Business model inspiration on Wikipedia

In search of a brilliant business model, you might get inspiration worth millions on the free online encyclopedia Wikipedia.

Of course Wikipedia has a definition of the concept Business model, but more important: If you scroll down a bit in the article, you will find a list of different examples of business models. At the moment you can find links to 22 different articles on different business models.

 Go to Wikipedias article on business models

Three roles in the venture team

Who are you in your venture team? The Entrepreneur, The Manager or The Technician.

The Entrepreneur is the dreamer living in the future. He or she is having great visions of how the company can develop in the future and constantly asks “what if…” and comes up with new ideas for improvement and change.

The Manager is more pragmatic and focused on planning and making order. He creates the systems of the organisations.

The Technician is the doer who likes to get things done. He is a hard-worker and pushes others to be more effective and move ahead.

In every venture team it is necessary to find a balance between the different roles, and if you are an individual entrepreneur it is important to balance your time between the three roles.

If you forget your Entrepreneur role, you will keep on doing the same things and miss new business opportunities. Your company simply won’t develop and grow.

If your forget the Manager role, you will get completely unorganized. Your accounting will be a mess, and you will lose the general overveiw. And you will probably waste to much time on looking for things. Furthermore you might have to rethink how to solve problems every time the appear, since you haven’t established routines. The Manager standardizes you different tasks, som when you grow, you will be able to make your employees do things in a standardized way.

The Entrepreneur get the ideas how to grow, but the Manager creates the system, that makes you able to grow.

Finally if you forget the Technician, you basically will not  be able so collect any invoices and get revenue. It is only the Technicians time that actually generates revenue.

On the other hand if you over do the different roles:

Overdoing the Entrepreneur will give you a lot of fantastic ideas but none of them ever turn into products and sales. You will just walk from idea to idea.

Overdoing the Manager til leave you with a clean desk and everything in perfect order – but nothing to manage.

Overdoing the Technician will keep you busy but with no idea where you are going and probably not being very effective even though you feel effective.

In short you may say, that Entrepreneurs make sure, that you are doing the right things, Managers make sure, that you are doing things right, and Technicians make sure, that you are doing somethings….

Your business model should reflect the life your want

Most people that I have helped staring their own business basically just want to create their own job. To be selfemployed. Therefore the set up a business that is completely dependend on their precense. That is fine with me, since I have had the experience myself to be selfemployed. It’s a great job, the best in the world, but it is still a job. You still need to go to work every day to get an income.

However the more entrepreneurial think in a different way. They want financial freedom. They want to build op income streams, that are independent on their precense. They want to create enough of such income streams to work for them, som they can do whatever they want with their time without worrying about their income for next month.

A simple and obvious example is writing an e-book and selling it on your website. Once the book is written and ready for download, it generates income without you moving a finger as long as people still download it. It is not always that easy, but in general it is an important part of the entrepreneurial mindset, that you create something that can generate income to you without you going to work every day.

Sterling & Jay – pseudonyms for a couple of internet entrepreneurs – speak a lot about this in their podcast and blog Internet Business Mastery that I strongly recommend for it’s focus on mindset. It has completely changed the way I look at my own business, that is going through a major transformation at the moment.

Sterling & Jay are in debt to the book Rich Dad, Poor Dad that teaches you how to make money work for you in stead of you working for money.

So what do you want? To create your own job or to create financial freedom. You’ve better decide now, cause what you think is what you get.

Who do you write the Business Plan for?

Writing a business plan as a study project easily becomes just another report – basically written for the teacher to get good grades or at least to pass the exam.

In real life however the business plan is always written for a more or less specific reader and with a specific purpose. Sometimes of course you just write the business plan for yourself to get a clear idea about the business you are going to start and to be sure, that you have thought about all relevant aspects of your startup company. And in other cases you write the business plan together with your business partner to be sure, that your visions and goals are the same and that your have the same image of the roadmap to succes with the business you are starting together.

But as soon as you need external financing from banks or investors, you should hav the banks and the investors in mind, when you write your business plan. You will have to understand the mind of the banker and the investor when you write the business plan, and you will have to have a clear goal with the presentation – fx. a 100.000 € loan or an investment of 1 mio. €.

What do bankers need

If you want a bank loan, you basically go to your bank and ask for it. You will probably be given a new contact person in the business department, but basically it is quite simple to ask for a bank loan in your bank – or in another bank.

What the banker needs to know is basically whether you can pay back the loan – and that you can start paying as soon as possible. And if they are not too sure about the business, they will get some other kind of security. Fx a mortgage in your house.

Therefore the banker will always ask for budgets to see the expected profits and estimate the necessary loan. In the business plan you will need to include

• Investment budget to estimate the startup loan.
• Profit/loss budget (monthly basis) to estimate profits and your ability to pay back.
• Cash flow budget to estimate the level of your cash credit.

