UNIT 3 – BUSINESS MODEL CONCEPTS

1. Business Plan: Definition & Fundamentals

A Business Plan is a formal written roadmap that outlines a business’s goals, methods to achieve
them, and timelines. It explains the nature of the business, its financial projections, strategies, and
how the company plans to succeed.
It integrates all key functional areas – Marketing, Finance, HR, and Operations, offering a complete
picture of how the business will run.

Purpose

• Gives clarity to entrepreneurs

• Helps answer:

o “Where are we now?”

o “Where are we going?”

o “How will we get there?”

• Essential for attracting investors, partners, and even customers.

Utility

• Tests the viability of your idea

• Helps with planning and funding

• Serves as a management tool

2. Components of a Business Plan

1. Introduction – Brief overview

2. Executive Summary – Highlights and core points

3. Industry & Environmental Analysis – Market size, competitors, trends

4. Description of Venture – Vision, mission, what/why/where of the business

5. Production Plan – How product/service is created

6. Operations Plan – Workflow, logistics, inventory

7. Marketing Plan – Distribution, pricing, promotion

8. Organisational Plan – Ownership, team structure

9. Risk Assessment – Threats, weaknesses, backup plans

10. Financial Plan – Revenue, costs, break-even

11. Appendix – Market research, legal docs, supporting data

 Example: Including a Mission Statement, IPR details, and Customer Profile helps strengthen the
plan.

3. Environmental & Industry Analysis

These analyses assess external factors like:

• Economic trends

• Legal and political changes

• Technology shifts

• Customer needs and competitor strengths

Important Questions:

• What trends affect your industry?

• Who are your competitors?

• How does your product/service stand out?

Tip: Use SWOT here – understand your strengths & threats clearly!

4. Production & Operations Plan

• Details how your product/service is produced

• Includes layout, equipment, software, raw materials

• Operations plan includes order flow, inventory management, shipping, space needs, and
customer support

Important: Mention costs, suppliers, and tech usage for maximum clarity.

5. Marketing Plan

• Describes how you’ll promote and sell

• Includes pricing strategies, distribution channels, and advertising methods

• Must be supported by market research

• Includes profit forecasts and sales control tools

6. Organisational Plan

• Describes ownership structure (e.g., Sole Proprietorship, Partnership, etc.)

• Includes team bios, roles, and an organization chart

 • Shows decision-making power and team capabilities

7. Risk Assessment

• Identifies potential business risks

• Includes new technologies, market shifts, or competitor moves

• Must include contingency plans to show preparedness

8. Financial Plan

• Checks economic feasibility of the business

• Includes:

o Cash flow projections

o Income statement & balance sheet

o Break-even analysis

o Sources of funds (like loans or investments)

Common Reason Business Plans Fail:

• Unrealistic goals, poor market research, or lack of experience

• Not updating the plan with changing trends

9. Business Model Canvas (BMC)

The BMC is a visual tool to map how a business creates, delivers, and captures value. It simplifies
the business into 9 key blocks:

Section Meaning

1. Customer Segments Who are your target users?

2. Value Proposition What value do you deliver?

3. Channels How do you reach customers?

4. Customer Relationships How do you acquire & retain customers?

5. Revenue Streams How do you make money?

6. Key Activities What must the business do to succeed?

7. Key Resources People, capital, tech, assets needed

Section Meaning

8. Key Partners Suppliers, allies, strategic ties

9. Cost Structure Fixed & variable costs involved

Tip: Use the BMC before writing your full business plan to get clarity.

10. Lean Canvas (LC) – A Startup’s Best Friend

The Lean Canvas is a startup-friendly version of BMC. It emphasizes:

• Problem-Solution Fit

• Customer Needs

• Quick Assumption Testing

Business Model Canvas Lean Canvas

Focus: Existing Businesses Focus: Startups

Used by: Ops & Marketing Teams Used by: Entrepreneurs & Founders

Emphasizes: Value creation Emphasizes: Problem-solving

Modified Blocks in Lean Canvas:

• Problem

• Solution

• Unique Value Proposition

• Unfair Advantage

• Key Metrics

Example: Facebook’s Lean Canvas highlights solving the problem of student communication,
offering a unique online solution.
 Pitch Deck

What is a Pitch Deck?

