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The last two sections, and coincidentally the ones that everyone ones to talk about first, are revenue and costs. Once we have that information we can summarize that information and present it in various different forms.
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We're almost done.
0:00
Now I've covered all the working parts of
my business model.
0:02
So let's look at how that translates into
money.
0:04
As I mentioned in the previous videos, I
can easily obtain our costs by looking at
0:07
the key resources, activities and
partnerships.
0:12
And since I've already completed that,
this should be fairly easy.
0:16
My start-up costs are going to be the
hardware, initial software and
0:19
any other setup costs.
0:23
If I want to be official and
0:25
create a company early on, I'm going to
have those legal costs as well.
0:27
I will also have ongoing costs for
subscriptions that I pay for.
0:31
As well as occasional costs, like
attending conferences, or
0:34
my educational activities and even paying
an accountant during tax time.
0:37
Listing out all these costs helps me
understand my base expenses and
0:42
the kind of revenue that I need to bring
in.
0:46
The last part of my business model is my
revenue.
0:49
Now that I understand my value proposition
better,
0:52
I have a better picture of how to maximize
my revenue streams.
0:55
Going into this my thought was, well yeah,
I'll charge a client, you know, revenue.
0:59
Obviously I'll just, you know, get the
money from them the one time.
1:03
But now the plan is,
1:07
for each client I start with a fixed price
point that's product feature dependent.
1:08
Since I'm targeting a market that doesn't
really know how to maintain their site or
1:14
resolve their problems when they occur, I
can charge a recurring fixed payment for
1:18
maintenance, hosting and any other
services.
1:22
Finally, I can gain additional revenue
from each customer by up-selling.
1:25
Well, that about covers it.
1:31
Let's put this information down in a
better format that suits our
1:33
purposes more.
1:37
To use this as an internal reference, I'm
going to keep it as a mind map,
1:38
which is this diagram I've been drawing
all along.
1:42
If this is something you'd like to do,
1:45
there's a lot of great free mind mapping
software out there.
1:47
If I want to use this for business
considerations,
1:51
I can put together a more formal document
that goes somewhat like this.
1:53
I'll start with a summary.
1:58
In this section, I'm going to list the
profile of my company, general overview,
2:00
you know, name, purpose, legal status, and
so on.
2:03
I can also include what I have already
achieved,
2:08
any clients that I have worked with, and
so on.
2:10
Most business plans then follow with an
industry or market analysis.
2:12
Here's where you list your market size,
your competitors and trends.
2:17
This information is very important,
2:22
because it shows that you understand your
playing field.
2:23
For this example, it's kind of hard to get
that information.
2:27
But if this were anything other than a
freelance business,
2:30
you should be spending a bit of time
gathering all this information.
2:33
Not only does it arm you when going into
business,
2:36
you'll also gain an understanding of what
already works,
2:40
what are existing sales avenues, and
revenue models.
2:43
It's important to know what companies
before you have tried.
2:46
Sometimes, this section is broken down to
industry and competitor analysis.
2:50
It's up to you.
2:55
I tend to put them together,
2:56
since your competitors are part of your
industry anyway.
2:58
Next up, is the customer analysis.
3:01
This section indicates that you have done
all your research about your customer.
3:04
I did that, so I'm just going to list it
out.
3:09
I'm gonna list out my target customers,
their demographic information, and
3:11
the needs of a typical customer.
3:15
All the information I went over when I
explored my customer segments.
3:18
The next big section is our marketing
plan.
3:23
This is where we describe our brand, how
we get our customers to
3:26
know about our product and service, and
how we distribute it to them.
3:29
The information for this section comes
straight from two sections of
3:34
the business model, our channels and our
customer relationships.
3:37
Like we just talked about, my channels are
very traditional.
3:42
So I'm going to rely on a few ads,
word-of-mouth, and a lot of networking.
3:46
Evaluation, purchase, and distribution
happen directly with
3:50
the customer since the relationship is a
one-to-one.
3:54
I'm going over all this briefly, because I
detailed it earlier.
3:57
But you should be writing out each of
these points in as much detail as
4:01
possible when putting together your formal
plans.
4:04
Next up is our operations plan.
4:08
This section goes over the key operational
processes that
4:10
the company needs to undertake to ensure
success.
4:14
In simpler terms, that's our list of key
activities.
4:17
It sounds too complicated to call the
activities of my freelance business
4:20
an operations plan.
4:24
So I'm just going to say key activities in
my plan.
4:25
Remember, a business plan doesn't have to
adhere super strictly to any format, for
4:28
such simple uses.
4:33
Now, we can also break this information
down into primary and
4:34
secondary activities, if we need.
4:37
Lastly, we're going to include our
financial plan.
4:40
This includes the revenue model that we
discussed.
4:43
As well as the associated cost structures.
4:45
Business plans seem like they're designed
for more complicated ventures.
4:49
But as you can see, we can modify it to
suit our needs.
4:52
The goal in this exercise wasn't the
format for the final product, but
4:55
to show you that running through the
business model is the more important part.
5:00
Once you know how all the working parts
fit together,
5:04
it's simple to put that down on paper in
multiple formats.
5:07
My personal favorite is the mind map.
5:11
It helps me keep an eye on the big picture
and it's really simple to implement.
5:13
I hope that the exercise helped you
understand how to
5:18
create your own business plans, regardless
of what you're getting into.
5:20
Good luck with creating your own.
5:24
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