ATB Entrepreneur Corner
A BEGINNER’S GUIDE TO STARTING A BUSINESS
Have you dreamt about starting your own business but were just not sure how to go about it or, where to begin? Does the Start-Up world seem all too complicated? Perhaps you are running your business and are puzzled as to why your products are not flying off the shelf? Are you on the verge of giving up on your business or, start-up idea? Are you put off by the thought of writing a Business Plan? If so, have no fear; ATB is here! We say, forget Business Plans, forget projecting the future (you are not a fortune teller). Simply focus on the here and now. No matter where you are in this start-up process, or whether you are a senior executive, you will benefit from using the Business Model Canvas which was designed by Alexander Osterwalder (see diagram below), and has taken the start-up/entrepreneurial world by storm. Draft and analyse your business idea in no time at all. You only need to focus on Nine building blocks below, and you’re on your way.
Starting a business is tough. So don’t venture into business with nothing more than wishful thinking. Whether you are starting a catering business, carpentry shop, hairdresser, consulting company, innovation or more, the Business Model Canvas can be applied to all businesses. Understand the 9 business blocks below, to enable you to make an informed decision as to whether or not, to start your business.
Below are the 9 building blocks which we would recommend that you to study before setting up your business. These make up the Business Model Canvas which was first put forward by Dr Alexander Osterwalder
- BLOCK 1– Value Proposition, which simply put, is your business idea and describes the benefits customers can expect from the service(s) that you intend to build, create, or offer to them i.e. an innovation, service, or feature intended to make a company or product attractive to customers e an innovation, service, or feature intended to make a company or product attractive to customers. Simply put: What problem are you trying to solve?
Value proposition is the number 1 thing that determines whether people will bother reading more about your product or hit the back button. It’s also the main thing you need to test – if you get it right, it will be a huge boost. The less known your company is, the better value proposition you need. In a nutshell, value proposition is a clear statement that
- explains how your product solves customers’ problems or improves their situation (relevancy),
- delivers specific benefits (quantified value),
- tells the ideal customer why they should buy from you and not from the competition (unique differentiation).
Evaluate your current value proposition by checking whether it answers the questions below:
- What product or service is your company selling?
- What is the end-benefit of using it?
- Who is your target customer for this product or service?
- What makes your offering unique and different?
- BLOCK 2 – Customer Segments. Deep customer understanding is the first great skill of any successful enterprise. The more you know about your audience, the more likely you’ll design a value proposition that answers customer priorities. For whom are you creating value? Who are your most important customers? You need to observe customers, get outside – you will not understand customers by sitting behind an excel sheet all day doing guess work. Get out and meet potential customers, share your ideas, get their feedback, speak with them, observe their behaviour. This allows you to then create a Value Proposition for them once you understand their “Pain Points” e. you are creating a business for them. Basically, you address or outline, how your products and services will help customers current frustrations with say: finding a good and affordable hairdresser/graphic artist/ restaurant/transport in town. How will you help the customer overcome their challenges. In this section, you need to segment your customer i.e is it for the mass or niche market etc
- BLOCK 3 – Customer Relationships is about outlining the type of relationship you have with each customer. What type of relationship does each of your customer segments expect you to establish and maintain with them? Which ones have you established? How are they integrated with the rest of your business model? How costly are they? Are customers expecting you to offer them personal assistance, self service, automated services, community services? You need to define and establish, lay the ground work, for these customer relationships which will be crucial to your business survival.
- BLOCK 4 – CHANNELS In this block, outline how your product or service will get from you, to your customers. Through which channels do your customer segments want to be reached? How will they hear about you? How are you reaching them now? How are your channels integrated? Which ones work best? Which ones are most cost efficient? How are you integrating them with customer routines? How do you raise awareness about your company’s products and services? Do you need a new channel to reach your customers?
- BLOCK 5 KEY ACTIVITIES – What key activities do your value propositions require? What do your business need to perform well? What are your distribution channels? What are your customer relationships? What are your Revenue Streams? Which categories do these activities fall under i.e. Production, Problem Solving, Platform/Network etc
- BLOCK 6 KEY RESOURCES – This is the infrastructure you need to create, deliver and capture value. What key resources do your value propositions require? What are your distribution channels? What are your customer relationships? How about your Revenue streams? What types of resources are you relying on: Physical, Intellectual (brand, patents, copyrights, data), Human, Financial?
- BLOCK 7 KEY PARTNERS – Who are your key Partners? Who are your key Suppliers? Who can help you leverage your business model? Which key resource are you acquiring from partners? Which key activities do your partners perform? What are your motivations for partnerships? Is it: Optimization & economies of scale? Is it for reduction of risk and uncertainty? Acquisition of particular resources and activities? Key partners are crucial if your business is to grow and survive.
- BLOCK 8 REVENUE STREAMS How much are you going to charge and who will pay you? For what values are your customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each revenue stream contribute to overall revenues? You need to see how and which areas of the business, you can monetise asap. Will you be paid per transaction, per month, subscription etc
- BLOCK 9 COST STRUCTURE What are the most important costs inherent in your business model? Which key resources are most expensive? Which key activities are most expensive? Is it: HR, transport, rent, equipment, venue etc Keep your cost structure as low as possible.
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The Business Model Canvas designed by Alexander Osterwalder Click HERE to view table below in larger version
Source: The Business Model Canvas Dr Alexander Osterwalder