Business Planning Business Models Describe your business model

Business Planning & Business Models Describe your business model so you can plan and test that it is commercially viable

Business Planning & Business Models Key Learning Outcomes • See a summary of business planning techniques • Get an overview of business model cases from the bio-sector • How to develop a business model canvas for bio-based industries

Document for Describing your Business Plan Your business model is simply the way in which your company generates revenue and makes a profit from company operations. There a variety of formats you can use to document your plan SWOT Analysis Business Plan • Strength, weakness, opportunity, threat • In depth view of your business Lean Canvas • High level business overview • Test viability of a business idea Business Model Canvas • Describes your business model One Pager Pitchdeck • Presentation for potential investors

SWOT Analysis External Factors Opportunities Have there been technological changes you could use? Are there any favourable trends or situations you can spot? Is there anything new, unique or interesting you can capitalise on? Internal Factors SWOT Analysis is a critical part of business planning • Identify relevant internal (strengths & weaknesses) & external factors (opportunities & threats) • Then review & and prioritise to identify the critical factors in each category. • Use these factors to develop company goals, objectives, strategies and tactics Use the worksheet to create a SWOT analysis for your business or idea Strengths What are you already doing that works well What resources can you draw on (that others can’t) What do your stakeholders see as your strengths What do you do better than others? Weaknesses What should you avoid? What can you improve? What might others see as a weakness? What could be damaging or negative? Threats What are your competitors doing? What issues and challenges do you face? What are your stakeholders concerned about? What might go wrong?

Business Models in the Bio-Economy • • • Bio-Economy A way for farmers and foresters to create a new source of income Using waste materials for feedstock Create new bio-based products and solutions. reduced consumption of fossil fuels & greenhouse gas emissions creation of new economic opportunity in rural areas Growing market for green products and solutions

Business Models in the Circular Economy Business Models for the Circular Economy Resource recovery: Eliminate leakage of material to maximise economic value Circular supplies: Where all supplies are fully renewable, recyclable or biodegradable Product life extension: By repairing, upgrading and reselling to generate additional revenue Sharing resources: stimulating collaboration to share overcapacity and underutilisation or resources Product as a service: An alternative to ‘buy and own’ products are used by one or may through lease or pay for use arrangement 6

Learning from 6 European Business Models from bio-energy initiatives using ligno-cellulosic energy crop biomass Business models are focussed on the 2 pathways with most common European application: direct combustion and conversion into biogas. Summary of Learning: A strong leader is required with understanding of bio-energy funding and legislation Create a bio-energy project consortium to define project aim and decide technology to use. The consortium should define project steps & carry out detailed technical / economic feasibility studies Where there are existing plants to combine with, integrate their management into the planning. Research funding possibilities and long-term financing

Learning from 6 European Business Models continued… Sign pre-contracts and letter of interests with fuel suppliers and heat customers. After finishing planning, permissions should be applied for and publish bid invitation. Promote public awareness Don’t rush plant construction; the aim is to avoid having any break downs as these are expensive! Employ a plant operator (and employees) and agree contracts with fuel suppliers Keep involved so you can react quickly to changing situations like raising fuel prices, regional acceptance.

Developing a business model for bio-based industries Lean Canvas: A tool for start-ups to test their business model to check viability Use a scientific approach to systematically get from your first idea, ‘Plan A’ to a plan that works without running out of resources Use the Lean Canvas to capture your business model in one page. Lean canvas is: • Fast • Concise • Articulates your idea • Easy to share • Simple to change • Visual Print out a blank copy and use post-it notes to complete each block of the canvas.

Lean Canvas Explained 1. Customer Segments and Early Adopters Who are your possible customers? What do they have in common? What are their differences? Early adopters are the enthusiasts who like to be in at the start. 2. Problem Put yourself in your customer shoes. . The customer problems need to be relevant to many people, be important and not have an easy workaround. 3. Solution What are your solutions for each of the customer problems? Identify the features and attributes that will tackle the problems. 4. Unique Value Proposition What are the benefits your customer will have after using your product? Why are you different and worth buying. Why will customers choose you over competitors?

Lean Canvas continued… 5. Channels These are the paths to your customer and the points or places where your customer will encounter your brand. 6. Revenue Streams Is your business model financially sound? What are customers willing to pay? 7. Cost Structures What costs are there to operate your business model; fixed and variable? 8. Key Metrics What will success look like, how will you measure the progress of your company? 9. Unfair Advantage What is your competitive advantage that is unique & not easily copied? Refer to notes page for further information on how to complete a lean canvas for your own business

Problem/Solution/Value Proposition Bio-Based Example Problem Solution Plastics are being banned worldwide – starting with bags Biobased, biodegradable, recyclable wood-fibre based material. Few recyclable, environmental bags & packaging Material combines the good qualities of paper & plastic without the negatives Few alternative to plastic bags that have good usability, versatility & feel Luxurious feel, stretchy & heat sealable Approved for food contact packaging. Unique Value Proposition: Paptic is a revolutionary, environmental new material replacing paper & plastic that looks & feels spectacular without sacrificing sustainability

Business Model Canvas A useful tool when you have validated your customer problem & your solution

Lundby Maskinstation Revenue Streams & Cost Structure Example Lundby Maskinstation own forest and agricultural land, 3 storage sites and a number of trucks that transport bulk material. The business model is cost driven and characterised by economy of scale and cost efficient operations throughout the value chain. Cost Structure • Purchase of biomass • Harvesting and transport to terminal • Storage • Terminal handling and mixing of fuels • Transport to customer • Fixed cost for machinery and property The most important cost is the cost of the different fuel categories Success depends on accessing fuels that are seen as waste. Revenue Streams • The revenue streams will be based on dynamic pricing depending on the energy content of the fuel • Revenue from fuel delivery

Lundby Maskinstation Key Activities & Key Resources Example Lundby Maskinstation have decided to develop and demonstrate a fuel supply chain of mixed bioenergy supplies from forest and land to the consumer. The consumer shall be able to individually specify what fuel they want based on their boiler type or fuel handling system. Key Resources Key Activities • Existing machinery & vehicle park • Well- established communication and contracts/agreements with forestry harvester and farmers within the region • Supply contract with regional heating plants and utilities incl. volumes and prices • Well developed terminals suitable for mixing of fuels and storage until delivery General activities to set up the supply chain includes: • Develop & make the supply chain cost efficient • Planning of activities on annual basis and budgeting • Continuous evaluation and follow up • Demonstration activities for suppliers & buyers

Further Information & resources Lean Canvas by Ash Maurya on Leanstack Business Model Canvas from Strategyzer Capture Your Business Model in 20 Minutes video by Ash Maurya Huge resource of startup tools from Steve Blank Green Business Model Innovation Report with Bio-based Business Case Studies Better Business Planning for Bio-Economy research projects, webinar from Dr Caroline Elston-Giroud European based report on SWOT analysis and biomass for Bio. Core Bio-refinery Project Best Practice Business Models for Bio-Energy Success Stories in Europe

Now you can: • Use a range of different methods to explain your business • Recognise your business strengths, weaknesses, opportunities and threats • Develop your own business model using lean canvas or business model canvas • Refine your business model by learning from other bio-based businesses