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Business Model Primer. Kim Alter Virtue Ventures LLC . What is a business model?. - PowerPoint PPT Presentation
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Social Impact, October 2007
Business Model Primer
Kim AlterVirtue Ventures LLC
Social Impact October 2007
What is a business model? A conceptual tool that describes the value
an organization/enterprise offers to its customers/clients and that expresses the architecture of the firm/organization and logic for creating, marketing, and delivering this value and relationship to capital, and how together to generate sustainable revenue streams.
Social Impact October 2007
Planning Process
Strategic Strategic ObjectivesObjectives
StrateStrategic gic
GoalsGoals
BusinessBusinessModelModel
BusinessBusinessPlanPlan
Social Impact October 2007
Business Model Building BlocksProduct Value Proposition What value do the products create for the customer/client?
ClientCustomer Interface
Target Market Distribution Channels RelationshipDynamics
Who is customer / client? How can they be divided? How can we deliver value at appropriate cost?
Special needs or considerations to deliver products and services client/customer segments?
Infrastructure Management
Value Configuration Capacity
Partnerships
How is value delivered? What is the structure of the value chain?What are the organization strongest capabilities and strategic assets?Who are the partners/alliances? How are these relationships structured?
Financial and Impact Aspects
Cost structure
Returns
Revenue Model
How much will it cost? How will costs be broken down?
Benefits/returns to stakeholders? How quantified?How do we cover our costs/meet financial objectives to do this business?
Social Impact October 2007
Model Building Blocks Informs:
Value proposition Product and services features/design
Target customer Market opportunity
Distribution channel Marketing/outreach and sales model
Customer Relationships Brand and Reputation
Value configuration Operating model
Core competencies and capabilities Organizational culture & management model
Partnership Partners and partnership model
Revenue model Financial sources and flows
Returns Social impact model and metrics
Cost structure Capital requirements and uses
Social Impact October 2007
Target Market: Refugees Demographics
Economically active Weak social ties Vulnerable
Few assets Inability to repay
Psychographics Transient Risk adverse Extra burdens
Geographic Refugee camps Poor or degraded market & infrastructure
Social Impact October 2007
Value PropositionEnable economic
security and create a sense of community, trust, and physical and emotional safety throughout transition
Financial Services Features Grants and training before
loans Monitoring Mentoring Certificates – credit rating Support to start up micro-
businesses Transparent processes Continue service Branding
Product Value Proposition
Social Impact October 2007
Customer/Client Interface
Social Enterprise
Client Worker
MarketClient Producer
ClientBeneficiary
Client Consumer
Client Community Environment
Public
Social Impact October 2007
Client/Customer Interface:Relationship Dynamics
Business Venture Idea Evaluation Form
Venture Idea(Rate according to ability to fulfill criteria)
(Definitely will not meet criteria) (Definitely will meet criteria)
CriteriaJanitorialServices
AssemblyBusiness
LaundryServices
Restaurant CommercialCopy
CommercialBakery
Range of skill requirements –mostly low skill jobs
+2 +1 +2 +1 +2 0
Range of full time and parttime jobs – mostly part time
+2 +2 +2 +2 +2 0
Variety of tasks +2 0 +1 +2 +1 +2
High proportion of repetitive,predictable tasks
+2 +2 +2 -1 +2 +1
Environment that managementcan control
+2 +2 +2 -1 +2 +1
Daylight-hours jobs +1 +2 +2 0 +1 0
Monday through Saturday +1 +2 +1 0 +1 +1
Organized as supervisedteam/crew work
+2 +2 +2 0 +2 0
Room for quality checks andcontrols – time to correct formistakes
+2 +1 +1 -2 +1 0
Minimal deadline stress +2 0 +1 -2 0 0
Minimal seasonal layoffs +2 0 +1 0 +1 -1
Leads to living wage work +2 0 +1 0 +1 +2
Total Score: +22 +14 +18 -1 +16 +6
-2 -1 +10 +2
Social Impact October 2007
Management InfrastructureValue chain structure and Opportunity
ProcurinProcuring g
SuppliesSupplies
EmployinEmploying g
WorkersWorkers
DesigninDesigning g
Product Product or or
ServiceService
ProduciProducing ng
Product Product or or
ServiceService
MarketiMarketing to ng to TargetTarget
Fair Fair TradeTrade
Dis-Dis-enfranchiseenfranchised Groupsd Groups
DeliveriDelivering ng
EducatioEducationn
Green Green TechniqueTechnique
ss
Micro-Micro-financefinance
Adapted from Dees (2002)
Social Impact October 2007
Management Infrastructure Value Configuration
CCC CCHN
CouncilConnections
• 20 Clinic Members• Established 25 Years Ago (Non–Profit)
• 13 Clinic Members• Established 5 Years Ago (Non–Profit)
• 420 Clinic Members
• Established 18 Years Ago
(For–Profit)
Practice Management
Managed Care Contracting
Quality Management
Technical Services Organization
Pharmacy Lab Services
Med/Surg Supplies
Office Supplies
Service Lines
Target PopulationCustomer * Social Impact
FinancialViability
Social Impact October 2007
Financial Aspects
Years Enterprise Revenue Social Expense Business Expense
Breakeven AFTERSocial CostsBreakeven Before
Social Costs
Social Costs
Business Expenses
EnterpriseRevenue Subsidizes Social costs
ProfitFor biz & programinvestment
Social Impact October 2007
Financial Aspects Cost Structure:subsidies
Volunteer time/expertise Infrastructure Overhead and back office Professional fees Staff time spent on enterprise and allocated to
other budgets Grants that cover social service costs or
subsidize service prices R&D
Social Impact October 2007
Employment Model
MarketOrganization Clients
Social Impact Financial
Sustainability
ProductProduct
Social Impact October 2007
Entrepreneur Model
Market
Social Impact
Client Organization
FinancialSustainabil
ity
ProductProductLoansLoans
Social Impact October 2007
Fee-For-Service Model
Services
Organization
Sustainability
Clients
Social Impact
Social Impact October 2007
Market Intermediary Model
Financial
Sustainability
Social Impact
ClientsOrganization
Market
Social Impact October 2007
Service Subsidization Model
Social ImpactFinancial Sustainability
OrganizationClients
Market
Services
Social ImpactClients
Social Impact October 2007
Organizational Support Model
Social Impact
Organization
Clients
Subsidiary
Foundation
FinancialSustainabil
ity
FinancialSustainabil
ity
Social Impact October 2007
Cooperative
Organization
Sustainability
Internal Clients Market Social
Impact
ExternalMarket
Social Impact, October 2007
Social Value Added
In the business model
Social Impact October 2007
Somers, Shaping the Balanced Scorecard for use in UK Social Enterprises, “Social Enterprise Journal”
Social Impact October 2007
Somers, Shaping the Balanced Scorecard for use in UK Social Enterprises, “Social Enterprise Journal”
Social Impact October 2007
Business Model FRAMEWORKProduct Value Proposition What value do the products create for the customer/client?
ClientCustomer Interface
Target Market Distribution Channels RelationshipDynamics
Who is customer / client? How can they be divided? How can we deliver value at appropriate cost?
Special needs or considerations to deliver products and services client/customer segments?
Infrastructure Management
Value Configuration Capacity
Partnerships
How is value delivered? What is the structure of the value chain?What are the organization strongest capabilities and strategic assets?Who are the partners/alliances? How are these relationships structured?
Financial and Impact Aspects
Cost structure
Returns
Revenue Model
How much will it cost? How will costs be broken down?
Benefits/returns to stakeholders? How quantified?How do we cover our costs/meet financial objectives to do this business?
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