Unit 1 Task 3: Business Plans and Models • What is a business plan? • What is a business model? • What is meant by the term ‘sustainable business model’?
Business Plan A business plan is a document which essentially describes and brings your business ideas together. By covering the primary aspects of how the business will run, the document allows you to see all of this information laid out briefly and next to each other, enabling you to see how ideas will complement or conflict with each other. The plan should elaborate on the goals and objectives of the business as well as looking at how this will be in the future. According to Harriet Kelsall, are ten key areas to focus on when sorting a business plan: •
Summary – this is a brief summary of all the headings seen below
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Current status – where is the business at right now?
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Vision – in the future, what can you see yourself/your business doing?
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Values – does your business meet your values for business success?
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Product/Service – what is the product you are selling? How will you do it?
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Management/Team – why are you and your employees the best people to be selling this product/service?
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Market – who are your customers and why would they choose your product over other similar businesses?
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Industry/Competition – why is your business needed? What gap in the market is there to prove evidence for this?
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Operations – how will your business actually run? (supplies, finances, legal, location etc)
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Finance/Funding – pricing, how you will afford materials, how you expect profits to be seen (preferably with a chart looking into the short term (or long term) future.
This plan can be and should be modified and expanded alongside the expansion of your business. It is critical that the plan is kept up to date.
Business Model A business model is the plan for how a business will actually make profit through what their product or service. The model is focussed on finances and the target audience and is a simplistic way for a business to see how their profit or debt aligns with audience opinion, allowing the organisation to maximise potential profit through sales and other areas such as resources, transportation etc. There are seven key areas to focus on when creating a business model: •
Audience – who is your target audience. By establishing this you will be able to customise your product to make it appeal to them
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Problems – what problem is your product or service resolving? Why is it your product that will improve the situation.
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Offers – what is your company able to offer with your products that no other business can? What qualifies you to be able to offer this?
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Needs – What resources do you need for your product/service? This can further reflect from operations within the business plan (previous slide)
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Partners – Find other businesses which support your business. This can be venues, companies which have products which compliment your own products. This will benefit both yourself and other businesses.
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Money – how does your company actually plan on making money? This can focus on new products or strategies on how to make your existing products better.
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Feedback – Get feedback from your consumers on everything. Ask for their feedback on products, website, marketing. Your business is there to fill a gap in the market and offer the audience an alternative, it will always come back to the opinion of the consumer so feedback is key.
Sustainable Business Model Most ordinary business models (previous slide) are seen as ‘incomplete’ due to the lack of explanation on how the business can impact the world. Sustainable business models are known as ‘complete’ because they calculate the effects on the environment which allows them to continue using that environment in a more sustainable way. Aa a part of being a sustainable business, there are sustainable practices which should be carried out in order to maintain sustainability. Business owners are now pressured to make their businesses as sustainable as possible for two key reasons:
Resources – many resources which businesses use are finite and will one day eventually run out. By being a sustainable business, the use of recycling products will enable the business to run for longer and not have to alter products when finite resources are limited/run out. This will make long-term financial gain more viable. Consumers – as the public find out more about the lack of resources and how the world is changing due to non-sustainable practices, people now want products and services which will impact the world in a beneficial way, or at least not having a negative impact. With this new demand for recycled products, businesses are forced to change to ways which are more sustainable in order to maintain their target audiences. Though initially being a sustainable business may seem more expensive, in the long term it is actually more cost-effective. Moreover, for some businesses there are environmental taxes, which can be reduced depending on how you prove your company is operating more efficiently.