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Running Your Business
Business Model & Strategy
Your solution: How do you solve your customer’s problem? What products and services are you offering? Describe your product or service and why it’s better than the alternatives.
Competition: What products and services do your customers choose today instead of yours? How are you different? What makes your business and products better than the alternatives that are out there?
A business model is simply how you plan to make money. It is the basis for the plan you choose for your company to make it successful. The business model describes how the company is positioned within its industry's value chain, and how it organises its relations with its suppliers, clients, and partners in order to generate profits.
If the business plan is a road map that describes how much profit the business intends to make in a given period of time, the business model is the skeleton that explains how that money will be made.
Let's go back to my pig farming example.
You have already decided on pig farming as your business, and have immersed yourself in all there is to know about pig farming, by now you should have an idea of the various businesses models.
Pig Farming/Pork Meat Business Models (simplified examples)
Buy and male and female pig, let them consummate their love and create little piglets which you will grow until they are big enough to slaughter, sell the meat. (Farming)
Buy piglets and grow them until they are big enough to slaughter, sell the meat. (Farming)
Buy adult pigs and slaughter them and sell the meat. (Abattoir)
Buy the already slaughtered meat in bulk, repack, sell. (Meat Packer)
The higher up the value chain, the more work, and sometimes the more profits (I will go into that later). The lower down the less work and less profits. Usually but not always.
How to choose the right business model for you
Here we continue with our pig example on choosing the best business model.
How this fits into your business plan:
3. Your Solution
A description of your products/services.
Have a look at your businesses value chain, this will give you an idea of the various business models available
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Target market: Who is your ideal customer? Describe your ideal customer. Who are they?
How do you market your products and services to your customers?
How this fits into your business plan:
Who else in the market is doing similar things and why your products are better?
5. Target Market
Who buys your products (or will buy your products)?
Your business strategy (including competition and target market) will have a bearing on your Sales Channels and Advertising, Sales & Marketing.
Remember, different target markets might need different types of marketing activities to get your product in front of them.
Budget and sales goals: How much do you think you will sell and how much is it going to cost you to make your product or deliver your service? What other key expenses will you have when your business is up and running? What sales goals do you need to reach for your business to be a success? Don’t sweat the details to start and just think in broad strokes to get a rough idea of how your business will work financially. You can refine the details later.
Where you determine how much it is going to cost to launch your business.
In this section you're going to take all of the elements of the resources you need and the staff you need, do a little research and place monetary value next to each of those items.
Find out what is the cost effective way to launch a business, scrutinise and interrogate your needs and wants again if you have to.
Put a monetary value on resources and people. The resources you need and the people you need are the essential elements to start your business.
Then we'll move those elements out of your journal into a spreadsheet. So that you can start to see your business ledger take shape.
Operations & Management
Resources & People
Resources (create three columns)
What do you have?
What do you need?
What do you want?
The resources you have?
The resources you need?
The resources you want?
Inventory, staff, actual human beings
The Resources You Have
It is a good idea to take into account what inventory you already posses that could actually save you money on your startup budget as you launch a business.
Buying things you already have is a waste of money, simply you spending that money twice, save those resources and apply it someplace else.
To start you won't necessarily have to burn up too much of your resources getting items that you already have. So just giving you a really great headstart towards launching your business.
The Resources You Need
This is the comprehensive list of all elements, that are requested to launch your business.
These are the things you need to have in place in order for your new business to thrive. To send it in the direction of success.
Everything from the large details like a rental space or real estate, a vehicle if you need it to the minute details such as paper clips and whether you need new business cards or you know some work in developing your logo.
These are the elements that are required, required the basic minimal elements that are required to launch a business that should go in the resources you need column.
Resources You Want
If I really want to put the finishing touches on this business, if I really want to take my company over the top and surpass the competition.
Haves Needs Wants
Staffing: Building Your Team and the power of delegation
You need to determine your staff, staffing people, placing people around you who can do the work that you delegate to them.
It's about understanding delegation, understanding that you can't do everything by yourself.
You've got to surround yourself with people who have skill sets, experience doing the things, you need them to do in order for you to be successful. No successful person finds success in a cave.
It just doesn't happen for the individual by themself without the support of a team.
People You Have
People You Need
People You Want
Think of (instead of individuals) job titles, skill sets, job descriptions that need to be filled.
Full time, part-time, outsourced
*Make sure when recruiting family and friends, they have those skills or can do the work, be for navigating your relationships with them in business.
Create those three lists
Create a list of the people you already have in your corner ready to go.
The people you need to show up on your team on day 1 to get your business going.
and the people you want who can add to your staff or your team to your cabinet that's going to make your business shine.
Partners and resources: Do you need to work with other companies or organizations to make your company a success?
Team: Why are you and your business partners the right people to make your company successful? Even if you’re starting out with just you, write a few quick bullets about why you’re the right person to run this business. If you need to hire key people in the future, list those positions as well, even if you don’t know who specifically will fill those positions right now.
How this fits into your business plan:
6. Financials: Budgeting & Forecasting
How much does it cost you to produce one of your products? How much do your products cost, how many of them will you sell this year, and how will you make a profit?
7. Operations & Management
The resources and people you have, need and want to start and run your business.
Your budgeting, forecasting, resources and people will partly determine your funding needs. Make sure you know the difference between a need and a want.
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