Business model design and plan.

The business model of an enterprise is one of the most important research objects in business science before a long time ago, but with the arrival of venture capital and Internet entrepreneurship boom in recent years, the business model has become the most talked about topic for entrepreneurs and investors.

Business model is very important, it is the entrepreneurs to create a business of the most initial thinking, the emergence of a business, will inevitably be accompanied by the emergence of the corresponding business model. Therefore, the first step to systematically understand an enterprise is to understand its business model.

This sharing is divided into three parts, the first part we talk about business model design, the second part we talk about how to prepare a business plan, and the third part, we would like to talk about what is more important than the business model, in the end, what is it, let's leave a little suspense.

First we look at the first part: business model design. So what is a business model? First of all, let's look at what is business, the original meaning of business is a kind of organized to provide customers with goods and services needed behavior, the purpose is to make money, profit.

Then the business model can be summarized as "a systematic description of how an enterprise can provide certain products and services to meet the needs of users, create value for users, and thus obtain income and profits.

At present, many entrepreneurs take a product for granted as a business model, this understanding is wrong, the product is not the same as the business model, the product is only a part of the business model, only your product is valuable to the user, the user for your products and services to pay the bill, and ultimately to achieve the scale of the profitability, we can call it a business model.

WeChat is an Internet social product, not a business model, only the WeChat users into the game, advertising and other value-added services revenue, to achieve profitability is called business model.

360 antivirus software is an Internet security product, only the traffic into the scale of commercial revenue and profitability is called business model.

In addition, some companies, although the product has many users, and can obtain a scale of income, but the income can not cover the costs and expenses, the enterprise can not achieve profitability, which can not be called a business model. A good business model must be able to achieve profitability. For example, the once very popular Lashou network, group-buying sites such as Gaopeng network, door-to-door nail care, door-to-door car wash and other O2O services have a certain number of users, and there is a certain amount of income, but this model can only rely on subsidies to attract users, once the subsidies are stopped, the user will be lost, doomed to not be able to achieve profitability, and ultimately closed, which can not be called a business model.

Alibaba Group founder Jack Ma once squeezed rival Jingdong Mall's long-term losses, said a sentence, "can not achieve scale and profitability, can not be called a business model, can only be called a business behavior." However, according to the latest earnings report, Jingdong realized a net profit of 5 billion yuan in Q4 2017, based on non-GAAP accounting standards. Liu responded to Jack Ma's questioning of Jingdong's business model with the results, which also brought about a surge in the stock price, and Jingdong's market capitalization is now as high as $65 billion, only $15 billion away from Baidu.

We said earlier that the business model is "a systematic description of how an enterprise can generate revenue and profits by providing certain products and services to meet user needs and create value for users.

It mainly includes six core elements, the first is the user demand, the second is the product and service, the third is marketing and sales, the fourth is the profit model, the fifth is the market space, and the sixth is the strategic partners.

Zhou Hongyi, founder of 360, once said that the business model is what kind of products you can provide, what kind of value to the user to create, in the process of creating user value, what kind of method to obtain business value, business value that is profitable. Zhou Hongyi's sentence is very concise contains the first four of the six core elements of the business model.

We first look at the user demand, user demand is the design of any business model of the premise, it is the first core elements of the business model. A good business model starts with a clear definition of the target customer's problems and pain points. Enterprises must look at the value of the products and services provided from the user's point of view, rather than from their own taken-for-granted point of view. Many entrepreneurs fail because they make a product or service that they think is great, but has no user needs and does not create user value.

The first step in determining user needs is to identify the target users, and determine what type of users we are providing products and services to, older or teenagers? Male or female? Elite class or common people? Internet users or offline users? City users or township users? Large and medium-sized cities or third- and fourth-tier cities.

