolga Baycan / 2017 11

Who is responsible (stakeholders) stakeholders for this Plan? Company owners. . . People who make inventions, entrepreneurs, founders. . . New partners • Merger Process (Not having enough capital so, offering a partnership to a company) Professionals, consultants may need for the development phase. • Why? – Not an easy process! Especially some further marketing and financial skills may be necessary. . . Business Plan by Tolga Baycan / 2017 12

Why do we need this Plan? As soon as there is no finished product in hand, this is simply a written brainstorming issue. . . The value lies in the process of researching and thinking about the business in a systematic way. . . This process helps to avoid potential future unplanned costs and unsolvable problems. . . Business Plan by Tolga Baycan / 2017 13

When do we need this Plan? Starting up a new business with a new product/service. . . • From innovators perpective of view, in order to explain the necessity of an invention. . . A major change process in the existing business. . . • Selling/Buying a division or a product line • Adding a new item to the product range • Outsourcing (Transfer of manufacturing or other tasks to countries where labor and supplies are less expensive) Money is needed! / Raising capital • Bankers • Investors (a 3 to 5 year financial plan is required, since investors will look for their annual return in that timeframe. . . ) Business Plan by Tolga Baycan / 2017 14

How ? 1. Executive Summary Should be written at last! Not exceed two pages! Mention fundamentals of the Business : What is your product/service? Who are your customers? Who are the owners? What are your expectations from your business? (A very brief future plan) • Make it Enthusiastic, Professional, Complete and Concise (short with major points). • If you need a loan; state the certain amount, why you need it and pay back strategy in a precise and clear way. • • Business Plan by Tolga Baycan / 2017 15

2. Organizational Plan (Description of company) What will you do in which business? ways of telling. . . Corporate Identity • Looking for the answers of : " who are we? " and " where are we going? " • A corporate title, logo and supporting devices commonly assembled within a set of guidelines. These guidelines govern how the identity is applied. . . Mission Statement & Vision Statement • Microsoft’s Vision : (A mental image of the future state that the organization wishes to achieve ) "Empower people through great software any time, any place, and on any device. " • Nissan’s Mission : (Reason for Existence) "Nissan provides unique and innovative automotive products and services that deliver superior, measurable values to all stakeholders in alliance with Renault. " Business Plan by Tolga Baycan / 2017 16

2. Organizational Plan (Description of company) Company Goals & Objectives • Goal : " Successful company that is a leader in customer service. . . " • Objective : Annual sales targets, measurement of customer satisfaction etc. Difference? • A common business goal : - Run a profitable operation, which typically means increasing revenue while limiting expenses. . . • Revenue objectives could consist of : - Increasing annual sales by 10 percent. . . • Expense objectives could involve : - Finding a new operating facility that decreases your rent by $200 a month or cutting monthly utility bills by 15 percent. . . Business Plan by Tolga Baycan / 2017 17

2. Organizational Plan (Organization & Operations) Legal form of ownership • Sole proprietor, Partnership, Corporation etc. o Single owner? Two or more? A business structure with shareholders? Location • Where will be the production and headquarter? • Advantages/Disadvantages of the location • How is your organization structure? (Who is responsible for what? , Roles by an organizational chart) Supply chain management – Inventory & Suppliers Design, plan, execution, control and monitoring of supply chain activities with the objective of creating a value by building a competitive infrastructure, worldwide logistics, synchronized supply/demand measure of performance globally… • Inventory control (IC Software, Upper&Lower limits of products etc. ) • Type of inventory (Raw materials, supplies, finished goods) • Key suppliers (Reliability, Credit and delivery process, Supplier database) Business Plan by Tolga Baycan / 2017 18

2. Organizational Plan (Product & Business Philosophy) Brief description of the product(s). To whom will you sell your product(s)? • Very Briefly! Details are at Marketing Plan! Industry description & analysis • Potential changes in short & long term Adaptation? Company strengths & core competencies • • How will you suceed? (Success story) Major competitive strengths? How will you differ from your competitors? How will you contribute by your skills, experience, innovations etc. Business Plan by Tolga Baycan / 2017 19

3. Marketing Plan Market Research (Why/How) • Why? Are you at the right market? o You must be aware of what you are selling. . . o Competitors providing the same (similar) product at a low price. . . o Setting up a healthy supply chain / procurement process o You need trustable suppliers! • How? Primary and Secondary market research. . . o PMS : Questionnaires, surveys or interviews with individuals or small groups. o SMS : Using published information such as research reports, previous survey results and making a web search. Business Plan by Tolga Baycan / 2017 20

