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Archives - February 2014

Painting on Your Business Model Canvas

February 17, 2014
By Tonya Elmore, Tampa Bay Innovation Center

More entrepreneurs are using this alternative to a standard business plan

Just about every entrepreneur knows the first step after your big idea is to draft a business plan. Too often long, tedious and relatively static, a business plan typically covers the mission statement, description of the business and its products/services, differentiators, market description and competitive environment, marketing strategies, operations and management, SWOT analysis, financial statements, including cash flow statement and revenue projections, and a conclusion.  Formats vary, but generally all these points should be covered.

But in business, we often find there are hurdles to jump, opportunities we didn’t know existed and conditions we never anticipated.  Enter: the Business Model Canvas. Created by Alexander Osterwalder, coauthor of the book, Business Model Generation, the Business Model Canvas is appealing to entrepreneurs for its acceptance of change.

The canvas, often depicted as one large image rather than multiple pages, is divided into nine blocks including key partners, key activities, key resources, value propositions, customer relationships, channels, customer segments, cost structure and revenue streams. The canvas is intended to be used collaboratively, allowing different ideas, sketches and plans to be jotted on sticky notes and placed in the blocks. Most important, the Business Model Canvas is dynamic, allowing the company’s plans to change and adapt to new opportunities and changing market conditions.

No one is discarding the idea of the traditional business plan, but if you’re an entrepreneur, most likely you’re always looking for a new and hopefully better way.  The Business Model Canvas may well offer a less structured, more flexible alternative that will make it easier for you to distill your thinking and get ready to present your idea to funders, partners and prospective clients. 

Have any of you created a Business Model Canvas?  Let us know about your experience.

Tonya Elmore is president and CEO of Tampa Bay Innovation Center.  She can be reached at elmoret@tbinnovates.com.

Ready to Start Your Business?

February 03, 2014
By George H. (Jody) Tompson, Ph.D

Entrepreneurs are sometimes known to be brash, impulsive and driven.  They tend to be action-oriented and are famous for a “ready – fire – aim” approach to planning for the future.  We would all agree that being action-oriented is good.  But we also recognize that there is room for research and planning when an aspiring entrepreneur wants to launch a new company. 

One piece of the planning puzzle involves researching the best industry to enter.  Whether you have a product/service prototype already built or just some intellectual property, you would be wise to think about the best place to launch it.  Did you know that there are some industry characteristics that are more favorable for new venture success?  On the other hand, there are also some characteristics that can work against new ventures.   There is a lot of academic research on what kind of industries provide more fertile grounds for new ventures.

  1. Industries with high “R&D intensity”:  In other words, industries where a lot of research money is being spent are usually a more favorable environment.  This doesn’t mean the new venture must spend a lot of its own money on R&D.  Instead, R&D intensity is an indicator that a lot of innovation will be happening in the industry.  When an industry has a strong norm of innovation, it is more welcoming of entrepreneurs and new ventures.
  2. Industries that are highly segmented: Segmentation refers to the number of distinct versions of the products and services in the industry.  A highly segmented market is one where customers’ demands vary widely, so that there is never a “one size fits all” solution.  When there is high segmentation, entrepreneurs are more likely to succeed because they can identify a small group of customers and provide a perfect solution to their needs.   On the contrary, markets with low segmentation favor giant companies that can serve most of the market with one solution.  Think of the table salt industry.
  3. Industries that are young.  New ventures are more likely to find success in the early stages of the industry life cycle than in the mature stages.  In younger industries, competitors tend to be less competent and less experienced.  It’s usually better to compete against a beginner than an expert!  Second, industry wide sales tend to grow the fastest in younger industries.  Third, a dominant design has not usually emerged in a young industry. 

These three generalizations might help if you are considering what kind of market to pursue.  They are not perfect rules, but they do reflect current thinking among the researchers who are studying the field of entrepreneurship. 

George H. (Jody) Tompson, Ph.D is professor and director of the Naimoli Institute for Business Strategy at Sykes College of Business, University of Tampa.  An entrepreneur himself, he is also the founder of CitriClean of Florida, LLC (www.CloudyDishes.com). He can be reached at jtompson@ut.edu.

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