Business Modeling Before Business Planning

Guest Blogger: Marilyn Schlake, Extension Educator, University of Nebraska-Lincoln

Every business has a model that they use to generate revenue. According to Alex Osterwalder, founder of the Business Model Canvas, a model is simply how a company creates value for itself while delivering products or services for customers.

Traditionally, when a founder had a business idea, they were first told, write a business plan, get it all down on paper, make sure you do your research, and dot the I’s and cross the T’s! After much time and effort, the founder had one model that maybe, just maybe fits the market. It’s a build it and they will come (or at least you hope they will come) type of process.

But what if the model is not the most profitable or not even viable? Some researchers support the idea that business failures are often a result of the wrong model driving the business.

Business modeling is rapidly gaining popularity as a pre-curser to the rigorous work associated with writing a business plan. Business modeling uses the key components of a business plan in a visually-oriented canvas that focuses founders on the needs of the customer and the value the business will bring to the market. Ideas are quickly generated about customer archetypes, value propositions, revenue streams, channels, resources and other essential segments of the business model. At best, the early canvas iterations are hunches that beg for more information and facts.

The business modeling mantra, “Get of the building and ask!” forces the founders to discover the true needs of the market by talking to targeted customers, understanding their needs, problems and learning how best to solve them. Through the process, multiple models are generated and evaluated. With each canvas iteration founders get closer to the optimal model that will create the most profitable business.

No, business modeling is not glamorous, it is another tool that can make a difference to the long-term viability of the business.

Sources: Alexander Osterwalder & Yves Pigneur (2009), Business Model Generation. Steve Blank & Bob Dorf (2012), The Start-up Owner’s Manual: The Step-by-Step Guide for Building a Great Company.

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Extension Partners with Small Business

Map with states visitedWe hope you have enjoyed our 2013 national Small Business Week+ tour of small business owners who have partnered with Extension. The map shows the states visited. Our stories ranged from a cigar shop and lounge in Missouri to a food coop in Ohio to a wooden bicycle helmets in Oregon. We traveled from the east coast to the west and went north to Alaska.

These stories represent though only a quick overview that every state might offer. In North Dakota, for example, we might have visited a CSA, Riverbound Farm; an agritourism business, Rolling Plains Adventures; a vineyard/winery, Red Trail Vinyard; another agritourism stop, Papa’s Pumpkin Patch; or a retail dairy outlet, Pride Dairy

Extension is nation-wide network comprised of the land-grant university system. It’s a space where university content providers can gather and produce new educational and information resources on wide-ranging topics. A week plus just isn’t enough time or space to list all of the ways and stories of the small business and Extension partnerships.

For small business owners or those who aspire to business owners, Extension, and our online element, eXtension.org, are an educational and support resource to help you get started and be successful. Contact your local office or go online with your questions. Check out the educational programs being offered.

We began the week recognizing the importance of small business owners in our economy. These stories show the diversity and roles they play. Remember to thank them for what they do. And don’t hesitate to explore your own entrepreneurial dreams. Extension is here to help.

Extension Partners with Small Business – Oregon

Our eXtension community, Entrepreneurs and Their Communities, continues to highlight Small Business Week+. With land-grant universities across the country supporting small businesses and their development, we have lots of great small business partners to highlight. If you are thinking about starting a small business, stop in at your local Extension office.

Guest Blogger: Scott Leavengood, Director, Oregon Wood Innovation Center, Extension appointment

Need a bike helmet? Dan Coyle saw a niche, wooden bike helmets. The Oregon Wood innovation Center assisted him with impact testing of different materials and finding raw materials.

Read more Dan’s product at:http://www.corvallisadvocate.com/2012/treepieces-a-local-artisan-crafts-wooden-safety-helmets/

His website is: http://coyledesignandbuild.com/

wood bike helmet

Extension Partners with Small Business – Missouri

Our eXtension community, Entrepreneurs and Their Communities, continues to highlight Small Business Week+. With land-grant universities across the country supporting small businesses and their development, we have lots of great small business partners to highlight. If you are thinking about starting a small business, stop in at your local Extension office.

