How to develop a Business Model

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How to develop a Business Model

It is a hard, commercial truth that financial viability must always be a high priority for organisations, for without the financial capacity to operate you will not have the ability to continue delivering services “There is no mission without margin.”

These guides provide support in navigating fundamental Business Model building blocks connecting Client and Community Engagement and Operations.

Business model

A Business model shows how an organisation creates, delivers and captures value for its stakeholders. There are many planning tools available to help to create a business model.

The Business Model Canvas™ has nine building blocks for planning successful operations, identifying sources of revenue, the target client base, products and services, activities, resources and partnerships.

The Canvas helps you focus on the essential elements of your organisation and visualise how the critical components fit together. This will save you time and enables you to track your progress across the various aspects of your operation.

The model can be used in several ways:

Strategic Planning and Development.

For mature organisations, the Canvas provides a blueprint for your regular strategic planning and development cycles. For less developed organisations, the Canvas business model provides a clear foundation and direction.

Retrospective/Outlook.

The Canvas helps you describe what you have done in the past year and what you intend to do in the year ahead. This provides an excellent opportunity to co-create strategy with people from around your organisation.

Develop New Services or Business Models.

The Canvas helps you understand and highlight which services are sustainable and which business models may work best in a changing market. This can entail everything from improving existing business models to inventing new business models.

Use these nine building blocks

Understand who your ideal client segments are

In-depth analysis (knowledge) of your potential client-base in the context of the NDIS, grouped into sets of clients that have similar needs or similar characteristics.

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Develop a Value Proposition

Potential clients can quickly understand what you offer (delivery method, price, quality). It’s your chance to establish a substantial difference between you and your competitors.

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Know how to reach them (Client Channels)

Know the "channels" where target client groups want to be reached.

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Build a service model that addresses their needs (Client Relationships)

Develop cost-effective and efficient service delivery models to reach target clients.

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Know how your organisation captures revenue

Identify the best price to achieve a sustainable operation by making sure you’re recovering the full, comprehensive cost of service delivery.

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Understand what resources are required

Determine the critical resources required to deliver your organisation's Value Proposition and what resources are needed to sustain operations.

Refer to How to assess your resource requirements.

Map all your key activities

Determine the critical activities required to deliver your organisation’s Value Proposition and what actions are needed to sustain operations.

Refer to How to identify activities related to service delivery and operations.

Develop partnerships that add value

Identify key partners essential to achieving broad impact and optimum outcomes for clients.

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Know and manage costs

Understand the accurate, comprehensive value of service delivery to price your services accurately.

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Resources

The developers of the Business Model Canvas have lots of support to help guide you through the vital building blocks. The template can be downloaded here - https://www.strategyzer.com/canvas/business-model-canvas

Further information about the building blocks is provided here: https://strategyzer.uservoice.com/knowledgebase/topics/113454-using-our-tools-canvases-methods

A Canvas example adapted for the not for profit sector can be found at https://www.nonprofitjourney.org/uploads/8/4/4/9/8449980/_npo_business_model_canvas_alexandros.pdf

The model below explores the development of a Canvas for mission-driven organisations. https://blog.strategyzer.com/posts/2016/2/24/the-mission-model-canvas-an-adapted-business-model-canvas-for-mission-driven-organizations