How to Do a Business Model – Part 1
Today we tackle a business concept not covered in the EITC free Entrepreneur in the Classroom curriculum: BUSINESS MODELS. Use this exercise as a one-off to help students or entrepreneurs to develop a business idea they’ve got. If you’re an entrepreneur, this may be news for you as most people out there tend to confuse “business plan” with “business model.”
Let’s first start with what I teach my students about business models. One of the best business model tools out there is a 6 part process constructed by a team led by Michael Morris.
The six parts of the business model – in layperson’s terms – according to the Michael Morris paper are:
1. How we create value – what you do/make and put out there in society
2. For whom – target customer population
3. Internal competitive advantage – operational efficiencies or processes that make you better
4. External competitive advantage – how consumers/stakeholders outside the company know you’re better
5. Economics – how you make money
6. Exit strategy – what is your exit from this business, is there one?
This is an incredibly back-of-the envelope description of the paper by Mike Morris and his team, but, you get the general idea.
1. Using an example many students can understand, explain the concept of the business model. (For example, in my class I have used the movie Lord of the Rings, how it was filmed and directed, and applied it to the six-part business model template – see next post for detail on this exercise).
2. Advanced: With a business idea (or existing business) in mind, fill out a grid with the six components above. Take note of the most difficult parts to complete, why?
The NFIB Young Entrepreneur Foundation is a 501(c)(3) organization promoting the importance of small business and free enterprise to the nation’s youth. More information is available at www.NFIB.com/YEF. The Foundation is associated with the National Federation of Independent Business; NFIB is the nation’s leading small business association, with offices in Washington, D.C. and all 50 state capitals.
Entrepreneur In The Classroom. The NFIB Young Entrepreneur Foundation Entrepreneur-in-the-Classroom (EITC) supplemental curriculum exposes students to entrepreneurship and the necessary steps to take an idea and turn it into a business. The free curriculum can be integrated into classes teaching a variety of subjects including music, art, fashion, business and many more. You must be registered to view the full Entrepreneur-in-the-Classroom curriculum.
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