After identifying the target users, then we have to determine what needs we want to meet and what pain points we want to solve. Every business model is designed to meet the needs of the user, to solve some kind of problem, whether the business model is successful or failure. For example, DDT, it is to solve the travel process in the taxi difficult, taxi expensive phenomenon; Mobay, ofo to solve the user's short-distance convenient travel. Tencent to solve is the user's online socialization.

No user demand, can not solve the user pain points of the business model are pseudo-business model.

The second core element of the business model is the product and service. Products and services are the solutions we provide to users after identifying their needs, which is the foundation of the business model, and all great companies are product-driven companies.

What kind of products and services does a company provide to its users? What makes these products and services different? What value do they create for users? And how to provide these products and services, whether through outsourcing production or own production? These are all questions that the business model needs to answer systematically.

For example, in the field of TV, cell phones, computers and other areas have formed a mature OEM system, so millet, hammer and other enterprises have chosen to outsource production. The automotive industry does not have a mature OEM company, so new entrants in the automotive industry like Tesla Motors have chosen to build their own factories or acquire one.

The third core element of the business model is marketing and sales. Marketing and sales is how do we make our products and services reach customers and realize the final transaction? Is it through media advertising, conference marketing or telemarketing? Is it through online sales or offline sales? Should we choose direct sales or distribution? These are all questions that need to be answered by the business model, and they are also important questions that investors care about.

For example, Internet cell phones represented by millet were initially based on Internet marketing and e-commerce sales. And oppo, vivo through the title of the popular TV variety show and the airport, high-speed rail, bus station and other outdoor advertising marketing, sales channels and focus on the offline stores. 2017, millet vigorously expand millet home and other offline channels, began to online channels and offline channels side by side, the combination of its own channels and third-party e-commerce platforms such as jingdong, tianmao, suning, gome, etc., the marketing method also jumped out of the past online marketing, also began in the television, tianmao, suning, gome, and other third-party e-commerce platforms, and marketing methods. On-line marketing, also began in television stations, airports, high-speed rail stations, bus stops and elevators in the advertising space for a large number of placements.

The fourth core element of the business model is the profit model, which is how to get business value, as Zhou said. There is such a joke in the industry, all business models that do not make money are hooligans. So any business model must solve the problem of how to make money, whether it is short-term profitability or profitability in the future. Jingdong, DDT, Meituan and other quasi-Internet giants have been most criticized by the media and investors for their long-term inability to achieve profitability, and there are natural flaws in their business models.

Enterprise revenue is equal to the unit price of the product multiplied by the number of sales, and profit is equal to revenue minus costs, minus expenses. So in the profitability model section, we have to determine how products and services are priced and the relationship between pricing and volume. Then we have to measure the costs and expenses of keeping the business running; for a business to be profitable, revenues must be able to cover costs and expenses. A business model requires accurate measurements of revenues, costs, expenses, and profits, and a business that loses money over time and fails to make a profit is not a true business model.

The portal has fallen, vertical e-commerce, group-buying sites, video sites, as well as now popular *** enjoy the bike, *** enjoy the charging treasure and O2O, the biggest problem with its business model is that it is very difficult to cover the high cost of income and expenses, not long ago, Mobike was acquired by the United States group, is because of its revenue of only 100 million per month, but there are nearly 6 billion of the cost of the expenses!

In this case, it is very difficult to have a profit model.

Recently, we have systematically studied the business case of the online video industry, and there is a natural business model dilemma in this industry, that is, the advertising revenue, membership fee income is difficult to cover the high cost of content, bandwidth costs and labor costs, which ultimately leads to a lot of video sites to either go out of business, or can only be in the BAT and other giants in order to survive under the umbrella of the survival. So we now see, youku, tencent video and aqiyi three largest video sites, are attributed to the BAT system.

Between, this is an important basis for companies to decide whether to enter this field. A business model without much market space is not a good business model, and it is difficult to get investors to favor.

There are two factors that determine the market space: first, how big is the market for the products and services we offer, and is it growing or shrinking? Second, how many competitors does the business face and how intense is the competition? How much market share can the enterprise gain? This is what investors are very concerned about, in order to become the next BAT, then must have the BAT level of market space.

