Building Business Models – In touch with fundamentals

Chosen industry may have many segments. Trying to attempt the business model of the chosen industry, we need to be clear about in which segment the participation shall happen.

From value chain perspective we have to be very clear about the inbound and outbound logistics. Bulk materials if are the input material, we need to arrange for timely deliveries. Part of the value add is outsourced, then seamless flows to be assured. Operations may happen in two or three shifts in many places, and round the clock in essential services or high demand industries. Finished products have to be transported to the wholesaler’s godowns or one’s own premises for further value add or to cater to the chosen distribution format.

A lot of emphasis on marketing/sales shall also happen. Spends on digital/social/influencer marketing to have a clarity with binding ‘returns’ in consideration.

From the stakeholder’s perspective, all concerned have to be considered in terms of their contribution and also what shall be due to them. The misses and slips have to be considered, and in detail.

Customers, employees, wholesalers and retailers, government officials, regulators, upstream/downstream partners, financial bodies, industry bodies, all shall come under the definition of stakeholders. Make or buy decisions shall have huge impact on the stakeholder engagement choices, including the people and their number who directly or indirectly work with you.

Pricing of the product/services, investment quantum needs to be finalized. In terms of debt to equity we need to be clear that what portion shall come from the promoter, and what quantum shall be taken as debt?

Path forward clarity should be there in terms of whether scaling up shall happen based on internal resources, or IPO shall happen. Further moving forward whether offloading shall be considered in the future shall help us finalize the ‘commitment’.

Do a detailed identification of process steps in terms of value chain, comprehensive stakeholder value flow analysis, and also suggest mitigation measures after identifying ‘what might go wrong’ shall be of huge value.

Focus on fundamentals always helps. Knowing the industry history, present structure including concentration, KSFs information, emerging trends for the industry shall make our model more relevant. Once fundamentals are in place, fine-tuning and tweaking can always happen, and for better.