Study notes for exam

Business model canvas definition

A visual template that illustrates the business model and provides a high-level, comprehensive
view of the various strategic details required to successfully bring a product to market. It
includes partnerships, key activities, key resources , value proposition ,customer relations,
channels, customer segments , cost drivers and revenue streams.

Business model canvas diagram

1)Value Proposition(Unique Selling Proposition) - The solution to a Problem or Market Gap.

The VP is presented in Three Sections:
-A clear definition of what it is
-A list of Unique Technology Features
-A list of Unique Benefits & Advantages (to customers & / environment)
2)Customer segment profile
When identifying the general target market, it's crucial to delineate the target industry,
sector, or general location where the product or service will be aimed. This involves
understanding the customer profile, including income levels, educational backgrounds,
and lifestyle preferences. Moreover, it's essential to grasp the geographic distribution
and population density of the target demographic, along with their behavioral patterns
and cultural inclinations. Identifying their concerns and pain points provides insight into
areas where the product or service can offer solutions, while understanding their
interests helps tailor marketing strategies and product features to resonate with them
effectively.

3)Customer relations - This is Your Communication and Brand Development Strategy

-Your Promotion & Advertising Strategy
-Your communication medium, /platform
-What you say, how you say it and when you say it
-Customer Feedback Strategy
-Includes Event Hosting, Websites, Social Media, Networking

4)Distribution Channels
-How do you deliver product to the customer
-What’s the point of sale strategy
-Online, direct selling, store front?
-How is the distribution channel in sync with customer life-style
-How does the distribution channel give you an advantage?

5a)Key Activities - Set up

-Establish Base of Operations (Plant / Property)
-Purchase of Key Equipment (You need details here)
-Set-up the Website, Software, ICT etc.
-Establish Relations with Key Providers & Partners
-Hiring & Training of Staff
-Host a Media Launch Event
5b)Key Activities - Recurring
-Branding & Marketing Activities
-Customer Experience Management
-Production & Processing Activities
-Quality Control Management
-Order Fulfillment Activities
-Distribution & Logistics Activities
-Reporting & Accounting Activities
-Performance Review & Strategic Planning

6)Key Resources
-Land & Building Infrastructure
-Equipment, Vehicles &/or Machinery
-Website, Apps and/or ICT Infrastructure
-Office furnishings and Equipment
-Human Capital (especially key Skills & Experience)
-Departments, Teams & Units
-Unique Knowledge, Process or Systems
-Networks & Contacts

7)Partnerships

These are business Relationships that benefit the business:

a)Tactical
-Stock and Inventory (e.g., Massy, Bhagwansingh’s)
-Raw Material / Ingredients (e.g., NAMDEVCO)
-Contractors (Software Developer, Builders, etc.)
-Transporter or Distributors (e.g., DHL, PLIPDECO)

Note: These can be very important but are not necessarily a Strategic Partnership
since you have no leverage in the relationship
b)Strategic
-Have similar goals, objectives, philosophy
-Their existence complements your business
-Your existence is VERY important to them
-You form a business Relationship with the Owner

Note: You help them with their Market development and in exchange, they help you
with your Market development

8)Cost Drivers

-Capital (Start-up) Costs

-Annual Recurring Costs

-Cost Structure describes all costs incurred to operate a business model. A business
incurs costs in creating and delivering value, maintaining customer relationships, and
generating revenue. Costs are business-specific, where some are more cost-driven than
others
-A business must answer the following questions to arrive at an optimum cost structure:
-What are the most important costs inherent in our business model?
-Which Key Resources are most expensive?
-Which Key Activities are most expensive?

9)Revenue Streams:
-List Each Product / Revenue Stream
-Estimate Annual Sales (based on)
-How much you can produce
-How much you can sell (demand)
-Your Price
Three (3) ways that a Business Model Canvas can assist an entrepreneur at the pre-launch
stage of a business enterprise

1)Structured Planning
-The Business Model Canvas provides a structured framework for entrepreneurs to visualize and
plan their business idea comprehensively. At the pre-launch stage, entrepreneurs can use the
canvas to outline key aspects of their business model, such as customer segments, value
proposition, channels, revenue streams, and cost structure.

--This structured approach helps entrepreneurs identify potential gaps or weaknesses in their
business concept and refine their strategies before entering the market.

