Editor’s Note: On Saturday January 13th, the McGill Dobson Centre for Entrepreneurship held its 2018 edition of the Startup Bootcamp – an annual, full-day event where potential entrepreneurs come in to get prepped for the McGill Dobson Cup, as well as what comes after. We’d like to thank the McGill Alumni Association for their support.
After a round of inspiring speeches from our Associate Director Renjie Butalid, as well as angel investor Tim Tokarsky, we offered several different options depending on the needs of our attendees: a starting block for those without an idea or team, and pitch practice with judges for those who are already on their way. The starting block was focused on developing the idea and building a great team, as well as best practices when it comes to pitching. On the other hand, pitch practice was useful to get real feedback from experienced business mentors. After lunch, we all gathered for some important lessons and final pitches.
But arguably the most powerful lesson for most people thinking about business, was the presentation on the Business Model Canvas, delivered by Renjie Butalid. Our writer Hasan Bilgen found a way to scale the lessons learnt, and share it with ALL of our readers – this article.
Before we jump into it though, here are the slides from the bootcamp:
The Business Model Canvas can help you think about all the different types of hypotheses for your business. They’re hypotheses because you don’t know if they’re true or not just yet. This uncertainty comes from having to actually go out there and look to see if you are actually addressing the concerns you think your business is addressing. You can’t take your business’s structure for granted and you can’t assume everyone on you team is really on the same page.
So who are your customers? What are you offering? Is your team all talking about the same customers? Following this model allows your team to have a conversation about your business and customers and to more clearly define your company’s internal and external organization.
If your team can go through the Business Model Canvas and answer all the questions then you will have a clear pathway to creating and writing your business plan.
A business model describes the rationale of how an organization creates, delivers, and captures value”
What is the business model canvas?
Think of this model as wording your business in a simple way: 3 or 4 words, so you can know how your business will be functioning: the customers, the financials, the labour. This is the dissection of your whole idea for everything. Remember, the McGill Dobson Cup Business Plan is short (5-pages), you should be struggling to condense all of the background, vision, prospects, and success of your company.
Going through this model is a way to think and express the most important things precisely and effectively–it is a visual snapshot of your entire company. It can also be value changing, it can really change how you think you know the operations of all that you are actually doing. It will help you express your ideas by thinking of your business differently and possibly connecting different aspects of your team that haven’t been before. Your company is creating value, it is solving a problem being wanted by customers, and it is your job to also capture this value.
Here’s an example, using LinkedIn:
The 9 Building Blocks:
1. VALUE PROPOSITION:
This is your elevator summary of your startup – three or four sentences which can sum up your company’s vision. What are you offering customers? What is it that is getting done for them? Why should they care? You have to create a need for your company to exist and understanding why and how you are needed is the key. If the customers you are trying to reach can’t see why they should need you, then you need to change how you target them till they think that they couldn’t possibly live without you.
2. CUSTOMER SEGMENTS:
Which customers and users are you serving? Which jobs do they really want done? If you say your target group is ‘everybody’ you need to narrow that down…a lot. You cannot create a startup trying to target everyone. If you do that, then you will target no one. How do you stand out? When Zuckerberg started Facebook his target community was just Harvard . It was only after he captured that market he expanded to other Ivy League Universities, then Universities in general, and only then, the world.
Furthermore, are you sure you are targeting the right people. 18-30? 18-22? Being 27 is very different than being 20. You must be nuanced in how you break down the assumptions of your customer segment. Uber used the rule of 3’s. Identify (1) where, (2) who, (3) how. They started with a pilot in (1) San Francisco with a target market of (2) individuals in the tech industry earning over a 100k a year (3) using their mobile beta app, and it worked! After their trial in S.F. they went to New York City with same variables, and so on. Only now do we all know Uber. Focus on getting to know a niche market’s customers – and the only way you can do that is by talking to them!
How does each customer segment want to be reached? Through which interaction points? For example, professionals may want to be contacted through LinkedIn while 16 year olds may be best reached through social media like SnapChat or Instagram. You don’t need to (and you shouldn’t) be on every single platform, just the ones that actively promote your company to your target audience.
4. CUSTOMER RELATIONSHIPS:
What relationships do you establish with each segment? Personal? Automated? Acquisitive? Retentive? You want customer loyalty. There is no point, or sustainability, in signing up many one-time customers. It’s cheaper to have a customer keep on coming back to make purchases than to get a 100 new, one-time customers every week. How will you establish loyalty for customers? (Air Miles card, Sephora card, etc.,) What program can you create to retain loyalty?
5. REVENUE STREAMS:
What are customers really willing to pay for? How? Are you generating transactional or recurring revenues? There are many different ways to go about it. One-time transactions are the easiest but perhaps your company needs a subscription service, or maybe customers can buy in blocks, or maybe you offer it for free to a certain amount and then charge premium, or maybe you start premium right off the bat. You should find the most efficient and customer preferred method of payment for your company.
6. KEY RESOURCES:
Which resources underpin your business mode? Which assets are essential? How do you deliver? If you ‘need’ an office, you don’t need a real office, a living room will do. Need wi-fi? Maybe go to a coffee shop. It isn’t important to have everything yet, but you NEED to articulate what resources you do and will need, including human knowledge or labour! If your team doesn’t have everyone (or thing) it needs to have, prioritize finding a way to be complete.
7. KEY ACTIVITIES:
What activities do you need to perform well in your business model? What is crucial? If you need 100 sign-ups, then you need sales people. If you are an app focused on students then you might need to research where students gather. Find out what your team needs to know to be delivering your value proposition.
8. KEY PARTNERS:
Which partners and suppliers leverage your model? Who do you need to rely on? Through whom can you earn credibility? You’re a seemingly unproven team but you can use previous references and experiences to establish relationships and partnerships right off the bat which could lead to users. If you want people to trust you, show them that they can through other people who have trusted you, or highlight how you are right for the job.
9. COST STRUCTURE:
This all costs money; you want these resources to deliver, you want to pay people to do these activities., What is the resulting cost structure? Which key elements drive your cost? By going through the 9 blocks your company will be able to articulate what it needs to construct and operate under an appropriate sustainable business model.
If you don’t have these basic answers it’s okay because your startup is a work in progress, but to start becoming successful you need to be able to breakdown and answer these questions. You can also use something like this to deconstruct similar companies or competition to compare and set up.
Back to the concept of hypotheses, you don’t know if these are true and the best way to test them is with going to customers. If your model works then keep going and add improvements. Otherwise, pivot, make small changes where you saw deficits, and remember to always be learning. This model is just one way that you can Build, Measure, and Learn how your startup is doing and it’s the role of a successful startup to be constantly, quickly, and effectively be monitoring their performance this way.
- January 17, 2018: Application Deadline @ 11:59PM – McGill Dobson Cup 2018
- January 24, 2018: Startup Legals, Protecting Your IP & How to Incorporate your Startup
- January 31, 2018: How to Pitch Your Startup Workshop
- February 7, 2018: Startup Financials Workshop
- February 14, 2018: Market Research Workshop
- February 20-23, 2018: Semi-Finals – McGill Dobson Cup 2018 and much more!
Learn more about our events at www.dobsonchronicles.com/events