Business model

Business models convert new technology to economic value. A business model is "what a business does and how a business makes money doing those things," A business model describes the rationale of how an organization creates, delivers, and captures value (economic, social, cultural, or other forms of value). The process of business model construction is part of business strategy. Whenever a business is established, it either explicitly or implicitly employs a particular business model that describes the architecture of the value creation, delivery, and capture mechanisms employed by the business enterprise. The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit: it thus reflects managements hypothesis about what customers want, how they want it, and how an enterprise can organize to best meet those needs, get paid for doing so, and make a profit.[4] Business models are used to describe and classify businesses (especially in an entrepreneurial setting), but they are also used by managers inside companies to explore possibilities for future development. Also, well known business models operate as recipes for creative managers.[5] Business models are also referred to in some instances within the context of accounting for purposes of public reporting.

The following examples provide an overview for various business model types that have been in discussion since the invention of term business model: Bricks and clicks business model Business model by which a company integrates both offline (bricks) and online (clicks) presences. A bricks and clicks business model (or sometimes called clicks and bricks) is one where a company conducts business both offline and online. Offline refers to doing business in person, such as having store locations or buildings; so this is where the bricks part of the title comes from. The word clicks relates to the clicking of a computer for online purchases and transactions. One example of the bricks-and-clicks model is when a chain of stores allows the user to order products online, but lets them pick up their order at a local store.

Collective business models Business organization or association typically composed of relatively large numbers of businesses, tradespersons or professionals in the same or related fields of endeavor, which pools resources, shares information or provides other benefits for their members.

Cutting out the middleman model

The removal of intermediaries in a supply chain: "cutting out the middleman". Instead of going through traditional distribution channels, which had some type of intermediate (such as adistributor, wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet.

Direct sales model

Direct selling is marketing and selling products to consumers directly, away from a fixed retail location. Sales are typically made through party plan, one-to-one demonstrations, and other personal contact arrangements. A text book definition is: "The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs."[25]

Distribution business models, various Fee in, free out

Business model which works by charging the first client a fee for a service, while offering that service free of charge to subsequent clients.

Franchise

Franchising is the practice of using another firm's successful business model. For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods and avoid investment and liability over a chain. The franchisor's success is the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.

Freemium business model

Brokerage In the broker business model, a broker acts as a facilitator for a business transaction. A broker might mediate purchases between buyers, either between two consumers, two retailers or between a consumer and a retailer. Ebay exists as an example of brokerage on the Internet. The auction website acts as a broker and facilitates purchases between two parties. E-commerce (business done over the Internet) frequently lends itself to using this model. Creator Creators either invent a product or assemble products from scratch. If you employ the creator business model, you then sell whatever product you make to generate profits. An example of this model is a factory or a distributing company. Auto manufacturers employ this model. Landlord A landlord model takes what you might normally define as a landlord, someone who owns a piece of property and rents it out, and carries the definition over into the business world. For example, a theater "rents out" the seats for temporary use and to generate revenue. Financial institutions sometime use this business model as well, as when a mortgage company lends money and make profits off the charged interest. Distributor If you use the distributor business model, you purchase goods and resell them. In order to make money from the deal, the product is usually purchased at somewhat of a discount and sold at a markup of the purchase price. Retail stores often utilize this model. Bait and Hook Model The bait and hook business model (also called razor and blades business model) is founded on the premise that a company can stimulate consumer excitement and interest by giving away freebies, or offering low prices on products. The goal of this model is to generate more profit through making products seem appealing (baiting) and then hooking the customers into liking your products or services so that they keep coming back for more. According to Investopedia (a website for investment and business concepts), this business model is not intended to give away freebies each time a customer returns. Rather, the tactic here involves offering low prices on one type of good, while considerably marking up the price of another.

This is supposed to create an illusion to the customer that they are getting a bargain, but is a way for businesses to make a profit. Subscription Business Model According to IUS Mentis (a website that offers legal advice), a subscription business model is where a company charges you a fixed monthly or annual fee that gives you access to their goods and services. Magazine companies, cell phone carriers, Internet providers and cable companies are common businesses that employ subscription business models. Some subscription businesses require customers to prepare for their monthly or annual membership fees, which can be beneficial to the company because it guarantees a profit upfront.

