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Developing and Organizing a Viable Business Model

Developing and Organizing a Viable Business Model. Session 2 of the Levitt Social Entrepreneurship Program February 23, 2013. Flow of This Morning’s Session. Introductory Dialogue and Activity Business Models and Their Value Stages of Social Venture Development

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Developing and Organizing a Viable Business Model

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  1. Developing and Organizing a Viable Business Model Workshop 2: Aaron Levitt Social Entrepreneurship Challenge Session 2 of the Levitt Social Entrepreneurship Program February 23, 2013

  2. Flow of This Morning’s Session • Introductory Dialogue and Activity • Business Models and Their Value • Stages of Social Venture Development • What Is Your Venture or Initiative? • The Two Pillars of a Viable Social Venture Business Model • Program Design and Logic Model • Core Business Model Elements: • Market • Money • Management • A Quick Assessment • Next Steps in Our Program and Process Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  3. --I Ching Workshop 2: Aaron Levitt Social Entrepreneurship Challenge “NO GOOD ENDING CAN BE EXPECTED IN THE ABSENCE OF THE RIGHT BEGINNING.”

  4. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  5. Let’s Talk… • What is a “Business Model?” • What is a “Viable Business Model?” Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  6. Stages of Development • Opportunity Identification, Clarification, and Assessment Leads to • Viability Assessment (or Feasibility Assessment) Leads to • Business Plan Development But not in a single cycle linear process: a strong venture development process will involve multiple iterations, gaining refinement from each cycle. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  7. Opportunity Identification/ Clarification and Assessment Growing Out of Exploration of Session 1 • Asset Identification and Evaluation • Asset Valuation • Opportunity Identification and/or Clarification • Opportunity Evaluation • Opportunity Valuation • Risk Assessment Result: Overall Assessment of Opportunity Worth Further Exploration and Development Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  8. Some Risks to Assess(from Dees et al 2001) • Management Capacity • Workforce Capacity • Organizational Culture • Organizational Infrastructure • Enterprise Concept • Level of Required Capitalization • Prospects for Long-Term Funding • Prospects for Changes in Marketplace • Changes in Knowledge and Technology • Stakeholder Backlash • Competitor Response Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  9. A Sound Business Model Integrates • Viable and Relevant Mission and Vision (the social purpose) • Real Value Proposition • Social Value Creation Cycle (in the form of a logic model or theory of change) • Resources to Finance and Fund It • Capacity to Implement It Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  10. Value Creation Cycle(from The Nonprofit Strategy Revolution. David LaPiana 2008) Daivd Renz: Midwest Center for Nonprofit Leadership at UMKC

  11. Market: -Clients - Donors & Funders Organization Capacity Mission, Vision & Values Strategic Fit Strategic FIT Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  12. Viability Assessment Three Basic Elements: • Market Assessment • Money Assessment • Management Assessment Leads to Overall Assessment of Venture Feasibility and Viability Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  13. Payor Customers: -Donors & Funders Beneficiary Customers (Clients) The Market (Customer) Question Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  14. Market Viability Assessment Builds on Assessment of Porter’s Five Forces Focus on: • Demand • Competitive Advantage • Differentiator(s) • Price and Cost Structure Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  15. Competitive Advantage (The Nonprofit Version) This is the ability to produce social value by: • Using a unique asset and/or • Delivering outstanding execution • We employ the perspective of Porter’s Five Forces Model to examine and understand where and how we fit Daivd Renz: Midwest Center for Nonprofit Leadership at UMKC

  16. Strategy vs. Reality Daivd Renz: Midwest Center for Nonprofit Leadership at UMKC

  17. Let’s Talk… Share with your colleagues… In two minutes or less (your elevator speech): • What is your venture or venture concept? What is the social venture or program initiative that you have determined has great potential for creating social value? What is the “social value proposition” and how do you expect to deliver on it? (or your best case scenario) Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  18. Key Components of A Well-Developed Program Design (The Social Value Proposition) Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  19. Mission & Vision • Mission, Vision, Values • The mission: • Continuing philosophical perspective • Makes explicit reason for the agencies existence • The Vision: • Is what can be accomplished by providing mission services • An end state

