Learning objectives:
At the end of the session, participants should be able to Develop business models for their local seed business.
Understand the relevance of a business model to a local seed business.
Understand the 9 components of the business model and be able to complete it. Understand how to develop a seed business model using a Business Model Canvas
(BMC)
Know how often the Business Model Canvas can be updated.
Figure: A business model canvas developed by Kyamulama Mixed Farmers’ Group in Lyantonde district during a business planning training in July 2013.
“This is such an interesting tool in the seed business” exclaimed one of the members in the business plan training as they filled in and completed the business model canvas. A business model canvas is one tool that has been introduced to LSBs to help them have a snapshot of their business before going down to develop a detailed business plan. Farmers have appreciated it as an innovative tool that makes them envision their seed business in short time and as quickly as possible. The 9 building blocks make it possible for LSBs to have a quick picture of their business in its entirety.
Content
A business model is a business plan showing how it competes, uses its structures, relationships, interfaces with customers, and creates value to sustain itself on the basis of the profits it earns. It is a handy way to fine tune your business strategy and therefore the LSBs are able to envision their seed business with a firm and reliable analysis made. Importance of a business model
It helps in producing the right product that will meet customer needs and preferences.
It helps in envisioning the key activities and resources needed in carrying out these activities.
It is good for strategic planning and defining your business niche.
The business model canvas forms a basis for business plan development. The Business Model Canvas diagram (business development process)
In each building block a number of questions are asked and when answered, the business model will be generated.
Steps for completing the business model canvas.
1: Value proposition: Value proposition answers the following questions What value do we deliver to the customer?
Which one of our customer’s problems are we helping to solve?
What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying?
2. Customer segmentation
What type of relationship does each of our Customer segments expect us to establish and maintain with them?
Which ones have we established?
How are they integrated with the rest of our business model? How costly are they?
3. Customer relations
For whom are we creating value?
Who are our most important customers?
Examples are: Mass Market, Niche Market, Segmented, Diversified, Multi-sided Platform 4. Channels
Through which Channels do our Customer Segments want to be reached? How are we reaching them now?
How are our Channels integrated? Which ones work best?
Which ones are most cost-efficient?
How are we integrating them with customer? 5. Key activities
Our Distribution Channels? Customer Relationships? Revenue streams?
6. Key resources
What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams?
Types of resources; Physical, Intellectual (brand patents, copyrights, data),Human, Financial
7. Key partners
Who are our Key Partners? Who are our key suppliers?
Which Key Resources are we acquiring from partners? Which Key Activities do partners perform?
8. Cost structure
What are the most important costs inherent in our business model? Which Key Resources are most expensive?
Which Key Activities are most expensive? 9. Revenue streams
For what value are our customers really willing to pay? For what do they currently pay?
How are they currently paying? How would they prefer to pay?
Training methods
Q: In your seed businesses, what problems of the customer are you trying to solve? Write the answers on a flip chart. Let members discuss the answers given further for clarity if the members understand the value proposition of their business
Depending on the answers given above, ask the following questions; Q: What is a business model?
Q: Why should businesses have business models?
Present to the participants the content on business models
Present the Business model Canvas to the participants; explaining in detail the components.
Divide participants in groups. Groups should not exceed 10 participants. If all members of the LSB are present have them split up into several groups according to the crops being grown for seed. If it is one crop, let the participants split and can merge the results in the plenary as to come up with one harmonized and agreed upon business model.
Plenary: Let the groups present the model developed in the plenary. At this level critical analysis should be done by all members of the LSB and supplements be added as well as deductions done. (This should take about 30 minutes per group)
Materials:
Flip charts, markers, BMC chart, idea cards, Manila paper, masking tape, camera
Advice to the facilitator
Ensure time management; the BMC requires that ample time be given during practice.
Constantly move around the groups and offer advice where necessary.
If the groups are many (as in a workshop), have another person helping you during the group work.
Control over dominance from some members and encourage all members to participate.
Relate all the explanation to seed business.
Resources
ISSD course notes (27th May to 14th June, 2012) in the Netherlands http://www.investopedia.com/terms/b/businessmodel.asp