Entrepreneurial Finance
Entrepreneurial Finance is designed to help managers make better investment and financing decisions in entrepreneurial settings. Entrepreneurial finance is the study of value and resource allocation, applied to new ventures. It is a field oriented to help entrepreneurs make investment and financing decisions, from startup to harvest. Richard Cantillon first defined entrepreneur in the 18th century as a person who is willing to help launch a new venture or enterprise and accept full responsibility for the outcome. In that process, financial decisions are unavoidable. Entrepreneurial finance is a discipline that studies ways to mobilize resources to take advantage of an opportunity identified by an entrepreneur. It is closely related to the fields of venture capital, private equity and innovation. Topics include pro forma financial statements, business valuation models, cash flow analysis, and raising capital from private investors, venture capitalists and banks

Business plan
A business plan is a description of the business, a road map that will help you get to your desired destination. It gives you an idea of the obstacles that lie ahead and can point out possible alternate routes. One of the major benefits you will receive from developing a business plan is getting to thoroughly know your industry and

market. A well prepared business plan will not only assist in plotting a course for the company, it can also serve as a vital sales tool. A business plan document is the work product of a thorough planning process in which the company creates the step-by-step blueprint for starting or expanding the business. The management team refers to and follows the blueprint while guiding the company during the year. Prospective investors many times request to read a business plan before pursuing discussions with the company Key elements that should be included are: 1. Business concept. Describes the business, its product and the market it will serve. It should point out just exactly what will be sold, to whom and why the business will hold a competitive advantage. 2. Financial features. Highlights the important financial points of the business including sales, profits, cash flows and return on investment. 3. Financial requirements. Clearly states the capital needed to start the business and to expand. It should detail how the capital will be used, and the equity, if any, that will be provided for funding. If the loan for initial capital will be based on security instead of equity, you should also specify the source of collateral. 4. Current business position. Furnishes relevant information about the company, its legal form of operation, when it was formed, the principal owners and key personnel. 5. Major achievements. Details any developments within the company that are essential to the success of the business. Major achievements include items like patents, prototypes, location of a facility, any crucial contracts that need to be in place for product development, or results from any test marketing that has been conducted. When writing your statement of purpose, don't waste words. If the statement of purpose is eight pages, nobody's going to read it because it'll be very clear that the business, no matter what its merits, won't be a good investment because the principals are indecisive and don't really know what they want. Make it easy for the reader to realize at first glance both your needs and capabilities. 1. Define the problem. Every plan must start with the problem you are solving, not a description of your company and product. Explain in terms your mother could understand, and quantify the cost-of-pain in dollars or time. Terms

like every customer needs this and next generation platform are far too soft, and should be avoided. Many entrepreneurs scare away potential investors by claiming that their technology represents truly disruptive technology. What that may mean is that you havent figured out yet what problem it solves, or it may take many years for people to get it. No investor wants to wait that long for his payback, or fund the years of waiting. 2. Solution and benefits. This is not the place for a detailed product specification, but an explanation of how and why it works, including a customer-centric quantification of the benefits. Skip the technical jargon and hyperbole. Do describe your intellectual property and secret sauce. Focus is the keyword here. Pick a specific solution that you have built or prototyped, rather than rambling about all the possible things that could be done with your idea. Clearly define the customer, channel, and revenue model associated with this solution. 3. Industry & market sizing. Start with the evolution of the overall industry, market segmentation, market dynamics, and customer landscape. Remember that investors like industries that have a billion dollar opportunity, and a double-digit growth rate. Data from accredited market research groups like Forrester or Gartner is required for credibility. It always amazes me how an entrepreneur can define his market opportunity so broadly, and then assess his competition so narrowly in the next breath. You wont impress investors by claiming that everyone in China needs one, and nobody else has exactly the right features to compete with you. 4. Explain the business model. This is how you will make money, who pays you, and gross margins. In this section, you need to be passionate about revenue, profit, and volume growth. Many people seem to use the social network advertising model for revenue, but forget it assumes at least 100M users and $50M investment. Avoid any statements like All we have to do is get 1% of the market. There are two problems with this assertion. First, no investor is interested in a

company that is only looking to get 1% of a market. Second, that first 1% is the toughest of any market, so you look nave implying it's easy to get. 5. Competition and sustainable advantage. List and describe your direct and indirect, including customer alternatives. Asserting competition is not credible. Then detail your sustainable advantage, and highlight barriers to entry which will keep your at bay. competition, you have no competitive competitors

