The business model is a document allowing to define a project idea and to understand the transition from a concept to a concrete project.
The business model
The Business Model (BM) answers three crucial questions:
What is the value proposition of your innovation project?
Who are your potential customers?
What are the resources you have?
The value proposition
The value proposition describes the key activities as well as the range of products and services you are offering to the market. It should show why the customer will choose your product over competitors. Indeed, the value proposition emphasizes the differentiation and advantages of your product compared to the market’s already established solutions. A strategic study of the competition should thus be established and analyzed. The value proposition must be stated clearly on all your advertising tools (social media, website, flyers, etc.) and in your business model and plan.
To complete your BM, you should now analyze how to create and/or reach your value proposition and thus ensure your business scalability.
The potential customers
Also, in the business model, you should identify the markets you are addressing and their size as well as the aimed customers. Your relationship with the customers must be well analyzed and expressed (personalized offer, the commercialization channels (B2B, B2C, B2B2C, e-commerce, etc.). The expected revenues from the addressed market will be also evaluated at this stage.
The resources
The solution or project’s costs must be evaluated and the revenue model established. Besides, at this stage, you should identify your owned resources as well as the resources you will need to grow and scale your business: human, know-how, intellectual property, partners, network, equity capital, funding opportunities, etc.
Introduction to business plan
Now that your BM is ready, you can construct your business plan (BP).
The BP is the operational, financial, and clear extension of your BM. It is a formal presentation document of the strategy of the company, the vision of the leader, how the BM will be implemented, the financial situation and the future activities of the company. The BP is composed of two main parts:
The qualitative part composed of the executive summary, the company description, the solutions and/or products to be developed, the competitive and market analysis, the lead team presentation, the marketing and sales strategies, and the legal aspects of the project.
The financial forecast in which are presented the financial data, the financial projections, and the expected funding opportunities.
The Business Plan will be detailed in a future post. Stay tuned, and subscribe to NETO Innovation website to receive our management related posts directly in your inbox.
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