Canvas Business Model and Strategy Tools

USEFUL TOOLS TO DRAFT AN EFFICENT BUSINESS PLAN

THE BUSINESS MODEL CANVAS

The Business Model CANVAS is a business model that explains how a company works, manufactures, supplies and becomes more valuable. It identifies the elements which are part of the company: actors, market and relationships. The Business Model Canvas, invented by Alexander Osterwalder, is one of the most used models.

Key elements of the Business Model Canvas:

CUSTOMERS
It identifies customers, divided into groups according to needs, interests,kind of relationships, profit and distribution channels;
It allows to understand customer needs, divide them into classes, understand what they would pay and turnover potentiality;

VALUE PROPOSITIONS
It describes the collection of products and services a company offers to meet the needs of its customers. It identifies the value, divided into classes and linked to customers;

CHANNELS
It is the mean that the company uses to deliver its value to customers. For example trade, communication etc…It identifies channels, the purchase experience and the purchase life cycle;

CUSTOMER RELATIONSHIPS
It is the process by which the company attracts customers and preserve them in the future.
It helps to understand the process efficiency, the company’s image and the customer experience;

REVENUE STREAMS
The way a company makes income from each customer, divided into classes and values.
It is composed of: what customers pay, how do they pay and price analysis;

KEY RESOURCES
Material and non-material resources necessary for a company in order to create value for customers.
It allows a resources assessment in accordance with value offered to a customer;

KEY ACTIVITIES
Activities made by a company in order to produce value for customers, for example goods, production etc…It allows to underline the activities in accordance with the offered value;

PARTNER NETWORK
Strategic alliances, co-operations, suppliers. All those co-operations that produce value for customers. They increase value, decreasing costs and risks.

COSTS
Finances used by a company in order to create value, through activities, people and partnerships. Creating a list of fixed and variable costs, divided into categories;

The Business Model Canvas is a very efficient system that contains key elements of business. It is composed of these 9 elements linked together.

What is the difference between Business Plan and Business Model?
The Business Plan analyses what, how long and money needed to start a The Business Model.

CONCEPTUAL MAPS

A conceptual map is a diagram which graphically represents words, ideas and activities developed around a key concept.

While making a Business Plan is fundamental to create a mind or conceptual map in order to have a 360° vision of the project.

In this way it is possible to take under control the key elements of your start-up: finance, marketing, team, technology, etc…

Organise and write a good mind map is the first step to have a successful Business Plan.

STRATEGY TOOLS

SWOT ANALYSIS (Strengths, Weaknesses, Opportunities, Threats)

Strengths: Which are the excellences and the advantages of your company? Which are your highest quality products? Which are the unique or low price resources you can have access to? Which elements are perceived as your strengths by market actors you work with?

Weakness: What could you improve? What could you avoid? Which elements are seen as your weakness by people or by the external environment? Which are the reasons of your losses? What competitors do better than you?

Opportunities: Which are the best opportunities for your business? Which are the trends you want to pay attention to? Which technological or market changes could be useful to your business? Which policies could be interesting for your business? Which local events could be positive for you?

Threats: Which could be your obstacles? What are your competitors doing? How market demands are changing? Which technological changes of the market could affect your product? Do you have a negative cash-flow or a complex debt situation? Which one of your weakness could represent a threat? Which local policies could affect you?

PEST ANALYSIS (Political Economic Socio-Cultural, Technological)

Politics: Government typology and stability, freedom of the press and of speech, laws and bureaucracy, scale of corruption, labour market and legislation, political changes expected;

Economy: Status of the business cycle, expected growth, inflation level, interest rates, distribution of the income, economic changes expected;

Socio-cultural: : population growth, age, health, education, social mobility, press, public opinion, attitudes and life styles, socio-cultural changes;

Technology: Impact of technologies, internet, research and development activities, technology transfer, socio-cultural changes expected.