Often I see statements like Microsoft is too big/slow to be a threat. Usually the reason the big companies are no threat is because the market is too small. But investors know that sleeping giants do wake up, the moment your company shows some traction. Competing with IBM, Microsoft, and other large companies should never be minimized. 6. Marketing, sales, and partners. Describe your market penetration strategy, sales channels, pricing, and strategic partnerships. Here is also a good place for a rollout timeline with key milestones. Convince investors that you have lined up sales channels, strategic partners, and a viable marketing strategy. Be careful with assertions like We have strong interest from a major customer. The mention of unsigned contracts normally takes away more credibility than it adds. You can bolster this position by including a Letter of Intent (LOI), contract summaries, or even testimonials. 7. Executive team. Investors invest in people - not just ideas. Convince investors that your team is experienced in starting a new business, and have great expertise in the selected business domain. Include Advisory Board members and key industry people connections. Sometimes I see statements like A world-class CEO will be joining us after funding. Rest assured that potential investors will ask for names, and place some calls. Soft responses from your candidates will definitely kill your credibility. 8. Funding requirements. Explain how you calculated the funding requirements, and show details on planned use of funds. Quantify existing skin-in-the-

game, by insiders and outsiders, including sweat equity and capital. Include a current valuation estimate. The most credible sizing approach is to do your financial model first with the volume, cost, and pricing parameters you want. See where your cashflow bottoms out. If it bottoms out at minus $400K the first year, add a 25% buffer, and ask for $500K funding. 9. Financial forecast and metrics. Project both revenues and expense totals for next five years, and past three years, if relevant. Show breakeven and growth assumptions. Details should be available in a separate financial model, but not included here. Remember that investors are looking for large, scalable, high-growth opportunities. Attractive deals show double-digit positive growth per year, and revenues that are projected to $20M or more within five years. 10. Exit strategy. This section is only required when you expect outside investors. These investors want to know that you are thinking about a liquidity event when and how they will get their money out, with ROI. For a family business, dont project an exit.

Making bs plan
Writing a business plan is best done in parts and is relatively simple to outline because, "banks and investors have established standards for the types of information theyd like to see," according to Business Plan Success.com. Creating an outline or template will help the business plan writer to focus on necessary inclusions and provide a guideline to ensure all provisions are covered.

Step 1
Start with the Executive Summary. Include space for one or two pages for the The Executive Summary. This portion is actually written last because it is a summary of the entire plan.

Step 2

Provide space for the Business Description. Allow two to three pages for the the Business Description, which typically includes the company's mission statement, its inception, and what products and/or services it will offer.

Step 3

Include a Market Analysis section. Devote two to three pages for the Market Analysis, which contains market share projections, competition market share figures, market opportunities and similar research.

Step 4

Provide an Operations portion. Give two to three pages to explain the business' operation's model, which explains how the business will operate, employee management, customer service procedures and how the business will promote itself.

Step 5

Include a section on Risks. Allow two to three pages for a section that will detail the risks associated with entering the marketplace and business operation, such as liabilities and insurance details.

Step 6

Set aside space for the projections. Provide between two and three pages for the business' "Financial Projections," which state expected and estimated startup and operations costs along with earnings projects and assumed rate of growth.

Growth and exit

First, most of you have heard the phrase start with the end in mind. Thats what knowing your exist strategy is starting with the end in mind. Depending on your exit strategy the way you build your business can vary widely. Without it when you start you could build your business incorrectly and end up spending 3 5 years trying to transition it to what you need in order to exit later. 5 basic exit strategies exist: 1. 3rd Party Sales selling your business to someone else. 2. Private Equity Group (PEG) Recapitalization selling a portion of the business to gain personal liquidity of your business. 3. Employee Stock Ownership Plan (ESOP) creating a program whereby employees earn or buy shares in the company allowing the owner to create personal liquidity. 4. Management Buyout transitioning the business to key employees within the company 5. Gifting transferring ownership of your business to family.

The four entrepreneurial pitfalls

Many businesses start out extremely well and then suddenly are up to their ears in trouble. If they survive at all, they are forever stunted. Are there typical mistakes entrepreneurs make? Peter Drucker pointed out in his book, Managing in the Next Society, that there are four entrepreneurial pitfalls where the new and growing business typically gets into trouble. The first pitfall is that it is often entrepreneurs reject success. The majority of successful new product or service does not succeed in the market the founderentrepreneur thought it would be. But it succeeds in a totally different market. Many businesses fail because the founder-entrepreneur is so obsessed with his or her original plan and refuse to grab the opportunity in the unexpected market. The entrepreneur doesn't realize that a new product or service is not successful where he or she thought it would be but it is instead successful in a totally different market. (This, Drucker says, is much more common than you might imagine.) The second pitfall is that entrepreneurs do not pay enough attention to cash flow. Entrepreneurs believe that profit is what matters most in a new enterprise. But profit is secondary. Cash flow matters most. Many businesses are getting caught in a cash crunch because entrepreneurs are financially illiterate and have a hard time grasping the concept of cash flow. Entrepreneurs believe that profit is what matters most in a new enterprise. Cash flow matters most. The third pitfall is that the entrepreneur outgrows his management base when business grows rapidly beyond expectations. Starting out, the typical founder does everything himself. When business grows, the entrepreneur begins running around like the proverbial one-armed paperhanger. Unfortunately, the entrepreneur does not realize he outgrows his management capabilities. He does not get the management team in place quick enough. Then all the sudden, everything goes wrong. The quality falls out of bed. Customers dont pay. Deliveries are missed. The business is eventually hid hard by manage crunch. As a business grows, the person who founded it becomes incredibly busy. Rapid growth puts an incredible strain on a