A pitch deck is a brief presentation (usually 10–15 slides) that provides an overview of your business
to investors.

Purpose:

• To convince investors to fund your startup.

• To communicate your vision, product, market opportunity, and financials.

• Used in face-to-face meetings, email outreach, or competitions.

 Typical Pitch Deck Structure:

1. Introduction – Who you are and what your business is about.

2. Problem – The real-world problem you are solving.

3. Solution – Your unique product/service.

4. Market Opportunity – Target audience size and growth.

5. Product – Features and demo/screenshots if applicable.

6. Business Model – How you’ll earn money.

7. Go-To-Market Strategy – How you’ll reach customers.

8. Competitive Analysis – Your position among competitors.

9. Team – Founders and key roles.

10. Financials – Revenue projections, funding needs.

11. Ask – How much funding you're seeking and how you’ll use it.

Elevator Pitch

What is an Elevator Pitch?

A short, persuasive speech (usually 30–60 seconds) that outlines your idea/business in the time it
takes to ride an elevator.

Purpose:

• To spark interest in your idea.

• Useful in networking, interviews, or chance meetings with investors.

🛠 Structure:

1. Who are you?

2. What do you do?

3. What’s the problem you're solving?

4. What’s your unique solution?

5. What’s your ask? (optional, if relevant)

Example: “Hi, I’m Aisha, founder of GreenPlate. We help urban people grow organic veggies at
home using our smart hydroponic kits. Our solution is eco-friendly, easy to use, and already used by
5,000+ customers. We’re looking to partner with wellness stores to scale further.”

Financial Aspects
 Financing vs Funding

• Financing: Getting capital (via loans or equity) to run or expand business.

• Funding Stages:

1. Bootstrapping – Self-funding by founders.

2. Seed Funding – Early investment to develop MVP (product).

3. Angel Investment – High-net-worth individuals.

4. Venture Capital – For scaling and growth.

5. IPO – Public market investment.

Inflows and Outflows

• Inflows: Income from operations, loans, investment.

• Outflows: Salaries, raw materials, rent, marketing, interest.

Financial Documents:

1. Income Statement – Profit and loss.

2. Cash Flow Statement – Inflows and outflows over time.

3. Balance Sheet – Assets, liabilities, equity.

4. Break-even Analysis – When total cost = total revenue.

Market Research & Marketing

Market Research:

The process of collecting, analyzing, and interpreting data about:

• Customer needs

• Market trends

• Competitor strategies

Importance:

• Helps understand demand.

• Reduces risk.

• Identifies gaps and opportunities.

Types:

1. Primary Research – Surveys, interviews, focus groups.

2. Secondary Research – Existing reports, articles, databases.

 Marketing:

Activities involved in promoting and selling products or services.

Elements of Marketing Mix (4Ps):

1. Product – Quality, design, features.

2. Price – Competitive pricing, discounts, premium pricing.

3. Place – Distribution channels (online, retail).

4. Promotion – Ads, sales promotions, PR, social media.

UNIT IV: Building Your Business Model

What Is a Business Model?

A business model is a company's plan for how it will make money. It includes:

• The products/services the business will sell,

• The target market (who will buy them),

• The expenses and costs involved.

It is like a roadmap to success for both new startups and existing businesses.

Importance of a Business Model

• Helps startups attract investors and hire talent.

• Motivates team members with a clear vision.

• Allows established businesses to update with trends.

• Useful for investors and employees to understand the company's future.

Steps to Create a Business Model

1. Identify Your Audience

Know who you're targeting. Understand your customer base to tailor your product and
message.

2. Define the Problem

What problem does your business solve? (E.g. restaurants solve hunger, repair shops fix
damage.)
 3. Understand Your Offerings
Match your skills and resources with market demand. Offer what people need and you can
deliver well.

4. Document Your Needs

List your challenges (e.g. technical, financial). This helps in planning and resource allocation.