-For example Example: Sarah is launching an online bakery, "SweetDelights," specializing in

artisanal pastries. She decides to use the BMC to plan her business model before launching. As
part of this process, Sarah maps out her distribution channels, which include online orders
through her website and delivery partnerships with local cafes.During her planning, Sarah
realizes that relying solely on her website for online orders might limit her reach, as some
potential customers might prefer ordering through third-party platforms or social media channels.
To address this issue, Sarah decides to diversify her distribution channels. She explores
partnerships with popular food delivery apps and establishes a presence on social media
platforms where she can directly engage with customers and accept orders.

-By doing so, Sarah expands her reach and makes it easier for customers to discover and
purchase from SweetDelights

2)Validation of Business Concept:

-By filling out the various sections of the Business Model Canvas, entrepreneurs can
validate their business concept against market realities. They can assess whether there
is a clear need for their product or service, whether they have identified the right target
audience, and whether their value proposition resonates with customers.

-This validation process can help entrepreneurs avoid investing time and resources into
a business idea that may not have sufficient market demand or differentiation.

-For example Sarah who has an idea to start a meal delivery service focused on
providing healthy, organic meals to busy professionals in urban areas. Sarah believes
there is a market demand for such a service, but she wants to validate her business
concept before investing significant time and resources into launching her venture.
Sarah identifies that busy professionals struggle to maintain a healthy diet due to time
constraints, resorting to unhealthy food options, negatively impacting their health and
productivity. Sarah undergoes a validation process for her business concept using the
Business Model Canvas. She confirms a clear need for her meal delivery service through
market research, finding that busy professionals are frustrated with their current eating
habits and actively seeking healthier alternatives. Her target audience, particularly those
aged 25-40, resonates strongly with the concept of convenient access to healthy meals.
Potential customers express enthusiasm for her value proposition of delivering healthy,
organic meals, seeing it as a practical solution to their dietary challenges

-As a result, Sarah gains confidence in her venture's potential for success and proceeds
with launching her meal delivery service, knowing that it offers a viable solution to a
significant problem faced by her target customers.

3)Pitching and Fundraising:

-Pitching involves presenting a business idea persuasively to attract support or

investment, while fundraising is the process of seeking financial backing for a venture.

-A well-constructed Business Model Canvas can serve as a powerful tool for pitching
the business to potential investors, partners, or stakeholders. It provides a clear and
concise overview of the business model, highlighting its key components and value
proposition. Entrepreneurs can use the canvas to communicate their vision effectively
and attract support or investment for the venture

-This thus increases their chances of securing support or investment for their venture.

-In a hypothetical scenario, imagine a startup called "TechSavvy Solutions" that aims to
revolutionize the educational technology sector with a personalized learning platform.
With a meticulously crafted Business Model Canvas, TechSavvy Solutions effectively
showcases its innovative approach, outlining key components such as target
demographics, unique features, revenue streams, and scalability potential. This
compelling visual aid enables the founders to articulate their vision persuasively to
potential investors, partners, and stakeholders, significantly enhancing their ability to
secure vital support and investment for their venture, ultimately propelling TechSavvy
Solutions towards success in the competitive ed-tech market.
Entrepreneurs often face a myriad of challenges when starting a business, but three of the
most common ones are:

Lack of Capital: Securing enough funding to cover startup costs, initial inventory, marketing
expenses, and operational expenses is a significant hurdle for many entrepreneurs. Without
sufficient capital, it can be challenging to get the business off the ground and sustain operations
during the early stages.

Market Uncertainty: Understanding the target market, assessing demand for the product or
service, and navigating competition can be daunting tasks. Entrepreneurs often struggle to
accurately gauge market needs and preferences, leading to misalignment between their offerings
and customer expectations.

Building a Strong Team and Leadership: Recruiting and retaining talented individuals who
share the vision and dedication to drive the startup forward is crucial. However, startups may
struggle to attract top talent due to limited resources, brand recognition, or the inability to offer
competitive salaries and benefits. Additionally, as the leader of the startup, entrepreneurs often
face the challenge of wearing multiple hats, balancing various responsibilities, and making
critical decisions with limited experience or guidance.