ANSOFF MATRIX

Market development:

Target: New markets and market areas;
Activities: Increase quantities sold to different customers;
How: Aim for different markets (domestic and foreign), using different kind of sales (online, direct sales, sale to groups different from regular customers, according to customer age and sex) ;

Market penetration:

Target: Market concerned;
Activities: Increase quantities sold to your customers;
How: Foster market sales with advertisements, increase your customers or products sold, create a customer loyalty plan, promotional prices and initiatives, buy a competitive company established in developed countries.

Diversification:

Target: Enter different markets with different customers;
Activities: Sold different products or services to different customers;
How: Pay attention to chose the right places to use the existing know-how, move toward niche economies.

Product development:

Target: Market concerned;
Activities: Sell more products to your customers;
How: Make different varieties of the same product or pack the product with different forms, develop linked products and services, improve the “time to market” or the perceived customer service quality.

COST LEADERSHIP

Increase profits, decreasing costs, maintaining prices on market average, increase the market share through more competitive prices. In order to maintain cost leadership it is important to:

- have own funds to invest in technology which will cut costs;
- have a very efficient logistics;
- have a low cost structure (labour, machinery, materials)
- have a sustainable austerity policy;
- cut supply costs of products and services;

An efficient way to do it? The Kaizen philosophy of “continuous improvement”

Porter’s five forces analysis

DIFFERENTIATION

Create more attractive products and services, different from competitors. How to obtain it?
It depends on sectors, the nature of the products and services. It depends on how customers perceive the brand value. In order to have a successful differentiation strategy, the main elements are:

- Ongoing research and development and innovation;
- Supply high quality products
- Efficient sales and marketing: market has to understand the differentiation advantages.

In order to have a successful differentiation strategy it is important to develop new products quickly.

FOCUS STRATEGIES

Pay attention to niche market, understanding the dynamics of the specific market, customer needs, developing customised products at the lowest price.
Aim to a strong customer loyalty to the brand, this makes that market sector less attractive for competitors. How to obtain it? Offering “something more” cutting costs (for example with specialised suppliers) or being different from competitors through a deep comprehension of customer needs.

BUDGETING

Budget has been for decades a management tool, with two different meanings:

- Economic and financial planning system, in order to evaluate needs of resources and arrange for a rational assignment of the different organisation parts.
- Relationships regulation between company people, in order to guide individual behaviours to common goals.
Its structure is a function of the company management and its degree of complexity.

FOR FURTHER INFORMATION ABOUT THE BUSINESS MODEL CANVAS / BUSINESS PLAN OR FOR A FREE CONSULTATION WRITE A QUESTION IN SECTION , AN EXPERT WILL ANSWER OR SEND US AN E-MAIL AT THE LINK BELOW

DEVELOP ABROAD: REASONS FOR THE INTERNATIONALISATION

- survive;
- reach the best dimension;
- optimise investments;
- support competition;
- find new places.

INTERNATIONALISATION OPPORTUNITIES

- There are always fewer customs barriers;
- Consumption tends to be global;
- People are always more interested in the “Made in Italy”;
-There are new emerging countries which will be possible customers.

INTERNATIONALISATION RISKS

- Financial risks for the company;
- New competitors;
- Company process become more complex;
- Domestic market may be overlooked transferring resources
- The personnel doesn’t always perceive positively the change.

WHICH IS THE PURPOSE OF THE EXPORT BUSINESS PLAN OR FDI?

The key points while drafting a Business Plan are geographical market analysis, trends, competition, targets, substitute goods, partners, pricing, suppliers, financial analysis, a study on fixed and variable costs, a team, technologies. In order to draft an efficient Business Plan it is important to start with a Business Model.

It is useful for the domestic market, to support and guide the company activities such as export activities or FDI ( open new factories and transfer there the company processes, create a joint venture, establish new agreements with suppliers on behalf of third party).

REASONS WHY A BUSINESS PLAN IS USEFUL

In activities such as export, international operational marketing, internationalisation the focus is on:

- how to enter a foreign market;
- supply;
- development steps

The internationalisation process is less taken into consideration:

- check carefully the situation of the company;
- imagine different situations;
- check the resources at disposal and the achievable goals.

