Unit 7: Business Models - Orthelious/PDCP_F19 GitHub Wiki

  1. Generating Business Models
  2. Building a Basic Business Plan

1. Business Plans and Models

Two parts to this topic:

  • Business Models
  • Business Plans

Business Models

You have a great idea, but ideas can easily fail without some consideration of how they will work in the real world.

The process of figuring out how your idea will work in a market or field is called a business model

Let's watch a cheesy video that explains this concept:

Getting from Business Idea to Business MOdel

— Starting point: The Profile

We need to first decide who and what we are.

  • What is your idea?
  • Who is carrying it out?
  • What is your business structure?

— Building Blocks

We're going to use the following framework from Business Model Generation by Alexander Osterwalker and Yves Pigneur. It's complicated on it's face, but another cheesy video will help us figure it out.

Business Model Canvas Explained

  • Customer Segments — Who is being served by your idea? Are they all the same or can you break them into different types?

  • Value Proposition — Why do your customer's care? What of value are you offering them?

  • Channels — How do you get your idea to your customers?

  • Customer Relationships — What kind of relationship are you maintaining with your customer segments?

  • Revenue Streams — You got value and customers, now where's the money coming from?

    • Example: Painting (Idea) sold to an art collector (Customer) results in payment (Revenue).
  • Key Resources — What do you need in order to even produce the idea and reach those customers?

  • Key Activities — What are the literal activities you have to undertake to make your idea a reality?

  • Key Partnerships — Your idea isn't going to come to life in a vacuum. Who are you working with? What partnerships are necessary to make your idea a success?

  • Cost Structure — The final step. Now that we have all of the prior elements in place, what will it cost to make your idea a reality? This is beyond money—you also have to think about time, people, and effort.

Here's how it looks all together:

Business Plans

Business Models are the theory, business plans are... well... the plan. Here is an example outline of what would be found in a business plan:

1. Executive Summary

  • Who are you?
  • What are you doing?
  • Why should we care?

2. Business Model

  • What's your value proposition?
  • Who are your customer segments and what is your relationship to them? What channels will you use to reach them?
  • What/How are you doing this? What resources do you need and who are your key partners?
  • How much will it cost?
  • How much will you make?

3. Financial Analysis

  • What is your operational budget?
  • What is the cost structure for your project?
  • What kind of revenues can you project?

4. Environmental Scan

What are the external factors that affect our model? (We'll cover this more in the marketing unit)

  • Market Forces
  • Industry Forces
  • Key trends
  • Macroeconomic Forces

5. Timeline

  • When is this happening?

6. Risk Analysis

  • What are your biggest obstacles?
  • What is critical for your success?

[°Adapted from Business Model Generation by Alexander Osterwalker and Yves Pigneur]

Final Activity!

For our final meeting, I want you to pitch your creative practice (or creative idea) Shark-Tank-Style.

You will have less than 3 minutes to pitch your creative idea to your peers, who in this case will be the sharks (investors). Use the sections above to think through how you want to do your pitch. There will be probing questions!