Outsourced CFO – Can you ‘pitch’ your business model in under 5 minutes?

As a business owner there are many reasons you need to be able to succinctly and clearly explain your business model.

Some reasons we have seen first hand recently include business owners wanting to:

• Establish a new business opportunity arising from their existing business

• Get funding for their business

• Explain the opportunity in their business to a potential new investor

• Work out how to generate more value from the IP generated in their business

• Restructure the business after the exit of a partner

• Start a new business

All of these required a clear understanding of their business model.

Your business model is effectively the way you deliver value to customers that they are happy to pay a fair price for and that generates a profit for you.

The value in being able to clearly articulate this includes:

• Clarity for targeting appropriate customers in your marketing and advertising efforts

• Clear understanding of what activities generate your profits (and what activities aren’t really needed)

• Better engagement of staff through improved understanding of their role and the ‘end game’

• Improving your ability to focus on what really matters within your business

• Ensuring your business partners and your bank understand what you are planning to deliver

When trying to articulate your business model you need to be considering:

• Your customer segments – who are they and what are their key characteristics?

• Your value proposition – what is it for each customer segment?

• Your channels of communication – what ones do you use and what ones do your customers want?

• Your customer relationships – how are these managed?

• Your key activities and the key resources – needed to deliver your value proposition

• Your key partners – who enables you to deliver aspects of your business?

• Your cost structures

• Your revenue streams

To get the best outcome, you should consider engaging your senior team members in your business modelling process. They have a wealth of experience from working for you and from working for other businesses that could provide great insights and practical ideas.

If you would like help to get a business modelling process underway on your business, please feel free to call David or John on 3221 4465 and we would be happy to answer your questions or facilitate your process.