Internationalisation is important for commercial functions and:

- for organisation because it requires new roles in the company, new competences for human resources, movements, skills for distance relationships;
- for production, because of the increasing amount and new productions;
- for financial resources management, whose needs could quickly increase;
- for logistics, in order to supply different territories.

IT REQUIRES TO ALLOCATE RESOURCES FOR DIFFERENT GOALS IN PARTICULAR:

- financial resources;
- human resources;
- time;
- technical resources.

BUSINESS PLAN AS STRATEGIC AND OPERATIVE PLANNING SYSTEM:

- to define vision and business goals;
- understand the external environment of the company;
- analyse if the project is financially and economically possible;
- planning the operative strategy;
- use budgeting and deviation analysis in order to control results;
- define the organisational set-up;
- accede to financial funds.

BUSINESS PLAN TO SUBMIT A PROJECT BUT ALSO AS MANAGEMENT TOOL:

» Internal function: Economic and financial feasibility plan; in case of a potentiality evaluation for an investment project (for a start-up) or to support the current business management (for going concerns). Measuring the financial and economical sustainability of the business, guiding the implementation of the company operative plan, stimulating contribution and the mission acceptance by the personnel.

» External function: : submission scheme (asking for funds too) and project development, “external” because it is referred to people who didn’t follow the plan in order to evaluate it.
» Operative plan

The business plan is used for the following business activities:

- investment feasibility;
- ask for funds;
- market analysis (supply and demand);
- evaluate a company;
- strategic planning;
- budgeting;
- operative planning.

HOW TO CREATE A BUSINESS PLAN

- essential and simple style;
- few graphics and charts;
- attach documents which widely explain different aspects (generally technical);
- direct participation of the entrepreneur, managers, or board of directors;
- write truthful information, accurate and useful.

BUSINESS PLAN STRUCTURE

Descriptive section: explain the aim of the project and its nature, business vision, market analysis and competition, description of goods and and services offered, strategic and operative plan of the investment;

Economic and financial section: : evaluation projections, that are output esteemed and financial results of the project, the return of the capital invested, both for project promoters and financiers.

In detail:

INTRODUCTION AND MISSION : Describes goals fixed following study data. It is based on the business statement, which are goals and nature of the company. It contains supply advantages, target customers, pricing policy adopted.

BUSINESS DESCRIPTION : Describes the field where the company works or will work and how it wants to settle in the market in terms of supply and competitive position. It considers the following aspects: company analysis, goods analysis, market analysis, sector analysis and company strategies.

COMPANY ANALYSIS: If it is a going concern, it is important to describe its history, write about its establishment year, ownership structure (during the years), business entity, acquired competences, usual activity, etc…extraordinary events (transfers, board of directors changes) in the company, and if the company is part of an industrial or financial group.

MARKETING MANAGEMENT : how to increase your value for customers, analysis, decisions and relations between three fundamental steps:

GOODS ANALYSIS AND MARKETING: Describes the offer behind the business idea, linking goods and services to their target.
It is important to consider the offer as an instrument to satisfy market needs, avoid considering your offer suitable for everyone, interesting for many consumers with different characteristics and needs.

Proceed with the segmentation of the demand, analyse suitable consumers, identify useful parameters in order to analyse their needs and reasons to purchase.

The following levels are taken into consideration for consumer goods:
- socio-demographic : age, sex, revenue, geographical position, etc..;
- psychographic : needs, purchase reasons, values;
- aimed benefits : product benefits perceived by the consumer;
- behavioural : purchase behaviour of different consumers groups.

Study how your offer is able to satisfy market expectations (demand) and who it is oriented to (target). Linking goods and services to a specific consumers segment, it is possible to identify business units, in order to divide business activities.

However, to be efficient it is fundamental to have important business activities, with economic dimensions that justify the business focus. They must be accessible, easy to reach (economically) by the company.

SECTOR ANALYSIS : it is focused on the offer characteristics, namely, competitors, distribution channels structure and supply market. The analysis has to be carried out both in an historical and prospective basis: indeed study the evolution of the offer (related to demand) provides useful information about the competitive scenarios expected.