Recommendations to overcome the above challenges

1)Lack of capital is a common challenge for aspiring entrepreneurs, but there are several
strategies you can consider to overcome this obstacle:

Bootstrapping: Start small and use your personal savings or resources to fund your business
initially. Bootstrapping involves minimizing expenses, leveraging existing assets, and reinvesting
profits back into the business to fuel growth gradually.

Seek Funding from Friends and Family: Approach friends and family members who may be
willing to invest in your business or provide loans. Make sure to formalize any agreements and
communicate clearly about expectations to avoid potential conflicts.

Crowdfunding: Platforms like Kickstarter, Indiegogo, or GoFundMe allow you to raise funds
from a large number of people who believe in your business idea. Create a compelling campaign
and offer incentives to attract backers.

Angel Investors: Angel investors are affluent individuals who provide capital to startups in
exchange for ownership equity or convertible debt. They often offer not only financial support
but also valuable mentorship and industry connections.
Venture Capital: If your business has high growth potential and scalability, venture capital firms
may be interested in investing larger sums of money in exchange for equity. However, venture
capital is typically more suitable for tech startups and businesses in other high-growth industries.

Small Business Loans: Explore options for small business loans from banks, credit unions, or
alternative lenders. Prepare a solid business plan and demonstrate your ability to repay the loan
to increase your chances of approval.

Government Grants and Programs: Research government grants, subsidies, and programs
available for small businesses in your area. These initiatives may provide financial assistance,
tax incentives, or other forms of support for startups.

Partnerships and Joint Ventures: Consider forming strategic partnerships or joint ventures with
other businesses or organizations that can provide funding or resources in exchange for shared
ownership or mutual benefits.

Bootstrap while Building Traction: Focus on generating revenue and building traction for your
business before seeking external funding. Demonstrating proof of concept and a growing
customer base can make your business more attractive to investors or lenders.

Alternative Financing Options: Explore alternative financing options such as equipment

financing, invoice financing, or merchant cash advances, depending on the nature of your
business and its financial needs.

Combining multiple funding sources and being resourceful in managing your finances can help
you overcome the challenge of lack of capital and successfully launch your business.

2)Market uncertainty can be a significant challenge when starting a business, but there are
several strategies you can employ to mitigate its impact:

Market Research: Conduct thorough market research to understand your target audience,
competitors, and industry trends. Gathering data and insights will help you make informed
decisions and identify opportunities within the market.

Validate Your Idea: Before fully committing to your business idea, test it in the market through
methods like surveys, focus groups, or prototype testing. This validation process can help you
gauge customer interest and demand, reducing the risk of launching a product or service that
doesn't resonate with your target market.
Flexible Business Model: Develop a flexible business model that can adapt to changing market
conditions. Consider alternative revenue streams, distribution channels, or customer segments
that you can pivot to if needed.

Lean Startup Approach: Adopt the lean startup methodology, which emphasizes building a
minimum viable product (MVP) and quickly gathering feedback from customers. This iterative
approach allows you to refine your product or service based on real-world data and customer
insights, reducing the risk of failure.

Diversification: Diversify your product or service offerings to spread risk across multiple
revenue streams. By offering a range of products or targeting different customer segments, you
can better withstand fluctuations in demand or changes in the market landscape.

Partnerships and Alliances: Form strategic partnerships or alliances with other businesses in your
industry. Collaborating with complementary businesses can help you leverage their resources,
expertise, and customer base, reducing the impact of market uncertainty.

Build a Strong Network: Invest in building relationships with mentors, industry experts, and
potential collaborators. A strong network can provide valuable advice, support, and
opportunities, helping you navigate market uncertainties more effectively.

Stay Agile: Remain agile and responsive to changes in the market by regularly monitoring
industry trends, customer feedback, and competitor activities. Be prepared to adjust your
strategies, products, or business model as needed to stay competitive and meet evolving
customer needs.

Financial Planning: Develop a robust financial plan with realistic revenue projections, cost
estimates, and contingency funds. Having a financial buffer can help you weather unexpected
challenges or downturns in the market.

