In recent years a lot of people asked me how it was to open a company on my own and what kind of business case did I use to achieve profitability.

To tell you the truth, my first venture in 2008 went belly up after 6 months: I did not have a Business Model, nor did I know how to create a business case. Later I opened 2 other companies using business frameworks and they were both a success.

I would like to share some tools and frameworks in the next articles: today we’ll focus on the Business Model Canvas (BMC), and in the next weeks we will check the SWOT matrix, and the 5 forces of Porter. With these matrices and frameworks, you will be able to see if your idea can be shaped into a successful business.

The Business Model Canvas (BMC)

Some of you have ideas for the creation of the next big start-up. Your idea, that has matured for some time, is the best: there are no flaws to it, no existing competition, it will bring you millions.

Well, before you even think about getting a line of credit from the bank in order to pay for a MVP, start by creating a sound business model. But how do you start this journey? What are the correct questions to ask yourself? Is the relationship with your customer as important as the price of goods that are provided from your suppliers?

I would advise you to start your journey by using the Business Model Canvas, which is a graphical design template created in 2004 by Alexander Osterwalder.

The BMC is divided by nine building blocks that are:

• Customer segments
• Customer relationships
• Channels
• Value propositions
• Key resources
• Key activities
• Key partners
• Cost structure
• Revenue streams

With this template, and a bit of practice, you will be able to articulate your business model and see if it is sound in less than 20 minutes.

Rather than describing each building block, I will illustrate them with an example of a business.

Business idea: sport-4-food

During the current Corona crisis, there is a tendency for the general population to overeat in order to pass the time [https://www.bbc.com/worklife/article/20200331-how-to-eat-a-healthy-diet-when-work-from-home-coronavirus] [https://newyork.cbslocal.com/2020/04/01/coronavirus-binge-eating-weight-gain-self-medicating/].

Let’s provide a fictional healthy fast food chain, called sport-4-food, to address this pain point.

The company will:

• Propose healthy food for any type of diet.
• Deliver the food via air drones.
• In order to retrieve the food, the customer needs to do some workout to burn some calories.
• The sport workout is displayed on the mobile app of the customer, which also serves as an interactive menu and the only payment interface.
• The drone records on a live feed the sport performance; if it is not executed well, the drone flies away with the food, no refund given.

Crazy idea? Let’s check if it could be a viable one using the BMC

Customer segment

The first block to fill out is the Customer segment: who do we create value for and who are the most important customers.
In our case, it would be customers that:

• Are health conscious
• Like a novelty that can make them popular on social media (e.g. sharing their exercise videos)
• Are curious about new ways to deliver food
• Want to remain fit
• Pay digitally
• Can be delivered anywhere (no fix address)
• Are locked down due to the Corona virus
• Want to eat fast

We have another type of customer: sport partners that are selling clothes or sport equipment that could use our analytics to better detail their own marketing mix.

Seeing these choices, the global segment are customers between 18 and 45, that know how to wield technology and would gladly pay for this type of experience.

Channels

How do we reach the customer?
We will pick the following route:

• Via social media (ads on YouTube, Facebook, paying influencers on Tik Tok)
• Our own mobile app will be the main channel of notifications

Customers relationship

What kind of relationship do we want to have with each of our customer segment?

We need to provide a bespoke exercise for each customer: someone that is reaching 40 and with some disabilities will not be able to execute the same sport exercise as an 18-year old. Here we either get an army of sport coaches or we try to automatize as much as possible using AI and ML.

For our sport partners, we can provide customer consumption analytics that they can use to better sell their products.

Value propositions

Let’s match a value per customer segment:

• Fast and healthy food
• Motivate to do sports
• New concept of serving food
• Will be in the center of social media attention
• Can be delivered anywhere thanks to the mobile location
• Digital payment
• Last mile delivery: no need to go out of the apartment
• A lot of rich analytics about the end customer over time

Key activities

What key activities does our value proposition need?
I would say that the core should be:

• Produce healthy fast food
• Monitor and evaluate exercises that are being executed

That means that we should not focus on:

• Building up a delivery network
• Building up the application
• Sales and marketing

In this BMC, we are going to externalize those needs.

Key resources

What are the key resources?
I have selected:

• A central optimised kitchen to produce food fast
• Sport coaches that will create the exercises and also monitor them via the live feed of the drone
That means that sport coaches will be part of the company and won’t be externals.

Key partners

Who are the key partners and suppliers seeing our value proposition?
I identified the following:

• Drone logistic partner: external company that will provide the drones and the pilots
• The IT infrastructure: from developing the app to make sure that the payments are placed correctly. They will also be responsible for the IT security (video feed needs to be secured from end customer to coaches)
• The food suppliers: food that we will transform into meals
• Sales and marketing that will be outsourced: external company will be more familiar with work on the social media and will bring more customers on board

Cost structure

Having a lot of key partners will induce more cost for us.
We need to take into account:

• Sales and marketing costs
• Delivery costs (Drones)
• IT costs

On top of that, we will have:

• Cost of goods (food)
• Kitchen upkeep costs
• Salaries

Revenue Stream

All the source of cashflow:

• The meal and experience
• Selling the analytics to our sport partners
I added the experience as this is clearly our added value over other competitors

Articulate the Business Model of sport-4-food

This is a raw idea: I spent 20 minutes on the canvas and evaluated all the blocks, it gives me a first impression of the business:

"Sport-4-food is a healthy lifestyle fast food company targeting the sport active population. More than delivering food, it provides a sport experience where the customer will do bespoke sport exercise before accessing to his meal, delivered by fast drones everywhere where there is phone coverage.During the corona crisis, stay at home, eat and workout in a healthy way thanks to our futuristic service."

Is this optimised ? Far from it.

Did we check the competition? Not yet.

But this lets you identify and then change your value proposition of your future business.


Exercise: analyze existing business around you

Download the canvas [https://en.wikipedia.org/wiki/Business_Model_Canvas][https://www.strategyzer.com/canvas/business-model-canvas] and check companies we all know (Netflix, Amazon, Google …) in order to identify their value proposition

Next week, we will check the SWOT matrix and see how we can analyse our weakness and strength against the competition!