Guest Blogger: Kathy Macomber, Business Development Specialist, University of Missouri Extension

The Run Around

Picture of Erik The Run Around, LLC, owned by Erik Bartlett, is committed to being Joplin’s running and walking resource. His store is located in Joplin.

Erik focuses on providing personal service and an individual fitting process at The Run Around resulting in a customized experience for each customer. His work resulted in his receipt, in 2011, of the “Rising Star of Entrepreneurship” award from the Missouri Small Business & Technology Development Centers (MO SBTDC).

In 2011, Erik also participated in the 2011 MO SBTDC Client Showcase held at the Capitol rotunda on January 26. Bartlett was presented with a legislative resolution from Senator Ron Richard (District 32). The Run Around, was one of twenty outstanding small businesses in Missouri who received the award sponsored by the MO SBTDC.

When Bartlett was first thinking of starting his company more than three years ago while still in college, he sought the advice of Kathy Macomber at the University of MissouriSmall Business and Technology Development Center to develop a business plan. That business plan was a key component in the loan process. The Run Around Running Company launched in April 2010 and has developed loyal customers in the running community in and around Joplin. Bartlett received assistance from the SBTDC in the areas of business start-up procedures, forms of business organization, writing a business plan, marketing methods, financial projections, and QuickBooks assistance.

Kathy Macomber, Business Development Specialist, provides business training and assistance in an eight-county region of southwest Missouri. “Erik Bartlett is a savvy young entrepreneur,” Macomber says. “He saw a need for a specialty running store in Joplin, and is successfully growing the business. He has created several new jobs, was able to purchase a building near his original leased location in which he recently moved the store.”

Running accessories and clothing, in addition to a wide selection of shoes, are available at the store which utilizes a gait analysis system and a digital foot scanner to provide a personalized shoe fitting process. The store organizes and supports local running events.

The Run Around is located at 422 S. Main Street in Joplin, Missouri. The phone number is (417)627-0057; and you can follow The Run Around, LLC on Facebook .

The Missouri Small Business and Technology Development Center Network is a non-profit partnership of the Small Business Administration, State of Missouri, University of Missouri Extension, and other state universities, organized to help small businesses succeed. For more information call Kathy Macomber at the Small Business and Technology Development Center (417) 682-3579.

Extension Partners with Small Business – Alaska

Our eXtension community, Entrepreneurs and Their Communities, continues to highlight Small Business Week+. With land-grant universities across the country supporting small businesses and their development, we have lots of great small business partners to highlight. If you are thinking about starting a small business, stop in at your local Extension office.

Guest Blogger: Kathryn Izdorek, University of Alaska-Fairbanks Cooperative Extension Service

Market stand The Hapunan Shack

Marie Bridgewater has just begun her second season at the Fairbanks Downtown Market. With the assistance of the UAF Cooperative Extension Service, Marie has been able to successfully start her own small business selling Lumpia (Filipino egg rolls) at a food stand.

Extension was able to assist Marie by helping to navigate the process of becoming a small food business in the state of Alaska and providing a DEC permitable space for preparation of food products to take to market.

Come see Marie and try her egg rolls any Monday at the Fairbanks Downtown Market.

Marie’s Facebook Page: https://www.facebook.com/whatshapunan

Extension Partners with Small Business – Nebraska

From our eXtension community, Entrepreneurs and Their Communities, welcome to Small Business Week+. Extension supports small businesses and their development as a part of our land grant mission. For the next several days, we are going to highlight small businesses around that country that have partnered with us.

Guest Bloggers: Connie Hancock, Extension Educator, and Jim Crandall, Cooperative Business Development Specialist – Both work for University of Nebraska-Lincoln Extension and bring us two examples of small business and UNL Extension partnerships.

Workshops for Aspiring Small Business Owners

The first example demonstrates how UNL Extension supports small business development and the individuals who are working to build those small businesses. Working with existing small business owners partners, Extension develops educational/support programs for new business owners who are developing their own business ideas. People are always interested in having a conversation and discussion with others who have faced some of the issues and hurdles they now are facing.
http://huskerpreneur.wordpress.com/2013/05/24/entrepreneurs-in-johnson-and-pawnee-counties-have-been-successful/

Elwood Hometown Cooperative Market Opens for Business!!

