Entrepreneurs & SME Toolkit -Part Four

This month, I have asked some successful entrepreneurs to share their knowledge to help SME start ups and people considering starting their own business .This is the final part of this series . entrepreneur text

In our first post we had some interesting insights from Jorge L. Rodriguez, President & CEO of PACIV.

In our second post we had excellent tips by Joe Aherne – President CPA Ireland and Chairman of Leading Edge Group

In our third post we had advice about starting a new business by John White FCPA ,Managing Director of JBW Consultants

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Please find enclosed some start up tips for businesses in a start-up phase, that might be of interest :

  • To succeed entrepreneurs must experiment, be resourceful and maximise every situation in a very targeted way.
  • Recognise that the secrets of business are translating ideas and concepts and putting them in to action.
  • It is the hard, often boring work of putting an idea in to action that makes all the difference.
  • Young entrepreneurs often find the task of getting money in the door or finance raising to be very difficult. Finance raising is actually a well-defined process and it’s just like sales.
  • Question those decisions that involve money to avoid making bad investments . Consult with your CPA as your trusted advisor .
  • When running a business, follow the simple mantra and make sure you have more money coming in than you’re spending.
  • To compete for and retain talent, you must understand why people come to work for your business.  Leaders of SME businesses face a challenge in attracting and competing for human capital when it comes to pay, compensation and career track. It can give employees a good small business training however.
  • Trust your instincts when hiring .  A candidate may have a technical savvy but if his or her personality isn’t a fit, it may not work out.
  • Because people are interested in other people, use some human interest stories as a cost effective way to build your brand.  Small companies can become household names by grabbing opportunities and becoming arch rivals of their competitors.
  • Entrepreneurs turn obstacles and threats in to advantages.
  • As an entrepreneur one of the greatest challenges may be to steer a ship in troubled waters.  If so, don’t panic.
  • To succeed, entrepreneurs must not expand until the business can handle that expansion.
  • You’ll have a better chance of being good at what you do if you find joy in it.

accounting

I hope you find this useful and thanks to all contributors for taking time to share their intellectual property online .

Cormac Fitzgerald - Fitzgerald & Partners

Cormac Fitzgerald FCPA is Managing Partner of Fitzgerald & Partners Accountancy Firm and Vice President of CPA Ireland .

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Jeremy Hayes – University College Cork  

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Many people say that entrepreneurs are born, not made.  I would agree with that sentiment to an extent, but I am also reminded of a quote from Hugh Mcleod that says “Entrepreneurship cannot be taught, but it can be unleashed”. In this part of the blog, I want to talk about a toolkit that entrepreneurs can use to unleash innovation in relation to their business models.

Alex Osterwalder (the leading figure in thinking on business model innovation) defines a business model as how a firm organises itself to create, capture and deliver value. He developed the Business Model Canvas (see Figure 1) which is a widely adopted tool that entrepreneurs can use to describe their existing business model and to brainstorm and innovate new business models.

Figure 1: The Business Model Canvas (www.businessmodelgeneration.com)

Business Modelling

From working with many companies, and facilitating workshops on business model innovation for them, I have found that the business model canvas can help people to think about their business models in a radically different way.

Too often, entrepreneurs can be focused on a much too narrow range of indicators – e.g. revenue, costs or technology performance. Of course, all these things are important, but there are many other aspects to the business model of an organisation that also must be addressed. Entrepreneurs need to start thinking about their business models in a holistic fashion.

Starting at the right hand side of the canvas, we have our customers. These are the users (or segments of users) that we offer value to. So, for example, a mobile network operator may have business customers as well as residential ones. The next most important block is the ‘value proposition’. This is the product or service offering (or bundle of products/services) that we make to our customer. Mark W. Johnson refers to this as the jobs-to-be-done, the offering that you make to your customer (or potential customer).

The ‘channels’ are how you reach your customer. This encompasses the physical or virtual channel by which you deliver value to your customer (anything from a high street shop to a website or even a mobile network or electricity grid). Channels also cover the ‘how’ you get your message to your customer i.e. your marketing channels (radio or print, TV or Social Media). The relationship box refers to the relationship that you have with your customers. This covers things such as; loyalty, trust, as well as the user experience (UX) that our customer segments have when engaging with the value proposition.

If you get these 4 boxes in that canvas to work like clockwork, then revenue will flow back to you. In order to deliver the value proposition to the customer segments, through the channels with good relationships, there are some issues we need to deal with on the left hand side of the canvas.

Key resources are the things we need to have in order to deliver this value. These include tangible and intangible resources (e.g. buildings, equipment, intellectual property or staff, as well as other resources depending on the nature of the business). The key activities are the things we need to perform in order to deliver the value. These could encompass activities like R&D, manufacturing, marketing etc. The partner network box recognises that businesses may not be able to form all of the activities required to deliver value in-house, and that we may need to partner up in order to deliver value. Activities that may be outsourced to a partner can include, but are not limited to, logistics, manufacturing, legal etc.

Finally, all of these things (resources, activities and partnership agreements) are costs to the business and are represented as part of the cost structure box in the canvas. Hopefully the revenues will exceed these costs and our business model will be sustainable.

Once the existing business model canvas for the firm has been created, the next phase is to carry out a detailed SWOT analysis on the existing business model to assess its strengths, weaknesses, opportunities and threats so as to identify areas where the business model can be improved in the future.

It is recommended that organisations engage in a process of continuous business model innovation so that they can continue to create new value for customers and prevent themselves from being ‘netflixed’ (i.e. replaced by a disruptive innovation in the marketplace.

Jeremy Hayes is a lecturer in Business Information Systems in UCC. He teaches Business Model Innovation on the Irish Management Institute Diplomas in Cloud Strategy and Data Business and has extensive experience working with firms to help them to innovate their business models.email: j.hayes@ucc.ie or phone 021 4903821

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