How to develop a Business Model
- Understand who your ideal client segments are
- Develop a Value Proposition
- Know how to reach them (Client Channels)
- Build a service model that addresses their needs (Client Relationships)
- Know how your organisation captures revenue
- Understand what resources are required
- Map all your key activities
- Develop partnerships that add value
- Know and manage costs
It is a hard, commercial truth that financial viability must always be a high priority for organisations, for without the financial capacity to operate you will not have the ability to continue delivering services “There is no mission without margin.”
These guides provide support in navigating fundamental Business Model building blocks connecting Client and Community Engagement and Operations.
A Business model shows how an organisation creates, delivers and captures value for its stakeholders. There are many planning tools available to help to create a business model.
The Business Model Canvas™ has nine building blocks for planning successful operations, identifying sources of revenue, the target client base, products and services, activities, resources and partnerships.
The Canvas helps you focus on the essential elements of your organisation and visualise how the critical components fit together. This will save you time and enables you to track your progress across the various aspects of your operation.
The model can be used in several ways:
Strategic Planning and Development.
For mature organisations, the Canvas provides a blueprint for your regular strategic planning and development cycles. For less developed organisations, the Canvas business model provides a clear foundation and direction.
The Canvas helps you describe what you have done in the past year and what you intend to do in the year ahead. This provides an excellent opportunity to co-create strategy with people from around your organisation.
Develop New Services or Business Models.
The Canvas helps you understand and highlight which services are sustainable and which business models may work best in a changing market. This can entail everything from improving existing business models to inventing new business models.
Use these nine building blocks
Understand who your ideal client segments are
In-depth analysis (knowledge) of your potential client-base in the context of the NDIS, grouped into sets of clients that have similar needs or similar characteristics.
- How to understand market scale
- How to decide if you need to do market research
- How to conduct market research
- How to evaluate market segments
- How to create client profiles
Develop a Value Proposition
Potential clients can quickly understand what you offer (delivery method, price, quality). It’s your chance to establish a substantial difference between you and your competitors.
Know how to reach them (Client Channels)
Know the "channels" where target client groups want to be reached.
- How to develop market engagement strategies
- How to identify (and manage) primary and secondary stakeholders
- How to create a social media plan
Build a service model that addresses their needs (Client Relationships)
Develop cost-effective and efficient service delivery models to reach target clients.
Know how your organisation captures revenue
Identify the best price to achieve a sustainable operation by making sure you’re recovering the full, comprehensive cost of service delivery.
Understand what resources are required
Determine the critical resources required to deliver your organisation's Value Proposition and what resources are needed to sustain operations.
Refer to How to assess your resource requirements.
Map all your key activities
Determine the critical activities required to deliver your organisation’s Value Proposition and what actions are needed to sustain operations.
Refer to How to identify activities related to service delivery and operations.
Develop partnerships that add value
Identify key partners essential to achieving broad impact and optimum outcomes for clients.
Know and manage costs
Understand the accurate, comprehensive value of service delivery to price your services accurately.
The developers of the Business Model Canvas have lots of support to help guide you through the vital building blocks. The template can be downloaded here - https://www.strategyzer.com/canvas/business-model-canvas
Further information about the building blocks is provided here: https://strategyzer.uservoice.com/knowledgebase/topics/113454-using-our-tools-canvases-methods
A Canvas example adapted for the not for profit sector can be found at https://www.nonprofitjourney.org/uploads/8/4/4/9/8449980/_npo_business_model_canvas_alexandros.pdf
The model below explores the development of a Canvas for mission-driven organisations. https://blog.strategyzer.com/posts/2016/2/24/the-mission-model-canvas-an-adapted-business-model-canvas-for-mission-driven-organizations