First of all it is important to ask yourself in which sector you are working or you are going to work on, in order to understand its life cycle. Indeed sectors have different life cycles such as: launch, development, maturity and decline. Each step needs different competitive logics.

Moreover it is important to carry out a study on business positioning, using:

- analysis variables divide the structure of the offer (specialisation, commercial brand, vertical integration, etc…);
- a matrix (technology pervasiveness, commercial value) which clarify the impact of new technologies on existing players and competitiveness problems.

MATRIX

Technology pervasiveness : production, logistics, marketing, trade;

Commercial value: purchase reasons, trust, offer characteristics;

After having analysed structure and characteristic of the sector, it is important to analyse competitors, dividing them according to their proximity to target market:

- direct and indirect competitors , whether they aim to satisfy needs similar or different from the target;
- primary or secondary direct competitors …classified according to their proximity to user market;
- inter-channel or intra-channel competitors , players focused on concrete or digital activities.

In order to complete the analysis, it is important to focus on supply and target markets, studying structure and characteristic of suppliers and then distribution channels.

At this step it is possible to draft competitive maps , choosing suitable classification variables, in order to identify competitors strategy market characteristics.

In this way the company can verify suitability and efficiency of a strategy in addition to latent markets opportunities.

EVALUATION TOOLS FOR CORPORATE FINANCE : the corporate finance goal is to provide the business decision maker tools for an efficient planning of business financial resources.

IN BIRIEF, THE BUSINESS PLAN WILL INCLUDE A SYNTHETIC DESCRIPTION OF THE FOLLOWING CHAPTERS:

- business mission and strategic orientation;
- needs analysis;
- market segmentation;
- potential market quantification;
- analysis of competitors;
- goods and services description;
- marketing policy;
- productive process description;
- internal organisation;
- external coalitions and co-operations;
- authorisations and registrations;
- business entity choice;
- headquarter location and characteristics;
- economic and financial plans, synthetic information of basis hypothesis:
- forecasted income statement ( 3 years);
- balance sheet and planned investments identification;
- financial budget, identifying financial requirements and its collaterals.

FUNDAMENTAL STEPS WHILE DRAFTING A BUSINESS PLAN:

Index

It has to be clear, synthetic, it has to include the following parts:

Summary

- company goals;
- mission;
- key success factors.

General and legal information

- information about how the property is divided, company shares distribution;
- information about company history (for existing companies)
- information about company location, existence and subsidiary companies.

Goods and Services

- goods and services description from the consumer point of view;
- competitors description form the consumer point of view;
- sales trends data of a specific sector;
- first materials supply modalities;
- criticality and opportunities of goods and services and potential evolutions.

Market analysis

- aim to a market segmentation;
- describe the strategy chose for the target market;
- identify market needs and trends, and evaluate its growth rate;
- analyse the production chain, its structure and main actors;
- analyse supply methods of the sector;
- identify main competitors.

Market analysis strategy and implementation

- business values identification;
- writing general strategy, tactics for specific problems, process new steps and action plans;
- define your competitive advantage;
- set a marketing strategy and how you want to position in the market, set a price policy, goods promotion, set a distribution channel and sale strategy;
- evaluate the possibility of operative and strategic alliances;
- identify the main steps of business development.

Legal aspects and project participants

- clear identification of organisational structure, managers, how to improve lacks of knowledge;
- quantify the involved personnel, tasks and responsibilities.

Financial plan

- describe hypothesis underlying the financial plan;
- financial break-even analysis;
- analysis of profits and losses expected on a changing temporary horizon with respect to the business plan goals;
- cash flows analysis on the long term;
- draft a forecast balance;

Plan

- financial break-even;
- profit and losses expected;
- cash flows expected;
- other specific plans.

Ideally, the document drafted has to be 40/50 pages long and you have to be able to present it through an Executive Summary in a power point file no longer than 15 slides.

FOR FURTHER INFORMATION ABOUT TO THE BUSINESS PLAN OR FOR A FREE CONSULTATION, WRITE A QUESTION IN SECTION, THE EXPERT WILL ANSWER OR CONTACT US VIA E-MAIL IN THE LINK BELOW