Focus on Value Creation: Instead of solely focusing on short-term profits, prioritize creating
value for your customers. By consistently delivering high-quality products or services that
address customer pain points, you can build a loyal customer base that supports your business
even during periods of uncertainty.
3)Building a strong team and leadership in a startup environment requires a combination of
strategic approaches and practical solutions:

Craft a Compelling Vision: Clearly articulate your startup's mission, values, and long-term
vision. People are attracted to organizations with a strong sense of purpose and direction. Ensure
that your vision resonates with potential team members and inspires them to join your journey.

Offer Non-Monetary Incentives: While startups may not always compete on salary alone, they
can offer other valuable incentives such as equity, flexible work arrangements, opportunities for
growth and learning, autonomy, and a vibrant company culture. Highlight these benefits to attract
top talent who value more than just monetary compensation.

Leverage Networks and Referrals: Tap into your personal and professional networks to identify
potential candidates. Employee referrals can be a powerful recruiting tool, as existing team
members are likely to recommend individuals who share similar values and work ethic.

Focus on Culture Fit: Prioritize cultural fit when hiring new team members. Look for individuals
who not only possess the required skills and expertise but also align with your startup's values,
work ethic, and collaborative spirit. A cohesive team culture fosters synergy and enhances
productivity.

Provide Mentorship and Development Opportunities: Recognize that many talented individuals
may be attracted to startups for the opportunity to learn and grow. Offer mentorship programs,
skills development workshops, and opportunities for career advancement to attract and retain top
talent.

Emphasize Impact and Purpose: Highlight the impact that each team member can make within
the startup. Emphasize the meaningful work they will be contributing to and the difference it can
make in the company's success. Talented individuals are often drawn to roles where they can see
the direct impact of their efforts.

Lead by Example: As a leader, demonstrate dedication, resilience, and a willingness to learn. Be

transparent about the challenges and uncertainties inherent in startup life, but also inspire
confidence in your team's ability to overcome obstacles together. Lead with authenticity and
integrity to earn the trust and respect of your team.

Delegate and Empower: Recognize that you can't do everything yourself. Delegate tasks and
empower your team members to take ownership of their work. Encourage autonomy, creativity,
and innovation, and provide support and guidance as needed.
Seek External Support: Consider seeking guidance from mentors, advisors, or industry experts
who can offer valuable insights and support as you navigate the challenges of startup leadership.
Joining incubators, accelerators, or networking groups can also provide access to resources and
mentorship opportunities.

Continuously Evaluate and Adapt: Regularly assess your team dynamics, processes, and
leadership approach. Solicit feedback from team members and iterate on your strategies to
address any challenges or areas for improvement. Stay agile and adaptable as your startup grows
and evolves.

SWOT analysis

A SWOT analysis is a strategic planning tool used to identify and evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a business venture or project. It helps
organizations assess their current position in the market and make informed decisions about
future strategies.

A SWOT analysis offers several benefits for businesses and organizations:

Strategic Planning: SWOT analysis provides a structured framework for strategic planning by
helping businesses assess their internal strengths and weaknesses alongside external
opportunities and threats. This enables organizations to align their goals with their capabilities
and the market environment.

Identification of Key Issues: By systematically examining internal and external factors, SWOT
analysis helps identify critical issues that may impact the business. This allows companies to
prioritize their efforts and resources on areas that require attention or improvement.

Enhanced Decision-Making: Armed with a comprehensive understanding of their strengths,

weaknesses, opportunities, and threats, decision-makers can make more informed and strategic
decisions. SWOT analysis provides insights that aid in evaluating alternative courses of action
and selecting the most suitable strategies.

Risk Management: SWOT analysis helps businesses identify potential threats and risks early on,
allowing them to develop contingency plans and risk mitigation strategies. By anticipating
challenges and vulnerabilities, organizations can better prepare for disruptions and minimize
their impact on operations.

Capitalizing on Opportunities: By identifying external opportunities, businesses can capitalize on

market trends, emerging technologies, or new customer segments. SWOT analysis enables
organizations to leverage their strengths to seize opportunities and gain a competitive edge in the
market.

Improved Resource Allocation: Understanding internal strengths and weaknesses helps

businesses allocate resources more effectively. By investing in areas of strength and addressing
weaknesses, organizations can optimize their use of resources and maximize their overall
performance.