3. Marketing Plan Define the characteristics of the market. . . Figure out total size, demand, trends and growth potential of the market and your share here. Entry Barriers • Costs (Capital, Production, Marketing, Shipping etc. ) • Potential consumer acceptance & establishing brand awareness problems (at the same market with MS & IBM? ) • Ex: Generating ERP softwares in a market that has dealers /business partners of them. . . • Technology adaptation. (Is the technological infrastructure of the country satisfies your sw ? i. e : due to speed of internet / synchronization problems) • Government policies and regulations (Political Influence Boycotting a product) If all the points mentioned above are covered then (Finished? ) How will you adapt your business to CHANGES? Business Plan by Tolga Baycan / 2017 21 NO!

3. Marketing Plan Product Detailed description of the product(s). • Technical Features, benefits • Why should a customer buy this product(s)? • Be honest! Mention possible problems & solutions, future improvements etc. • How do you handle after-sale operations? o Delivery o Warranty o Support o Refund policy Business Plan by Tolga Baycan / 2017 22

3. Marketing Plan Customers (Analysis of end – users) Identify your target customers by Age Gender New software development. . . Location Who are your customers if you are Income Level coding online games? Social class Who are your customers if you are Education generating ERP softwares? Industry (for business customers) Size (for business customers) Technology (for business customers) Business Plan by Tolga Baycan / 2017 23

3. Marketing Plan Competitors SWOT Analysis is necessary Based on Products and/or Companies Direct or Indirect competition? Indirect A local grocery store – Migros, Subway – Mc. Donalds Direct Toyota - Honda, Dominos - Pizza Hut Business Plan by Tolga Baycan / 2017 24

3. Marketing Plan Marketing Strategy Marketing 4 P’s. . . Business Plan by Tolga Baycan / 2017 Flexibility How to increase sales & generate a competitive advantage by short term and long term activities. . . Classification 25

3. Marketing Plan Digital Marketing It is marketing that makes use of electronic devices (computers) such as personal computers, smartphones, cellphones, tablets to engage with stakeholders. Digital marketing applies technologies or platforms such as websites, e-mail, apps (classic and mobile) and social networks. . . * Customized / Dynamic Banners : Follow what people are browsing and remind the browsed items at different sites periodically. . . Business Plan by Tolga Baycan / 2017 26

4. Financial Plan Income Statement Also known as 12 -month profit and loss projection How can we make a profit and be successful? Sales projections are from sales forecast, cost of goods sold, expenses and profit/loss monthby-month for a year. ENOUGH? A four year profit and loss projection - In order to carry forecasts beyond one year - Reflects potential changes after the first year Business Plan by Tolga Baycan / 2017 27

4. Financial Plan A projected balance sheet A picture of a business's financial health at one particular moment in time. A must for reporting and financial management Reflects the correctness of the transactions Includes Assets of the company, Debts (liabilities) of the company and the Owner’s Equity is the difference of liabilities and assets. So, Owner’s Equity = Assets – Liabilities or in it’s well known format : Assets = Liabilities + Owner’s Equity Business Plan by Tolga Baycan / 2017 28

4. Financial Plan A break-even calculation Sales volume, at a given price, required to recover total costs. The thin line between Profit and Loss. Break-Even Point Revenue = Expenses Business Plan by Tolga Baycan / 2017 29

4. Financial Plan A cash flow projection An overview on changes in cash and cash equivalent during the year When to receive cash (Sales), When to pay (Expenses) Preliminary & operating expenses Prepared on the basis of Balance Sheet Shows the shortages in time to make necessary updates & changes i. e : cut expenses, negotiate for a loan etc. Business Plan by Tolga Baycan / 2017 30

Relation between the components of a Financial Statement Business Plan by Tolga Baycan / 2017 31

Relation between the components of a Financial Statement « A balance sheet, or statement of financial position, is a summary of the financial balances of a company, while a cash flow statement, or statement of cash flows, shows how the changes in balance sheet accounts and income on the income statement affect a company's cash position » Business Plan by Tolga Baycan / 2017 32

Mini Quiz. . . Assume that you are developing a new application for androids that finds an empty parking place in a mall. Which one do you need as a programmer or system analyst or project manager? Business Plan or Business Model / Lean Canvas? Why? Business Plan by Tolga Baycan / 2017 33