Topic Business Model Canvas BMC and Business Plan

Topic: Business Model Canvas (BMC) and Business Plan Session Theme: Business Model Canvas (BMC) and It’s Components By: Andrew Habel Odongo Entrepreneurship Faculty

Objectives/Outcomes On completion of this session, you should be able to: • Define a Business Model Canvas • Explain why a BMC is an important tool to an Entrepreneur. • Identify the 9 building blocks/components/elements of a BMC • Define Value proposition, Key Partners and Key Activities as some of the BMC components. • State the value proposition, Key partners and activities of companies like Face book, Skype, Google etc • Fill the components of Value proposition, key partners and key activities of your start-up or existing venture in a BMC.

From Business Idea to Business Model Having a great idea is not enough to succeed. Any great idea needs a great business model… …And the two are different things.

From Business Idea to Business Model • Before we dive deeper into the ocean of the Business Model Canvas, let’s briefly define a Business model: • A business Model is a plan for the successful operation of a business, identifying sources of revenue, the target customer base, products and details of financing. • It tells how the key drivers of business fit together to produce the desired results. • This then leads us to a Business Model Canvas.

What is a Business Model Canvas (BMC) • Writing all the details of a business model in a document such as a word document will take quite a number of pages and time. • A BMC therefore provides us a simple way of creating a clear business model just on a single sheet of paper. • It is universally accepted by any type of company, be it established or a start-up.

Why use a Business Model • • • Easy to understand Flexible Focused Customer Focused Shows Connections Easy to Communicate.

Definition of a Business Model Canvas (BMC) • A visual tool or representation that will help you understand: • What are the key elements your startup needs to succeed • Monitor your progress • Identify the key points to pitch your idea to the venture capitalists, investors, donors and above all, your customers.

Business Model Canvas (BMC) Template See the templates attached as follows: Worksheet 1: Business Model Canvas (BMC) standard Worksheet 2: Business Model Canvas (BMC) Simplified Worksheet 3: Sample BMC: Face book BMC Worksheet 4: Sample BMC: Skype BMC

Components of a BMC • The BMC has nine key elements or components/building blocks as follows: • Value proposition • Key Partners • Key Activities • Key Resources • Customer Segments • Customer Relationships • Distribution Channels • Cost Structure • Revenue Streams Note: The building blocks on the left hand side represents Costs while those on the right side represent Revenue.

BMC Key Building Blocks • In this session, we take a deep exploration into three key elements/building blocks: Value proposition: This is the nerve centre of the BMC and the other building blocks start from here. In simple terms, it is asking “What do you do? ” What are the unique benefits that your startup offers to each segment?

Building Blocks- Value Proposition Recall the customer has a problem you have to solve and this therefore poses a gap that you need to fill as an entrepreneur. Why should a customer buy your product or service and not from another person? Remember you are not selling a product or service to a customer but solving a customer’s problem What value are you offering to a customer? Is it in newness, durability, high performance, design, brand, price, cost reduction, convenience etc.

Value proposition of Face book Connect with your friends, Discover and learn and Express yourself Reach, relevance, Social context and engagement Personalized and social experiences, social distribution and payments.

Value proposition for Skype • Free internet & Video Calling • Cheap calls to Phones

Key Partners • Simplified as “ Who will help you? ” • What activities can be outsourced so that the startup can focus on its key activities? • Those who will carry out these outsourced activities are your partners. • Tasks and activities very important to your business but you will not do them yourself.

Examples of Key Partners • Face book: Content Partners (TV Shows, Movies, Music, News Articles) • Skype: Microsoft, Telecom companies, Hardware manufacturers and Payment providers.

Key Activities • Simplified as “ How do you do it? ” • What are the key activities that your startup needs to perform in order to deliver its propositions? • Must be related to the value proposition otherwise if not then something is wrong somewhere.

Examples-Key Activities • Face book: Platform development, Data centre operations management. • Skype: Software development, Complaint Management.

Group Work: Designing of a BMC • You are a team of 5 entrepreneurs who have thought of the problems faced by Base of Pyramid (Bo. P) customers in matters of accessing quality education because of the long distances their children travel to access education at a private school, 5 Kilometers away from their homes and to worsen the matter, the cost of this education is far too high with very low quality. You therefore wish to set up a Base of Pyramid Education centre that is less costly, of high quality and easily accessible. As a team, fill in the BMC in the components: Value proposition, Key Partners and Key Activities in line with this business idea.

Lesson Summary • The Business Model Canvas provides a way to show the key elements of any business model on a single sheet of paper. • The canvas is based on nine building blocks and the interrelationships between them. • This canvas is applicable to any type of business, whether a start-up or an existing company. • It is therefore easy to design BMC of your business from scratch basing on the 9 building blocks

Take Away Assignment: Designing of a BMC • In line with your Team work business idea (Low Cost Education Centre), fill in the next three components of your BMC: Customer Segments, Customer Relationships and Key resources. • Then prepare your responses in preparation for your Team work in the next session in which they will be harmonized and presented as a group.

Resources • Worksheet 1: Business Model Canvas (Standard) • Work sheet 2: Business Model Canvas (Simplified) • Work sheet 3: Sample BMC-Face book • Work sheet 4: Sample BMC- Skype

End of Session HAVE A WONDERFUL ENTREPRENEURIAL WEEKEND AHEAD OF YOU. THE WORLD BELONGS TO THOSE WHO CAN COLOR OUTSIDE THE BOX.