The banker probably prefer a business with a low risk and steady income in stead of a more risky project with the potential of huge profits and growth. Remember that bankers are usually generalists, so it is safer for them to give credits to common businesses they know in stead of completely new innovative ventures with products that the market does not know yet.

Basically you will have to convince the banker, that your can generate profits very fast and that you have the experience and enthusiasm to succeed. Than banker is usually looking at the general family economy too.

What investors look for

Contrary to bankers, investors are willing to take risks, and they usually invest higher amounts. Investors usually invests equity (typically shares) in stead of loans, so they don’t need to get interest and repayment right away. In stead they are expecting a high profit, when they sell their part of the company after fx. 5-7 years. Therefore investors are looking for companies that they can help grow fast, so their shares will increase in value.

There are different kinds of investors, but i will mention two of the most common:

Venture Funds – companies with capital from fx big companies or bigger funds. Their purpose is to invest in typically smaller companies with big growth potential. Not all Venture Funds invest in startup ventures, but some do. Venture Funds usually have a clear focus on one or a few specific industries.

Business Angels – are individual investors or groups of individual investors, who have free capital to invest in smaller companies with growth potential. Their capital often comes from succes with their own businesses or from selling it, and they usually invest in industries they know, and where they have management experience. They will usually be interested in or demand a seat in the board in the companies the invest in.

To get an overview over venture funds and business angels can be complicated. In particualar Business Angels can be hard to spot or identify. And you will need help or advice to spot the right Business Angel. Fortunately there are usually people that can help you find them. In Danmark the DVCA – Danish Venture Capital & Private Equity Association – has a website with a list of members, so that is a good place to start seaching.

In general the investors will look at the factors below, when they consider investing:

• Strong team
• Attractive market
• Scalable business model
• Unique product
• Progress in the business project
• Attractive investment conditions
• Exit opportunity

Some people say, that investors go backwards into the company with their eyes fixed on the exit sign

Building a team

Building a strong team for the new venture is both a matter of finding the right people for the daily work and management, but also a matter of finding the right people to give advice and share their network.

More inspiration on building a team, the episode 4a podcast of Mark Julianos Entrepreneurship & Business Course gives good inspiraiton.

Beside the podcast, professor Juliano has put his PowerPoint-slides and an excersise-handout on his course material webpage.

Being a business owner in Denmark….

For startup companies in Denmark there are several websites dedicated to give information to startups – but only a few in english. Probably the best practical guide in english is 100svar.dk ( “100 ansvwers”).

Check it out to see if it contains relevant information for your business plan.

It’s up to you now…

After developing new ideas and concepts for the first half of the course, it is inportant, that we start focusing on the business plan.

And remember: A business plan is not somthing you put together in an intensive last week before deadline. A business plan is a process, where you make the first raw version, get feedback, research, change it and get feedback again. It is a long learning process that you cannot finish fast if you want a good result.

Since you have worked quite som time now on your ideas, I would like you to fokus on other parts of the business plan now. Especially describing the team behind the idea, the market and industry and the financial projections (budgets).

It is going to be chaotic, difficult and frustrating. You can’t alway find the information you need on the internet – and maybe not even by speaking to people. But then you need to find creative ways to answer your questions.

I will be there to help in class and support you with information on this blog, but you will have to take action yourself now…to get a feeling of real life….

Market information – statistics

Speaking to experienced people is the best way to get updated market information. People who works in and feels the market dynamics every day.

But statistics is a fine start to get an overview over market size and trends. In Denmark the general statistics can be accessed via Statistikbanken. It is free to use, but you have to register as a user. Most statistics are general, but you also might find some very interesting specific information about your market.

 Have a go!

Finding your competitors

If you don’t know your competitors yet, it’s about time to identify them. If you need to search for competitors on the danish market, I have a few tips.

Kompass is an international database with information about 2.2 million companies in 70 countries, where you can searc on specific products or product groups, and in that way identify potential customers. You can search products on a specific country or worldwide, and get basic information about companies supplying the product.

If you want the full information, you have to have a license, and fortunately, the library at Vitus Bering – and many other public libraries have a license, so you can use it for free there.

Other ways to find danish companies is fx. via Danish Exporters, where you can searc for products too.

Krak is a good database too. Unfortunately it is only in danish – so you might need some help.

Networking for resources

After the holiday break we have switched focus from developing the idea and concept to focusing more on the final product – The Business Plan. I have uploaded some material about business plans on our Fronter-intranet, but I would like to give you a link here to a business template i MS Word-format, that you can download from the danish website Startvækst.dk.

It is detailed template, that guides you through the business plan process with about 80 questions to answer – though some of them might not be relevant to your project.

More detailed guidance in the different parts of the business plan is provided on a seperate website www.dynamicbusinessplan.com.

So go ahead!