business. You outgrow your production facilities. You outgrow your management capabilities. The fourth pitfall is the entrepreneur begins to put himself and his needs before his business when the business is a success. He has worked eighteen hours a day for fourteen years. He does not enjoy it anymore. He knows hes not concentrating on the right things. But it is difficult for him to face up the harsh reality and start asking What does the business need at this stage? and Do I have those qualities? He does not realize that it is time to bring in an outsider. He ends up killing himself and the business. 4. When the business is a success, the entrepreneur (who is perhaps bored) begins to put himself and his needs before the business.

Women entrepreneur
Even though female entrepreneurship and the formation of women business networks is steadily rising, there are a number of challenges and obstacles that female entrepreneurs face. One major challenge that many women entrepreneurs may face is the traditional gender-roles society may still have on women. Entrepreneurship is still considered as a male-dominated field, and it may be difficult to surpass these conventional views. Other than dealing with the dominant stereotype, women entrepreneurs are facing several obstacles related to their businesses. Women entrepreneurs start their businesses as a second or third profession. Because of their previous careers, women entrepreneurs enter the business world later on in life, around 4060 years old. As women are now overtaking their male peers when it comes to education,[2] having higher education degrees is one of significant characteristics that many successful female entrepreneurs have in common Meaning and definitions Women entrepreneur is a person who accepts challenging role to meet her personal need and become economically independent. There are economical, social, religious,

cultural and other factors existing in the society which responsible for the emergency of the entrepreneurs. Women entrepreneur refers equally to someone who has started a one women business to someone who is a principal in family business or partnership or to someone who is shareholder in a public company which she runs.

Problems of Women Entrepreneurs

Women Entrepreneurs encounter two sets of problems i.e. general problems entrepreneurs and problems specific to women entrepreneurs. These are discussed follows. 1. Problem of Finance Finance is regarded as life blood for any enterprise is in big or small. However women entrepreneurs suffer from shortage of finance on two counts. Firstly women do not generally have property on their names to use them as collateral for obtaining funds from external sources. So that access to the external sources funds is limited. Secondly the banks also consider women less credit-worthy and discourage women barrowers on belief that they can at any time leave their business. 2. Scarcity of Raw Materials Most of the women enterprises are plagued by the scarcity of raw materials and necessary inputs. Added to this are high prices of raw materials, on the one hand and getting raw material at the minimum of discount on the other. 3. Male dominated Society. The constitution of India speaks of equality between sexes. But in practice women are looked upon as abla i.e. Weak in all respects. In male dominated Indian society, women are not treated equal to men. This turn serves as a barrier to women entry into business. 4. Lack of Education

In India around 60% of women are still illiterate. Illiteracy is the root cause of socio- economic problem. Due to the lack of education women are not aware of business, technology and market knowledge. Also lack of education causes low achievement motivation among women. 5. Market Oriented Risk A number of women have to face the challenges of market because of stiff competition. Many business women find it difficult to capture the market and compete with their product. They are not fully aware of the changing market conditions. 6. Motivational Factors. Successful businessmen can be self motivated through setting up a mind and taking up risk and accepting social responsibilities on shoulder. The other factors such as family support government policies financial assistance etc. are also important to set up business. 7. Lack of Confidence Women lack confidence in their strength and competence. The family members and the society and reluctant to stand beside their entrepreneurial growth. Nowadays most of the women are suffering from one major problem of lack of selfconfidence, determination, physically powerful outlook, hopefulness etc. They are always panic from committing mistakes while doing their piece of work, more over there is limited initiative of taking risk and bearing uncertainty in them. Thus all these psychological factors often obstruct their path of achieving success in the area of enterprise. 8. Training Programs Training programs are essential to new rural and young entrepreneurs who wish to set up a small and medium scale unit. The programs enrich the skill and potential of women entrepreneur.