Why is the capital value of Volkswagen and Toyota, which are closer to ordinary users, much larger than that of luxury brands such as Ferrari and Rolls-Royce, the core is that Volkswagen and Toyota are oriented to a larger market space. Why Tesla's stock price soared after the release of the Model 3 is because the price of the model is more accessible to the general public, with a broader user base and more market space.

So, in order to create a big enterprise, you must choose the field with large market space, which is why most of the big enterprises are concentrated in the financial, energy, automobile, real estate, consumer electronics and FMCG industries, because the market space in these fields is large enough.

The sixth core element of the business model is strategic partnership, which is ignored by many entrepreneurs. In the Internet era, the whole business community is becoming more and more open, the establishment of external strategic partnerships is increasingly becoming an important part of the business model, many companies are through the creation of strategic alliances to optimize their business model, access to resources and reduce risk. Therefore, building a business model requires us to identify who are our most important partners? What are the core resources we can get from our partners?

Apple, millet business model is inseparable from the important strategic partner Foxconn; Tesla electric car business model is also inseparable from the battery technology of Panasonic, so entrepreneurs need to learn to socialize the resources for their own use. If Apple, Xiaomi, Tesla are like the traditional enterprises in the past, all the business links are solved by themselves, the development speed will be much slower.

Because business models involve many different industries and types of enterprises, it is difficult to make a unified classification of business models. The Massachusetts Institute of Technology (MIT) has proposed a business model categorization method, which divides all enterprises into four categories according to the nature of the activities they engage in: manufacturers (manufacturing and providing product ownership), sellers (providing product ownership, but not changing the form of the product), lessors (providing the right to use the product), and brokers (providing the medium between the supply and demand sides), and classifies the products or services provided into financial products (money, capital, etc.), physical products, and business models (e.g., the business model of a company). Capital, etc.), physical products, intangible products (intellectual property, brands, etc.), human resources products, each type of activity and each type of product is a combination of a business model, so that all commercial activities in the market from the business model into 16 types.

Next we look at a few specific examples of business models.

Why the most profitable Internet business is to do search, e-commerce and social BAT, and the United States the most profitable, the highest market capitalization of the enterprise Google, Amazon, Facebook, the same is also search, e-commerce and social. This is because the search, e-commerce and social three Internet products to meet the immediate needs of users, high frequency of use, huge market space, and more importantly, is close to the money, it is easier to find ways to commercialize cash. A good business model must be the closest to the money model, such as e-commerce, finance, games, which are the closest to the money in the field.

Why millet phone once quickly rise, and once quickly fall? This is because in 2011, smartphones generally low configuration, expensive, poor operating system experience, Lei Jun captured the user pain points at the time, to provide users with a high price ratio, the operating experience is far more than other brands of Android smartphones, achieved great success. But in 2015, smart phones have been widely popularized, the operating system experience generally improved, Meizu, glory, Lei, 360 and other cell phone prices continue to break through the bottom line, millet cell phone in the past is no longer his advantage, not able to meet the new needs of consumers. And the previously unknown oppo, vivo because of the capture of the range, photography, sound quality, appearance design and several new user needs, the rise, become the dark horse of the cell phone industry.

We recall that the business model mainly consists of six core elements, the first is the user demand, the second is the product and service, the third is the marketing and sales, the fourth is the profit model, the fifth is the market space, the sixth is the strategic partners. These six elements constitute the core framework of the enterprise business model, you can use the business model we give 6 elements of the model to think, planning their own business model.

After talking about the business model, let's look at the business plan. Business plan and business model are inseparable, it is the entrepreneurs will be the business model of the important bridge to partners. Whether the entrepreneur is facing PE, VC and other venture capital institutions for equity financing, or to banks and other institutions for debt financing, or to recruit partners and negotiate with strategic partners, a clear business plan will greatly increase the audience's impression of the company's score.

