entr4800 class 3 - business modelling for social enterprise
DESCRIPTION
Theory: What models exist for social enterprises? How do these models inform the structure and operations of the social venture? What are the key issues, tensions and considerations that make these models applicable to specific contexts? Practice: How can business model development be applied to the development of a social enterprise?TRANSCRIPT
ENTR 4800: Social Entrepreneurship
Class 3: Business Modelling for Social Enterprise
Monday, September 24, 2012
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Instructors: Elisha Muskat ([email protected]) Norm Tasevski ([email protected])
© Norm Tasevski & Elisha Muskat
Upcoming Assignments
• Video Assignment (5%/video x2) – 3 Minutes! (evenly split between reading review and critical
analysis/opinion) – Videos will be uploaded to socialentrepreneurship.ca the
Friday before class. – Due date: the Thursday prior to that week’s class!
• Live Case Write Up (15%) – Guest speaker next week – Documentation on their social enterprise to be emailed to
students by mid-week – Write-up due before start of class 4
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© Norm Tasevski & Elisha Muskat
© Norm Tasevski & Elisha Muskat
© Norm Tasevski & Elisha Muskat
Agenda
• Upcoming assignments • Centre for Social Innovation • What are the components of a business model for
social enterprise? • Term Assignment • What did we learn? • Next week
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Business Modelling for Social Enterprise…
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© Norm Tasevski & Elisha Muskat
A Caveat…
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We will walk you through the business modeling process…
But…
We will discuss how to infuse “social”…
© Norm Tasevski & Elisha Muskat
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A Second Caveat…
“Business Model”
“Business Form/Legal Structure”
© Norm Tasevski & Elisha Muskat
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A Third Caveat…
“Business Model”
“Business Plan”
Business Model 1st!!! (Business Plan 2nd)
Why business model 1st and plan 2nd?
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© Norm Tasevski & Elisha Muskat
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Because…
It is a cure for “We Need a Plan-itis”
© Norm Tasevski & Elisha Muskat
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And…
It is a Quick way to assess Profitability/Sustainability – Why spend months building a plan if you don’t have a real
sense of profitability/sustainability? – If your model doesn’t make money, even with the most
ideal conditions…
…STOP! (…and rethink your business model)
© Norm Tasevski & Elisha Muskat
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One More…
It breaks down highly complex business ideas into easily digestible (and visual) chunks
– Gets to the heart of what you need to know to:
Set Strategy
Make a Go No-Go Decision
Make Potential Investors/funders (and business partners) Happy :)
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Are small and visual (1 page with about 10 supporting pages)
Are big and complex (often 50-100+ pages)
Cover many topics (business description, financials, marketing strategy, HR strategy, Operations Strategy management team, etc, etc, etc)
Business Models
Focus on a few topics (Will you make $$? How do the pieces fit together?)
Take weeks/months to create
Take a few days (possibly hours) to create
Are necessary for investors, funders, business partners, etc
Feed the business plan!!
Business Plans
© Norm Tasevski & Elisha Muskat
freemium!
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user networks!franchising!
web ads!
licensing!micro-finance!retail!
subscription!
nonprofit (donation)!
open-source!loyalty!
solution shops!
!
etc…etc…etc…!
© Norm Tasevski & Elisha Muskat
Some Definitions
• “A business model describes the rationale of how an organization creates, delivers and captures value – economic, social, or other forms of value”
Wikipedia
• “A description of the means and methods a firm employs to earn the revenue projected in its plans. It views the business as a system and answers the question, “How are we going to make money to survive and grow?”
BusinessDictionary.com
• “A business model describes the specific way the business expects to make money. While a business plan is on paper (lots of paper!) a business model should be small enough to stay in the heads of the owner and staff. If a business model is on paper, it should be one page, and it would be more clearly shown as a diagram than as words.”
AudienceDialogue.net 16
© Norm Tasevski & Elisha Muskat
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© Norm Tasevski & Elisha Muskat
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Customer Segments
The “business” Side: – Customer “Pain” – Difference between a
“customer” and a “client”
Infusing Social:!– Are you selling something a
disadvantaged person/community? !
© Norm Tasevski & Elisha Muskat
Empathy Mapping
© Norm Tasevski & Elisha Muskat
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Value Proposition (the “Offer”)
Infusing Social:!– Are you constructing your
offer in a socially responsible way?!
The “Business” Side: – The “value” created for
customers (in terms of products/services), and the “pain” you are alleviating
– An exchange of value
© Norm Tasevski & Elisha Muskat
Quick…
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What is the last thing you bought?
© Norm Tasevski & Elisha Muskat
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Customer Utility
© Norm Tasevski & Elisha Muskat
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Channels
The “Business” Side: – How the customer receives
the offer/value prop – The physical “movement” of
the offer into the hands of the customer
Infusing Social:!– Are you delivering your offer in
a socially responsible way?!– Are your channel partners
socially responsible?!
© Norm Tasevski & Elisha Muskat
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Relationships
The “Business” Side: – Personal and impersonal
interaction with the customer – The “movement” of
information (e.g. marketing, communication)
Infusing Social:!– Are you marketing your service
in a socially responsible way?!– Do you have a marketing partner
that is socially responsible?!
© Norm Tasevski & Elisha Muskat
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Revenue Streams
The “Business” Side: – Cash!!! (specifically, how cash
flows into the enterprise) – “Money In”
– What is the pricing model?
Infusing Social:!– How does being “social” impact
your revenue streams?!– Do you allocate a portion of
your revenues to a charitable purpose?!
© Norm Tasevski & Elisha Muskat
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Key Resources
The “Business” Side: – Assets…and how these assets
create value – Includes human, physical,
intellectual, and financial resources
Infusing Social:!– Do you hire from a
disadvantaged community?!– Do you acquire certain assets
in a socially responsible manner?!
© Norm Tasevski & Elisha Muskat
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Key Activities
The “Business” Side: – Actions (specifically, the
actions you plan to take to generate value)
– Both “direct” and “indirect”
Infusing Social:!– Do you undertake “charitable”
activities?!
© Norm Tasevski & Elisha Muskat
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Key Partners
The “Business” Side: – People/organizations that are
integral to enabling you to do business
– How you partner, and what you partner on
Infusing Social:!– Do you partner with
companies/organizations that align with your core values?!
What makes a good partnership?
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Common Vision!
Discreet Missions!
Same Core Values!
A Commitment to Invest in
the Partnership!
© Norm Tasevski & Elisha Muskat
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Cost Structure
The “Business” Side: – Fixed costs, variable costs,
economies of scale…“money out”
– At this stage, focus on your cost assumptions! (don’t worry about actual $$)
Infusing Social:!– Is there a “social premium”
you are paying to deliver on your offer?!
© Norm Tasevski & Elisha Muskat
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So…what does a completed biz model look like???
© Norm Tasevski & Elisha Muskat
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$$ Microloans
Branches
Personal
BOP Entrepreneurs
-Branches -Brand -Capital
Lending and
collecting $$
Government
-People -Capital Costs
Interest rates
© Norm Tasevski & Elisha Muskat
Tip…
• Be a Business Model “Alchemist” – You need to go through the business model process many times in order to figure out which model best fits
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Break
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© Norm Tasevski & Elisha Muskat
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“Sticky Ideation”…
What we Don’t Know!
What we know!
Bridging the Gap!!(turning what we don’t know into what we know)!
© Norm Tasevski & Elisha Muskat
What did we learn?
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