  20. Strategy and the 5 “Ps” Strategy as a Plan Strategy as a Ploy Strategy as a Pattern Strategy as a Position Strategy as a Perspective

  21. Program Hypotheses • A series of “if-then” statements • Cause and effect (factors) • Process • Output • Means-Ends continuum

  22. Program Hypotheses • Development Steps • Identify Critical Issue and Factors • Cause and effect of each factor • Identify resources, data and assumptions • Brainstorm solutions • Prioritize solutions • Provides framework for service

  23. Policy and Budget • Policy Guidance • Communication Systems • Client Interaction • Financial Guidance • What will the strategy cost? • How will we fund the strategy? • Is it financially feasible?

  24. Finances • What will it cost? • Direct? • Indirect? • Is there revenue? • Who will pay for the program? • Do we have the capacity to financially manage? • Implementation • What do we need to do to start the program? • Where will we provide the service?

  25. Objectives • Provide short-term and long-term outlook • Intermediate results: Immediate impact or change • Final results: The long-term impact or ultimate change • Should be stated in measurable terms • Time frame • Target of change • Results

  26. Outcome Objectives Service Result Flow from the problem analysis Establish criteria for numbers served Multiple outcomes for a strategy or program

  27. Process Objectives Target program actions Establish milestones necessary to meet intermediate outcomes Focus on internal activities

  28. Group Work

  29. Program Design • Inputs • Client • Staff • Material resources • Facilities • Equipment

  30. Program Design • Throughput • Service Definition • Service Task • Method of Intervention • Outputs • Unit of service • Service completion • Quality

  31. Outcomes Numeric Counts Standardized Measures Level of functioning scales Client satisfaction

  32. These Add Up to Becomea “Logic Model” A very useful device to plan and explain: • Your assumptions and expectations for how you expect to link: • Inputs, which will support • Activities, which will lead to • Outputs, which will add up to • Outcomes, which will result in • Long-term Outcomes and Community Impact Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  33. Take A Few Minutes… Please take about ten minutes to sketch out the basic logic model that explains the process by which your social venture or initiative will accomplish the outcomes that will result in social value and community impact. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  34. Return to Viability Assessment Three Basic Elements: • Market Assessment • Money Assessment • Management Assessment Leads to Overall Assessment of Venture Feasibility and Viability Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  35. Money Viability Assessment Initial Consideration of • Revenue Potential • Investor Potential • Available Capital Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  36. To Integrate These: CompassPoint’s“Dual Bottom Line Matrix” Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  37. Management Viability Assessment • Mission Compatibility • Core Competencies • Venture Capacity (including complexity) • Core Constituents or Stakeholders Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  38. Social Venture Planning In other words, social venture planning is the process by which we plan and articulate how we will integrate • Money • Market • Management To successfully deliver social value. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  39. The Summary: Key Elements of Feasibility or Viability Assessment Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  40. Let’s Do A Quick Assessment • Take about ten minutes to work alone or with your work group, if you have one, to take a look at the “Quick Market Test” and then complete the “Quick Market Test Scorecard.” • After you have completed this, we will invite observations about the topics where you know the most and the topics where you will want to engage in further research and analysis. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  41. Move to a Business Plan? If the venture is deemed feasible… • Build on all of the information of the feasibility assessment. • Add depth to each of the elements of the feasibility assessment to create a business plan. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  42. Wrap-Up: For the March Workshop • Meet and Begin to Work With Your Coach • Develop and Clarify Your Logic Model (complete the form) • Use the Worksheet Sets 4 and 5 (from the book, Venture Forth) to gather and organize your data to begin to assess the feasibility or viability of your venture. • Read the materials on financial viability assessment in preparation for next workshop, which will focus on “Funding and Financing Your Social Venture” • Contact your Levitt Program facilitators and advisors (Laufer, Helm, Andersson, and Renz) as needed to help you and your coaches to progress in the development of your social venture. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

  43. Questions? • Comments? • Clarifications? Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

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