Family Conflicts: Women also countenance the conflict of performing of home role as they are not available to spend enough time with their families. Because in India, mainly a womans duty is to look after her children and manage the other members of the family. In business they have to spend long hours and as a result, they find it difficult to meet the demands of their family members and society as well. Their incapability to attend to domestic work, time for education of children, personal hobbies, and entertainment adds to their conflicts. Marketing Problems: Women entrepreneurs incessantly face the problems in marketing their products. It is one of the core problems as this area is mainly dominated by males and even women with adequate experience fail to make a dent. For marketing the products women entrepreneurs have to be at the mercy of middlemen who pocket the hunk of profit. Although the middlemen exploit the women entrepreneurs, the purging of middlemen is tricky, because it involves a lot of running about. Women entrepreneurs also find it difficult to capture the market and make their products popular. High cost of production: High cost of production undermines the efficiency and adversely affects the development of women entrepreneurs. The installation of new machinery during expansion of the productive capacity and like similar factor dissuades the women entrepreneur from venturing in to new area. Government assistance in the form of grant and subsidies to some extent enables them to tide over the difficult situations. However, in the long run, it would be necessary to increase efficiency and expand productive capacity and thereby reduce cost to make their ultimate survival possible, other than these, women entrepreneurs also face the problems of labour, human resources, infrastructure, legal formalities, overload of work, lack of family support, mistrust etc.

Future Prospects for Development of Women Entrepreneurs:

Education is a boon to mankind, while lack of education to a person is a bane now-a-days. Throughout the world, we can observe that the ratio of women entrepreneurs is growing tremendously. The emergence as well as development of women entrepreneurs is quite visible in India and their overall contribution to Indian economy is also very significant. Today the role of Women entrepreneur in economic development is inevitable because women are entering not only in selected professions but also in professions like trade, industry and engineering. The industrial structure and the enterprises are undergoing a radical change. Information Technology has transformed the very technique of doing business. Individually, business ownership provides women with the independence they crave and with economic and social success they need. Nationally, business ownership has great importance for future economic prosperity. Globally, women are enhancing, directing, and changing the face of how business is done today. Ultimately, female business owners must be recognized for who they are, what they do, and how significantly they impact the worlds global economy. Women should be considered as specific target group for all development programmes. Govt. should extend better educational facilities and schemes to women folk. Adequate training programs on management skills should be provided to women community. Encourage womens participation in decision making. Vocational training should be extended to women community to enable them to understand the production process and management. Training on professional competence and leadership skills should be extended to women entrepreneurs. Activities in which women are trained should focus on their marketability and profitability. State Finance Corporations and financing institutions should permit by statute to extend purely trade related finance to women entrepreneurs. And lastly womens development corporation has to gain access to open-ended financing.

ROLE OF WOMEN ENTREPRENEURS:

Introduction: Introduction Women entrepreneurs may be defined as a woman or a group of women, who initiate, organize and run a business enterprise. In terms of Schumpeterian concept of innovative entrepreneurs, women who innovate, initiate or adopt a business activity are called business entrepreneur. Areas of Women Entrepreneurs: Areas of Women Entrepreneurs The areas chosen by women are Retail Trade, Restaurants, Hotels, Education, Cultural, Cleaning Insurance and Manufacturing . Women entrepreneurs in India: Women entrepreneurs in India The Government of India has defined women entrepreneurs based on women participation in equity and employment of a business enterprise . Accordingly, a woman entrepreneur is defined as an enterprise owned and controlled by a woman having a minimum financial interest of 51% of the capital and giving at least 51% of the employment generated in the enterprise to a woman. Reasons for their marks in business: Reasons for their marks in business They want to improve their mettle in innovation and competitive jobs. They want the change to control the balance between their families and responsibility and their business levels. They want new challenges and opportunities for self fulfillment. Role of women as an Entrepreneur's: Role of women as an Entrepreneur's Imaginative Attribute to work hard Persistence Ability and desire to take risk Profit earning capacity Imaginative: Imaginative it refers to the imaginative approach or original ideas with competitive market. Well-planned approach is needed to examine the existing situation and to identify the entrepreneurial opportunities. It further implies that women entrepreneur's have association with knowledgeable people and contracting the right organization offering support and services

Attribute to work hard: Attribute to work hard enterprising women have further ability to work hard. The imaginative ideas have to come to a fair play. Hard work is needed to build up an enterprise.. Persistence: Persistence Women entrepreneurs must have an intention to fulfill their dreams. They have to make a dream transferred into an idea enterprise; Studies show that successful women work hard. Ability and desire to take risk: Ability and desire to take risk the desire refers to the willingness to take risk and ability to the proficiency in planning making forecast estimates and calculations. Profit earning capacity: Profit earning capacity she should have a capacity to get maximum return out of invested capital.