Heads up! To view this whole video, sign in with your Courses account or enroll in your free 7-day trial. Sign In Enroll
Well done!
You have completed How to Start a Business!
You have completed How to Start a Business!
Preview
Let's recap everything we've learned about using the business model to expand on our business idea.
This video doesn't have any notes.
Related Discussions
Have questions about this video? Start a discussion with the community and Treehouse staff.
Sign upRelated Discussions
Have questions about this video? Start a discussion with the community and Treehouse staff.
Sign up
Now that we've walked through the business
model and
0:00
all its minute details, let's recap on
what we have learned so far.
0:02
There are nine sections in the traditional
business model canvas,
0:07
plus the one that we inserted in there.
0:10
First up is our value proposition.
0:13
A business's value proposition is our
product or
0:15
service through which we offer value to
our customers.
0:18
We create this value by solving a problem
for
0:22
the customer, or by satisfying a need or
want.
0:24
This is very important.
0:28
Our value proposition can be a mix of
different elements.
0:31
Including newness, performance,
convenience, design, and so on.
0:34
A customer segment is a group of people or
0:40
organizations that you aim to reach and
serve with your value proposition.
0:43
There are different types of customer
segments.
0:48
The main ones we talked about are mass
market,
0:51
niche, segmented, diversified, and
multi-sided markets.
0:53
The goal of this section of the business
model canvass is to get you exploring your
0:58
customer segments, and defining who your
hypothetical customers are.
1:03
Once you have identified the type of
segment, develop your customer
1:08
archetypes to get a better sense of how
you can gear your business model to them.
1:11
Next, we have channels.
1:18
Channels cover three very important
aspects of our business.
1:19
Communication, distribution, and sales.
1:24
There are two types of channels, owned or
partner channels.
1:27
Owned channels have higher margins, but
are harder to manage.
1:31
Partner channels have lower margins, but
allow easy distribution and greater reach.
1:35
In addition, owned channels can be broken
down into direct and indirect.
1:41
However, all partner channels are by their
nature, indirect.
1:46
Regardless of the type of channel you
choose,
1:51
all channels have five main stages.
1:54
It is crucial that you think through your
approach for each stage.
1:57
There's awareness, evaluation, purchase,
delivery, and post purchase.
2:00
Keep in mind that starting out, your aim
should be to pick one channel that
2:06
you think will maximize your return, and
focus on that channel.
2:10
Don't waste you resources by trying to
simultaneously deliver through
2:15
multiple channels.
2:19
Customer relationships cover any
communication we
2:21
have with our customers throughout our
business model.
2:24
These relationships can be broken into
three main groupings: acquisition,
2:28
retention, and up selling.
2:33
When starting out, we're going to focus on
our customer acquisiton and
2:35
activation strategies, and how we can
maximize our revenue stream.
2:39
Remember that your customer relationships
are closely tied to your channels, so
2:44
develop them in parallel.
2:48
Next we have key activities, resources,
and partnerships.
2:51
To execute our business model,
2:55
we have a certain set of activities we
need to complete.
2:57
Some of these activities are crucial to
our business model.
3:00
These are our key activities.
3:03
Most of our efforts should be dedicated in
making these key activities a reality.
3:06
And our key resources are the
intellectual, human, financial and
3:10
physical capital that we harness to
execute on it.
3:15
For the activities outside of our key
activities list,
3:18
we don't necessarily need to handle all
the activities ourselves.
3:23
We can work with key partners who would
help reduce the risk, uncertainty and
3:27
costs of executing our business model.
3:32
Allowing us to focus on our core product.
3:34
Next we have revenue.
3:38
There are two main types of revenue
streams, transaction revenues,
3:39
resulting from the one time sale of your
value proposition, and recurring revenue
3:43
streams, obtained by continuously
delivering your value proposition.
3:47
Your chosen revenue model is closely tied
to the pricing structure you implement.
3:51
There are two main pricing categories,
fixed and dynamic pricing.
3:57
Fixed pricing is a pricing methodology
based on static predefined variables.
4:01
Fixed pricing can be further broken down
into different types: list pricing,
4:07
product future dependent, customer segment
dependent, and volume dependent pricing.
4:12
The second main type of pricing is dynamic
pricing.
4:18
Under dynamic pricing,
4:22
your price constantly changes based on
certain market variables.
4:23
Dynamic pricing is seen in instances of
negotiation, yield management,
4:27
real time markets, and options.
4:32
Remember that the price you implement must
not only take into account your
4:35
value proposition and customer segments,
but also accommodate the cost of doing
4:39
business, highlight the value that your
product delivers, respect the practices
4:43
and expectations of your market, and keep
an eye on competitive prices.
4:48
Your revenue model is very closely linked
to your customer segments and
4:53
channels, so explore those sections before
you start on this one.
4:56
Then there is costs, a company's cost
structure building block
5:02
describes the major costs incurred to make
the business model a success.
5:05
In a cost driven business model,
5:10
the focus is on minimizing costs as much
as possible.
5:11
This is reflected in the value
proposition,
5:15
where low cost is heavily emphasized.
5:17
In a value driven model, the main focus is
on value creation, rather than cost.
5:20
This type of business model is accompanied
by personalized customer relationships and
5:25
premium value propositions.
5:30
In this section of the business model,
don't worry about the nitty gritty.
5:32
Instead, focus on the large cost drivers.
5:36
The last section of our business model, is
the industry analysis.
5:40
The industry analysis should focus on two
things.
5:44
The type of market we're entering and how
that drives our marketing and
5:47
sales spending.
5:51
As well as the speed of product
development and customer expectations.
5:52
The second thing you should focus on is
your competitors.
5:56
What are they doing well, what aren't they
doing for customers.
5:59
How do they earn revenue and how are we
competing with them.
6:03
We've covered quite a bit of information
in this section, so
6:06
watch it as many times as you need to,
until you get a good grasp of things.
6:09
Above all, what I want you to take away is
that at this stage in your company,
6:13
we still don't have a business model.
6:18
We're still looking for one, and
6:20
we're using this canvas to come up with a
set of hypotheses for our undertaking.
6:22
In the next stage, we're going to look at
how we can test these hypotheses.
6:27
And use a method of iteration and
6:31
experimentation to validate our business
model until we find something that works.
6:33
You need to sign up for Treehouse in order to download course files.
Sign upYou need to sign up for Treehouse in order to set up Workspace
Sign up