So, for writing the business plan we have to also address another question. What is a business model? What are you trying to do? Now, I want to introduce a concept which we borrow from the Lean startup. It's called the Business Model Canvas. It is a very simple map and it maps out nine aspects of your business. These nine aspects by no means are a complete business plan but they serve as a very, very good start. The first partition that I would start is the value proposition. What is the value proposition that you are giving your customer? Remember, value proposition is not the product. For example, if you are selling cars you are not, the value proposition is not just simply selling a car. What you are proposing is you give the customer convenience. You give them the comfort. You give them the status of driving your car from A to B. So the car is just part of it. The product is only part of the value proposition. It's what makes the customer buy from you instead of your competitor who are selling also a car. Remember, value proposition is beyond just the product. Is the reasons why your customer choose you over your competitor. Second part as we continue is the customer segment. Having decided what is your value proposition, you have to tell the investor who are your potential customers. Now, some people might even start with customer segments before value proposition. That's OK too but these two partitions are the most natural one to start. How do we describe our potential customers? Well, you can divide them by demographic and psychographic. Demographics is how we describe our customer by a fact; the age, their education level, their income level, are they married or not married? Do they have children? These are all the facts about the customer. Typically people would divide them by age, by marital status and etc. Psychographic is what we describe their preference. Do our customer like to go on holiday? Do they prefer a certain color? Do they prefer a certain type of culture? What do they really like? These are the psychographic. We should try to cluster our customer into different segments. Even if we have like the same product, different customer group may like the product for different reasons. Customers can be further divided into two categories. The first one is the purchaser and the second one is the user. For example, for products that target children, the purchasers are the parents and the grandparents for example. The end users are the children themselves. These are two very distinctive segments. We have to include them in our customer segment analysis. The next part is the channels. How do we connect the value proposition with our customers? How do we communicate and deliver the values? Here we are talking about the different channels that we either raise the awareness of our customers or we actually deliver the service or the product. For the marketing to raise awareness, these could be the traditional ones like TV, radio or even social media these days. For the physical delivery we may have a shop, we may even mail order, so we send it to the customers home. Or in the Internet age it could be a download of an app or it could be a music track. So, what are the channels that we can connect the values to the customers? Next we have the customer relationship. How do we maintain and continue to improve our relationship with our customers? For this part, do we run a loyalty scheme? Do we run a social media page so we can continue to inform our customer? And what if they have a customer service related questions? What if they have a product maintenance need? How do we actually serve them? That's the customer relationship management. Then we move to the revenue model. How do we actually make money? Who's going to pay for the service or the product? In most cases, the purchasers would be the one who pay for the product or services. In some cases like ad supported apps or ad supported email and so on, the advertisers are the one who are actually paying the service and the users get the service for free. What are the more... What are the other possible revenue models? For example, can we actually help someone else to sell product so we get a commission? Is it the customer who is actually subscribing to a service. So, like software as a service, like subscription to a magazine. The customer pay on a periodic basis. List out all the potential revenue streams into the revenue model. Then next we have, what are the key activities? In order to deliver and run our business, how do we actually do it? What are the key activities? Do we need to produce them, the product or do we need to maintain a website or do we need to run an office or a shop? So what are the key activities that we have to do every day in order to run our business? What about the key asset which is next. What do we need to own? Do we need to own a factory? Do we need to own a shop? Do we need to own a domain name? Do we need to hire a lot of people? These are all the potential asset that we need to have in order to run our business. Often we cannot run the business alone. So the next part is, who are our partners? These partners could be a sales channel. It could be an advertising partner. It could be our suppliers. It could be our many, many other like services for example like ad provider and so on. Who do we work with in order to complete our value proposition to the customer? That's the partners. Last but not least we need to list out all the potential costs. What sort of things would cost us like cost of goods sold, running the office, running a website, running the server, paying our vendors and so on and so forth. Now, these nine parts of the Business Model Canvas are a very, very good start. It actually tells us a lot about the business. However, this is by no means complete. What are the missing pieces? These missing pieces are also important to the investors. For example, in this Business Model Canvas, it does not talk about the competition. Who are our competitors? How do we fare against them? What about the marketing strategy? How do we go to market? How do we run our campaign? It doesn't talk about these yet. So therefore, this is a very good start especially when you are starting your first business plan. If you can answer these questions and fill them into this 9 building blocks, that's a pretty good start but we must also cover the other aspects that we have left out.