Facilitates Communication and Collaboration: SWOT analysis encourages communication and

collaboration within the organization. By involving stakeholders from different departments or
levels, businesses can gain diverse perspectives and insights, fostering a shared understanding of
the organization's strategic priorities and challenges
SWOT analysis by the functional areas of the business

1. Marketing:

● Strengths: Strong brand identity, effective digital marketing campaigns,

innovative product positioning.
● Weaknesses: Limited offline marketing presence, lack of market research data,
high customer acquisition costs.
● Opportunities: Growing online market segment, expanding into new geographic
markets, leveraging influencer partnerships.
● Threats: Intense competition from established brands, changing consumer
preferences, regulatory restrictions on advertising.

2. Sales:

● Strengths: Well-trained sales team, strong customer relationships, diversified

sales channels.
● Weaknesses: Lengthy sales cycle, inconsistent lead generation, high customer
churn rate.
● Opportunities: Strategic alliances with complementary businesses, entering new
distribution channels, upselling to existing customers.
● Threats: Economic downturn impacting purchasing power, aggressive pricing
from competitors, increasing customer expectations.

3. Operations/Production:

● Strengths: Efficient production processes, reliable supply chain partners,

high-quality products.
● Weaknesses: Dependence on a single supplier, lack of scalability in production,
limited automation.
● Opportunities: Investing in automation technologies, optimizing inventory
management, exploring lean manufacturing practices.
● Threats: Disruptions in the supply chain, fluctuating raw material prices,
regulatory compliance requirements.

4. Finance/Accounting:

● Strengths: Healthy cash flow, low debt-to-equity ratio, accurate financial

reporting.
 ● Weaknesses: Limited access to capital, high overhead costs, reliance on
short-term financing.
● Opportunities: Seeking investment from venture capitalists, diversifying revenue
streams, optimizing tax strategies.
● Threats: Economic instability, interest rate fluctuations, regulatory changes
impacting financial reporting.

5. Human Resources (HR):

● Strengths: Skilled and motivated workforce, comprehensive training programs,

positive workplace culture.
● Weaknesses: High employee turnover, lack of diversity in the workforce, outdated
HR policies.
● Opportunities: Implementing flexible work arrangements, investing in employee
development, improving diversity and inclusion initiatives.
● Threats: Skills shortages, increasing labor costs, legal challenges related to
employment regulations.

6. Information Technology (IT):

● Strengths: Robust IT infrastructure, secure data management practices,

responsive IT support team.
● Weaknesses: Legacy systems, vulnerability to cyber threats, limited IT budget for
innovation.
● Opportunities: Adopting cloud computing solutions, enhancing cybersecurity
measures, leveraging data analytics for insights.
● Threats: Cybersecurity breaches, technological obsolescence, disruption of IT
services due to system failures.

7. Customer Service/Support:

● Strengths: Responsive customer service team, multichannel support options,

high customer satisfaction ratings.
● Weaknesses: Long response times during peak periods, lack of personalized
support, inconsistent service quality.
● Opportunities: Implementing chatbots for instant support, enhancing self-service
options, conducting customer satisfaction surveys.
● Threats: Negative online reviews, social media backlash, increasing customer
expectations for service quality.
8. Research and Development (R&D):

● Strengths: Innovative product development team, robust R&D budget, strong

intellectual property portfolio.
● Weaknesses: Lengthy product development cycles, insufficient market research,
limited collaboration with external partners.
● Opportunities: Investing in emerging technologies, conducting market feasibility
studies, collaborating with industry experts.
● Threats: Rapid technological advancements, competition from disruptive
startups, regulatory hurdles for new product launches.

9. Legal and Compliance:

● Strengths: Experienced legal team, proactive compliance measures, adherence to

industry regulations.
● Weaknesses: Limited legal resources, complexity of regulatory landscape,
potential legal liabilities.
● Opportunities: Conducting regular compliance audits, enhancing risk
management strategies, staying updated on regulatory changes.
● Threats: Legal disputes with competitors, regulatory fines, reputational damage
from compliance violations.

10. Administration/Management:

● Strengths: Effective strategic planning, efficient organizational structure,

transparent communication channels.
● Weaknesses: Lack of succession planning, bureaucratic decision-making
processes, siloed departmental operations.
● Opportunities: Implementing performance management systems, fostering a
culture of innovation, promoting cross-functional collaboration.
● Threats: Leadership turnover, internal conflicts, resistance to change within the
organization.