The business model we talked about in the first part of the previous is only a part of the business plan, the business plan in addition to a clear business model, the business plan is the most important thing to solve the problem of the landing of the business model.

We have previously provided a large number of business models for different industries and different types of enterprises in the field of business plan consulting services, summed up a common template for writing a business plan for your reference. We suggest that the business plan mainly consists of six parts: project profile (also known as a minute core points), market insights, business model, core resources and capabilities, business planning and financial projections, financing and capital utilization plan.

The first part of the business plan is the project profile, which I used to call the one-minute core points. The one-minute core point is to use the most concise language, the core points of the business plan in one or two pages of PPT to express. Not all people have enough time to listen to you spend hours describing your complete business plan, and the One Minute Essentials helps to impress your audience in the shortest possible time.

The one-minute core points should express the core elements of your business: what path do you take, what products and services do you offer, what are your differentiators, and what needs do you address? In addition, what is the mission and vision of the enterprise?

The mission is the meaning and value of the existence of the enterprise, and the vision is what kind of enterprise do you want to become in the future? Investors prefer entrepreneurs who are visionary and ambitious, and those without a mission and vision are often not strong enough, or give up halfway, or fall into opportunism.

The second part of the business plan is market insights, market insights is to tell you start this business venture project the most primitive thinking, what kind of market opportunities the enterprise caught? Capture what kind of user needs and pain points? Rigorous, persuasive market insights for new business projects is very important, it can increase the audience's awareness and recognition of the project.

Market insights are mainly centered on two parts: industry trends and user needs. Industry trend analysis is used to prove whether your business project is in line with the future trend; user demand analysis is used to prove whether your business project is realistic and feasible.

Robin Li led Baidu All in Artificial Intelligence, mainly foreseeing the future trend of the arrival of the era of artificial intelligence. Lei Jun to do millet phone, to a large extent, is an insight into the user demand for cost-effective smartphones with smooth operating experience.

The third part of the business plan is a complete description of the business model, the core is the target user and user demand, products and services, marketing and sales, profitability model, market space and strategic partnerships six elements, in the business plan you need to explain your business model clearly, the first part of the first part of the business model we have been introduced in detail, here will not repeat.

The fourth part of the business plan is the core resources and capabilities of the enterprise, which is the most critical part of the business plan, which is to ensure that the business model of the foundation. What kind of resources you have and what kind of ability, must be systematically described in the business plan, the audience will be very concerned about whether the entrepreneur has the resources and ability to land the business model. In this part, you also need to have a detailed description of the background of the founder's team, the business model is important, the founder's team is the foundation of the business model into reality.

Investors judge whether a business is reliable, mainly depends on two elements, one is the thing, one is the person, the business model can only show that you are not doing a reliable thing, but can not show that this thing can be done, the talent is the focus of the thing can be done.

The fifth part of the business plan is a detailed business planning and financial projections, if the business model is just an idea, then the business planning needs to understand the idea to realize the path.

Business planning is divided into quantitative and qualitative parts. Quantitative part of the core business indicators: for example, the number of users and order sales forecasts; qualitative part of the entrepreneur in the production and research, supply chain, brand, marketing, sales and service of the business aspects of the specific plan, this part is the most test of the entrepreneur's skills, if you can not start a project for the business of a clear, enforceable business planning, it is difficult to be convincing.

In the business plan, there should generally be a business plan for the next 3-5 years, corresponding to the business plan, but also for the next 3-5 years of detailed financial forecasts, revenue, costs, expenses and profits should be accurate estimates.

The biggest audience of the business plan is the investors, the face of investors, clear financing and capital utilization plan is essential. The core of the financing plan is to determine the valuation of the business, the proportion of equity ceded, the amount of financing and the requirements of the type of investor. But in order to make the enterprise valuation more convincing, generally need to be close to the enterprise benchmarking study, the revenue, profit and valuation of enterprises in the same industry, is an important basis for us to make a reasonable valuation of their own business. Otherwise, too high a valuation will scare away investors, too low a valuation will damage the interests of entrepreneurs.