5. Find Key Partners

Collaborate with others. (E.g. caterers for a wedding planner). Partnerships can boost your
success.

6. Set Monetization Strategy

Decide how you'll earn money — sales, subscriptions, ads, etc. Choose the best fit for your
target audience.

7. Test Your Model

Conduct trials, surveys, or soft launches. Collect feedback and be open to making
improvements.

3 Tests of a Business Model

1. Desirability
Are you solving a real customer pain point?

o Ask: Is it a "must-have" or just a "nice-to-have"?

o E.g. Tesla planning for autonomous car-sharing boosted desirability.

2. Feasibility
Can your business actually build the solution using your strengths?

o Don't copy competitors blindly.

o Use existing resources like branding, tech, etc.

3. Viability
Will your business idea work long-term and stay profitable?

o Consider sustainability and future trends.

o Tesla built charging infrastructure — a smart move for long-term growth.

MVP — Minimum Viable Product

An MVP is a basic version of your product with just enough features to satisfy early users and gather
feedback.

Why Build an MVP?

• Cost-effective way to test ideas

• Quick development
 • Helps you find out what features people really want

• Allows room for experiments and updates

• Provides a proof of idea to investors

MVP Development Process:

1. Define the Problem and do market research

2. List and Prioritize Features — build only the essentials

3. Prototype and Validate — show a sample or mock-up

4. Build, Measure, Learn — collect feedback and improve with each version

Proof of Concept (POC)

A POC is a small project to test whether an idea is workable in real life.

Purpose of POC:

• To check technical feasibility

• To see if an idea can become realistic and functional

• Helps identify challenges early

• Minimizes risks and waste of resources

Value of POC:

• Helps companies assess if an idea has real potential

• Useful for getting internal feedback

• Convince investors or stakeholders about the idea’s viability

Prototype Model and Startup Ecosystem in India

(8-Mark Answer)

1. Prototype Model

The Prototype Model is a software development approach where a working model (or "prototype")
of the system is built before developing the actual software. It helps understand client requirements
better, especially when they are unclear.

Key Steps of Prototype Model:

1. Requirement Gathering – Understand basic needs.

2. Quick Design – Create a rough system layout.

3. Build Prototype – Develop a basic version.

 4. User Evaluation – Get client/user feedback.

5. Refinement – Modify based on feedback.

6. Engineer Final Product – Build the actual system.

This model is ideal when requirements are vague, allowing for early visual interaction and iterative
improvement.

2. Early Adopter

An Early Adopter is someone who uses a new product or technology before the majority. They are
usually:
Young, educated, and risk-takers
Tech-savvy and social influencers
Key in providing feedback for improvement

Why Early Adopters Matter:

• They test the product early

• Provide genuine feedback

• Influence others to buy (FOMO)

• Accept higher prices for innovation benefits

Company Strategies to Attract Them:

1. Pre-releases with rewards (e.g., Samsung's free earbuds)

2. Relationship Building – taking their feedback seriously (e.g., Apple)

3. Value Proposition

A Value Proposition is a clear statement that explains:

What the company offers
Why it is valuable
How it solves the customer's problem

It usually includes:

• A strong headline

• A sub-headline or short paragraph

• Visuals (like an image or demo)

After reading it, the customer should clearly understand what the brand stands for and what they
can gain from it.

4. Startup India and Top Schemes

The Startup India Initiative was launched to promote entrepreneurship and innovation in India. It
supports startups with funding, tax benefits, and infrastructure.

Opportunities and Support:

• India is the 3rd-largest startup ecosystem

• Over 100 unicorns and 60,000+ startups

• Backed by programs like Aatmanirbhar Bharat and Make in India

Top 3 Government Schemes (examples):

1. ASPIRE – Supports agro-business incubation and innovation.

2. Pradhan Mantri Mudra Yojana – Provides collateral-free loans to small entrepreneurs.

3. SIP-EIT – Financial support for international patent filings in tech sectors.

These schemes create jobs, support rural entrepreneurs, and encourage innovation at all levels.