Date post: | 19-May-2015 |
Category: |
Documents |
Upload: | manshbalwani |
View: | 2,986 times |
Download: | 3 times |
Business Model Analysisfor the Entrepreneur
Presented by : Group no.4
Manish BalwaniSunil PrajapatAshish Kothari
Prateek SaratheSaket Singhai
Mayank Bhalodia
Few questions in mind of an entrepreneur…
How Likely is the business to turn cashflow positive ? How much time is required to ramp-up the revenue in
order to turn cash flow positive ? How large an investment is required to pursue the
business model ? What are the critical success factors and associated risks ?
A business model is the summation of the core business decisions and trade-offs employed by a company to earn a profit.
In general, these elements fall into four groups: Revenue Sources Cost Drivers Investment Size Critical Success Factors
Source: A Note on Business Model Analysis for the Entrepreneur HBS Note N9-802-048
Business Models
Analyzing the Business Model
Determine revenues, timing and key drivers Determine costs/expenses, timing and disaggregate
cost data into discrete cost drivers Determine total investment to achieve positive cash
flow Plot cash flow versus time to generate a cash curve Systematic sensitivity analysis to identify critical
success factors
Revenue Sources
Single Stream
Multiple streams
Interdepedent
Loss leader
Revenue models
Subscription/Membership
Volume or unit based
Advertising based
Licensing and syndication
Transaction fee
Revenue model analysis
Revenue streams
Revenue model
Case Example - 1
Cost drivers
FixedSemi-variableVariableNon-recurring
Cost structures
Payroll centered (Direct)Payroll centered (Support) InventorySpace/RentMarketing/Advertising
Using The Business ModelTo Drive A Forecast
Play out the business model over time, looking at P&L and cash flow
How much cash is required to get the business to cash flow breakeven
Cost driver analysis
Cost Driver
Cost centre
Case Example - 2
Investment size
The total investment size of a business model depends on several factors including the company’s revenue model cost drivers and critical success factors.
Basis of evaluation of a cash flow diagram
Maximum financing needs
Positive cash flow
Cash breakeven
Examples of types of business models
Software
Retail
Small consulting firm
Case Example - 3
Critical success factors
It is an operational function or competency that a company must possess in order for it to be sustainable and profitable.
Study of revenue models
Exhibit 1: Fishbone DiagramFor The Grateful Dead Revenue Model
Total Revenue
ConcertRevenue
MerchandiseRevenue
RecordingRevenue
# Concerts
Revenue/Concert
Albums Recorded
Revenue/Album
# Concerts
Revenue/Concert
# Tickets
Price/Ticket
# Attendees
Revenue/Attendee
# Albums Sold
Revenue/Album
Exhibit 2: Fishbone DiagramFor Seven-Eleven Japan Cost Structure
Total Cost
Cost of Goods Sold
InformationTechnology
Payroll
Facilities
Marketing/Advertising
Price/SKU
# of Suppliers
Inventory Turns
Development Costs
Implementation Costs
Maintenance
Head Office Payroll
Employees/Store
Daily Wage/Employee
Square Footage/Store
Price/Square Foot
Advertising Cost/Store
Company-wide Spend
Cumulative Cash Flow in $
Time
Exhibit 3 :The Cash Flow Cycle For A Venture
Burn Rate
Date of First Cash Flow Positive
Maximum Financing Needs
Date of Cash Breakeven
Cumulative Cash Flow ($)
Time
Medical Devices Company Giving Away Instrument
Medical Devices Company Selling Instrument
Exhibit 4: Cumulative Cash Flow DiagramsFor Two Hypothetical Medical Device Ventures
Conclusion
Thank you