Additionally, the business plan needs to be clear about the use of funds, which is of great concern to investors, who want to be clear that the money invested in the final flow of recruitment, product development, branding, or logistical systems to build up?

Entrepreneurs also need to be selective about investors, not all the money to take, it is best to find a convergence of values, can trust the entrepreneurial team and understand the nature of the business model of the investor, otherwise, to find a profit-oriented, not very ethical sense of the investor will continue to put you under pressure, become a major impediment to the development of your business, and even take away your right to control the business.

While business models are important, I don't want to overstate their importance. What's more important than the business model is the power of action, which I know firsthand as a consultant, as a business observer, and as an entrepreneur.

A good business model, if you do not go to action, always stay in the oral or written, it is always just an idea.

A bad business model, if decisive action, bad business model will also be optimized in the process of business, adjusted, may gradually evolve into a good business model.

Jack Ma also mentioned in one of his speeches to young entrepreneurs in Hong Kong, "Many of our young people think of a thousand roads at night, and then get up in the morning and go back to the original road, and the important thing in entrepreneurship is to act immediately, now, right away."

On weekdays, a lot of friends who want to start their own businesses come to me for advice, and I usually encourage them because no one can predict the potential that will be unleashed after they start their own businesses, and as long as they have an idea, they can give it a try. However, these friends who plan to start a business are divided into two kinds of people, there is a kind of people, just talk about it; there is another kind of people, said, and went to do it.

So, I suggest that friends with entrepreneurial ideas can act decisively, first of all, with reference to our course today, the business model 6 elements and business plan 6 steps, to systematically sort out the business model of their own plans to entrepreneurial projects, and write a complete business plan, write a business plan, the process of business plan, both to improve the process of your entrepreneurial ideas, but also to test, to correct your entrepreneurial ideas of the process.

The business plan process is both a process of refining your business idea and a process of testing and correcting it.

With a business model, with a business plan, how to start a business, take the first step, is another important issue plaguing entrepreneurs. We often see some entrepreneurs online through the huge financing, the business quickly grow, in 3-5 years on the realization of the listing of the entrepreneurial case, in fact, these cases are extremely rare, not universal, is unattainable. More entrepreneurship is a matter of practical step-by-step cultivation.

My advice is that you should first take a comprehensive look at your own capital, resources and capabilities. Identify whether it's courage, resources or ability that's holding you back from starting your own business.

If it is courage that prevents you from taking action, I think you can choose to give up, because entrepreneurship is a game for the brave. If you are afraid of the risk and don't have enough courage, you'd better choose to continue to engage in a risk-free job in the workplace, and live a life of ease, which is not a bad choice.

If the obstacle to your action is the ability, I think you can also stop first, more in the workplace to accumulate a few years, and so have enough driving ability to start entrepreneurship is not too late. I know a lot of successful entrepreneurs, the reason why they are successful, mainly depends on their resources and ability to accumulate in the years of experience in the workplace.

If what's holding you back isn't courage or ability, but resources, I think it's okay to give it a try. This time you need to be an evangelist, around the relatives, friends, colleagues and classmates may become your investors and partners, you have the ability and courage, not afraid to pry the resources.

If both you have the ability, also have the resources, at the same time have the courage, but it does not mean that you start a business soon to be successful. At this point you need to be low profile, do not desire overnight success, but re-zero, from a little bit of small things to start. The other thing is that you must persist when you encounter setbacks, and not give up easily, as long as you persist, you will usher in the light.

Business model is applicable to both the preparation for the start-up of the prospective entrepreneurs, but also applicable to business enterprises encountered some bottlenecks to seek breakthroughs, but also applicable to the development of the enterprise is good, there is a great dream, even if not an entrepreneur, through the understanding of the business model, but also to help you from the deeper understanding of the nature of the business operation.