Work the Runway ft. The Business Model

Hey Entreps!

At University I've met a lot of interesting and amazing people who really inspire and challenge me to reconsider my boundaries so I can attain my fullest potential.
In my second year, while living on hall, I met a young man who blew my mind, knocked the socks of my feet and well after doing so he swept me off my feet! Oh, let me just make it very clear that all this mind blowing and sock knocking and sweeping occurred in the most non-romantic way!

Anyhow, he was enrolled in the medical programme at the University and at the ripe age of 20, he already had his first degree in Biology from another University of the island. Apart from wanting to be a doctor, he was a "practicing"businessman and entrepreneur. Back in his hometown he rented and got permission to sublet apartments and was even trading on the Jamaica stock exchange. Mr. Man was also philanthropic. In his 2nd year at the University he started both a club designed to help med. students study and a charity that sought funding for medical supplies and financial donations for med. students in need.

Hence, when he told me that he bought a restaurant... I was far from surprised. It only seemed natural.
During one of our conversations he explained that the business was barely breaking even and there was  guy who worked there who stole over 250000 JMD from the business. When I asked who was running the business... he was. It was clear that he did not know what he was doing.

When I asked about the business plan... none.
Business Model... what?

So, today I want to talk a bit about the importance of a business model... a step many young entreps seem eager to bypass...

Based on my readings, a business model provides the answer to two key questions:

1. How is your organization going to capture Value i.e. Customer Value Proposition?
2. How is your organization going to make money?

So say for instance you have created a natural hair care line right...

In your business model you have to clearly outline who is your target audience. 

Are you targeting women 16- 40 who have naturally curly and kinky hair (black and mixed race women)? You need to consider both the demographics and psychographics of your audience.

What is your Customer Value Proposition?
What is it about your line of products that's going to keep the customers coming back?
Are you going to capitalize on the fact that you are a local brand that's eco friendly and using only natural and organic ingredients?
What's the pricing going to be like? Are you affordable?
If there are a lot of products like yours on the market, then what is it about your product that should make me the customer want to come back support your business?
What are benefits are you offering me (and my hair) in exchange for my money?

Now, after you've outlined your CVP... let's talk money!

How are you going to get the cash flowing? What are your plans for generating revenue?

What's your cost structure? What's your profit margin?

Remember, most businesses fail not because they're not making profit but because of an insufficient cash flow to keep up with their expenses.
So, what do your expenses look like? utilities, ingredients, packaging, graphic designer, website developer, advertising... what are your fixed and variable costs?
What pricing strategy are you going to use?

and.... where are you going to get the money from?
If you're going to investors, they need to know that you're serious about your endeavour and you've considered all these factors.
They want to see how you're going to repay them and when you're going to be able to do so.

So entreps, you have your amazing idea so its time to design your business model so you can make it happen!