Outside of a food coop The loss of a grocery store in a rural community can be a devastating blow, especially when it is the only, or at least major, source of local groceries. Not only do people then have to travel farther and expend more time and money to get their groceries, but it can also be a serious blow to community pride and make it harder to attract new residents and businesses.

When the only grocery store in Elwood, Neb., closed in January of 2012, community leaders quickly responded, organizing a community meeting to consider opening a cooperatively owned grocery store. Jim Crandall of the UNL Nebraska Cooperative Development Center (NCDC) was the primary speaker at this first meeting, to explain the concept of community ownership as a cooperative. The meeting attracted more than 100 people, almost all of whom felt that a grocery store was vital to the future of their community. Prior to and following the initial meeting, community leaders developed and distributed a survey to gauge interest in opening a co-op grocery store. The community response showed widespread support for the concept. A committed, hard-working steering committee was formed to begin the process of studying the feasibility of a grocery store, the cooperative business model, and creating pro-forma financials.

The 10 member steering committee formed subcommittees that focused on facilities, business and finance issues, and incorporation options with NCDC providing guides and outlines for each subgroup. Expert advice was sought from a local attorney, insurance agents, former store owners, neighboring stores and managers of grain co-ops in nearby towns (one grain co-op also owned a grocery store). Ideas were also sought from cooperative accountants, area economic developers and grocery suppliers. A financial plan was developed for remodeling the store, and progress and information was shared at two more community-wide meetings. All indications still showed continued support for opening the new grocery store.

The steering committee received a small grant from the NCDC to help with organizational costs such as attorney fees, brochure printings, and mailings. The committee met weekly or bi-weekly as a group, with subcommittees meeting at additional times to move the process forward quickly.

The cooperative was incorporated in May 2012 as the Elwood Hometown Cooperative Market. The steering committee, now Board of Directors, conducted a membership drive to capitalize the new business allowing them to purchase and remodel the former store location, hire a manager and purchase the inventory. Over 140 people bought ownership shares in the cooperative and new members are still being added to the ownership base. Coop members, Board members, and other volunteers were involved in the remodeling of the store, installing coolers, freezers and shelving. Board members, coop members, and volunteers scanned inventory and stocked all the shelves in preparation for opening. The Market has been advertising their opening locally and through social media with their Facebook page, https://www.facebook.com/ElwoodHometownCooperativeMarket.

The Elwood Hometown Cooperative Market celebrated their official “soft” opening on February 3rd with a preview of the new store for coop members and donors. The store opened for business to the general public on Monday, February 4th. The market plans to have a Grand Opening this spring to include a ribbon cutting and additional activities.

Extension Partners with Small Business – Ohio

From our eXtension community, Entrepreneurs and Their Communities, welcome to Small Business Week+. Extension supports small businesses and their development as a part of our land grant mission. For the next several days, we are going to highlight small businesses around that country that have partnered with us.

Guest Blogger: Louis (Brian) Raison, The Ohio State University Extension

Stone’s Throw Market Co-op

Food coop sign about values Neighbors, farmers and local organizations collaborated in a grassroots effort to organize and establish a new cooperative grocery in Miami County, Ohio. The Stone’s Throw Foods Project was incubated through the leadership of two full-time organizers, Laura Hanson and Jake Schlachter. In February 2010, they established a pilot online grocery to support the organizing process. OSU Extension assisted with early board and co-op development background work. The online grocery kept $52,000 circulating in the local and state economies that year.

In 2011, the co-op leadership transitioned as Laura left for grad school. OSU Extension was called in to assist the still nascent organization with transitioning issues, mission and vision work, strategic action steps, board development, annual meeting plans, and marketing.

The Market has now kept over $150,000 circulating in the local and state economy and boasts nearly 200 member-owners. It collaborates with several dozen local farms and businesses. Local vendors earn an average of 65 cents per dollar which is more than the national average. More information is available online at: http://www.stonesthrow.coop/ or contact Brian Raison, OSU Extension, Miami County at raison.1@osu.edu

Photo – USDA.gov, Flickr, CC