How-to... Biz Modeler

The Biz Modeler tool is used to articulate our business idea into a business model.

Biz Modeler modules are:

• Separation
• Synergy
• Business Model

Defining a Business Model

A properly articulated Business Model is defined in various categories:

• Business idea
• Financial idea
• Product / Service
• Customer
• Competition
• Key activities and resources
• SWOT analysis

Business idea

The business idea is about a unique combination of selected customer segments and the company's products and services, which is more successful on the market than the competition. It is the so-called market triangle:

The market triangle operates on a mutual relationship, where changes in one element affect the other two. There is a continuous interdependence between them. Your business and its product/service should focus on the customer while also considering the competition's offerings. Competitors must also consider your business's offerings. Although there are other crucial factors in the market, this market triangle should not be disregarded.

Example of Ice Glee LLC

Business model: Production and distribution of mixtures for frozen cocktails

Business idea: Production and distribution of mixtures for making frozen cocktails to the cafe and restaurant market under the brand "Ice Glee." Devices for preparing cocktails from the mixtures are also supplied, as well as know-how/training on how to prepare and serve a frozen cocktails on the spot.

It has been proven that frozen cocktails are a unique product on the market, particularly attractive to the female population, as well as the minors in the non-alcoholic version. Their attraction lies in the special experience of taste and appearance.

Financial idea

The financial idea roughly explains how we calculate the difference between the cost of purchased or produced products and services, the prices at which we sell them, and whether this difference is sufficient to cover costs and make a profit.

Example of Ice Glee LLC

Business model:  Production and distribution of mixtures for frozen cocktails

Financial idea: Frozen cocktails are attractive and it is easy to achieve a higher price in retail and wholesale.

A large amount of ice (water) is used as the raw materials that make up the mixture for frozen cocktails, so that the production price per product unit is low. This allows for a large margin between the production and wholesale prices.

Some simplified examples of financial ideas:

• We will produce in underdeveloped regions where labor costs are low and sell in developed centers.
• We will provide information for free, but we will charge for advertising space next to it.
• We will produce high-quality products with high costs, but we will sell even more expensively to prestigious customers.
• We will build a large-scale supply chain, where we will have the power to negotiate and buy for the lowest prices, and we will sell cheaply, with a minimal margin, but in huge quantities.

Product / Service

Provide a concise list of your products and services, emphasizing the unique features that differentiate them from your competitors in the eyes of customers.

Example of Ice Glee LLC

Business model:  Production and distribution of mixtures for frozen cocktails

• Mixtures for frozen cocktails

  22 ready mixes for the production of frozen cocktails in cafes and restaurants. The best-selling frozen cocktails are: Melon margarita, Prosecco, Ice Piña Coladas in 3 colors, Coconut Mojito, Frozen Hot Chocolate. The characteristics are a low percentage of alcohol, intense aromas and smells, and vivid colors. The perception of the cocktail is that it is a refreshing drink, rather than an alcoholic drink.

• Equipment for making cocktails

  Cocktails can be prepared from mixtures only with appropriate devices and tools that we manufacture ourselves and deliver to clients.

• Equipment installation and training

  In addition to mixtures and devices, it is necessary to install and service devices and other equipment. Additionally, the appropriate training for operating and maintaining the devices is provided.

Customer

List the main customer segments. Provide their brief description, social affiliation, needs, and reasons for buying. For B2B customers (or intermediaries), provide specific information about their business, etc.

Example of Ice Glee LLC

Business model:  Production and distribution of mixtures for frozen cocktails

• Direct customers:

  - Cafes are the primary customers because they are environments where it is common for end users to consume frozen cocktails.

  - Restaurants offer frozen cocktails as desserts.

  - Hotels have the capacity of both, cafes and restaurants.

• Indirect customers:

  Specialized distributors that deliver to cafes, restaurants and hotels.

• End consumers:

  Typically, the younger people, particularly females, enjoy drinking frozen cocktails while socializing with friends. They find it an enjoyable and relaxing activity.

Competition

List direct and indirect competition, as well as their strengths and weaknesses; assess their market interest.

Example of Ice Glee LLC Business model:  Production and distribution of mixtures for frozen cocktails.

There is still no direct competition in the frozen cocktails market.

The biggest existing competition is the producers of bottled cocktails. The vast majority are foreign manufacturers who market their products through companies that represent them locally.

The largest among them is La marée, a French company. Their Blue Lagoon product, which has been advertised on national televisions and social media, is in high demand.

La marée is expanding aggressively, but only in a few of the largest cities, while in many other cities they do not have distribution. The assumption is that it will remain so because they have entered other markets in a similar fashion.

Key elements

• Key activities
• Key resources

When listing activities and resources, focusing on the key ones contributing to achieving a competitive advantage for the business idea is essential. Typically, only a few key activities and resources should be listed.

See the document: Examples of a key resource and resource classification

Example of Ice Glee LLCBusiness model: Production and distribution of mixtures for frozen cocktails

Key activities:

• Detailed research among users about which new flavors would be successful in the market.
• Advanced procurement of local quality raw materials to minimize stockpiling of raw materials.

Key Resources:

• Specialized, custom-made machines for making mixtures for frozen cocktails.
• Ice production plant.
• Talented food technologists.

SWOT analysis

Internal Weaknesses

List all internal weaknesses, flaws, shortcomings, etc., which represent an obstacle to the realization of business ideas and goals.

Example of Ice Glee LLCBusiness model: Production and distribution of mixtures for frozen cocktails

Internal Weaknesses:

• Dependence on experienced technologists.
• The necessity of continuous maintenance of the cold chain from production to delivery. 
• Problems in properly managing raw materials stocks. Something is constantly missing, not ordered, or ordered in insufficient quantities, causing production interruptions. 
• Ambiguities and errors in communication with retailers. 
• Irregular orders from retail and frequent small additional orders that cannot fit into current production. 
• Employee turnover. 
• There are indications of information leaks of secret recipes to competitors.

Company strengths

List internal strengths.

Example of Ice Glee LLC

Business model:  Production and distribution of mixtures for frozen cocktails

Company strengths:

• Development of own a technology.
• Specialized and customized machines that cannot be found on the market.
• Promoting new cocktails in accordance with the seasons.

Market Threats

List which events on the market threaten the business, currently or in the near or distant future, in relation to the business idea and goals.

Example of Ice Glee LLCBusiness model: Production and distribution of mixtures for frozen cocktails

Market threats:

• The competition is copying the best-selling cocktails with almost identical recipes.
• There is a concern that the former technologist will develop production for the competition.

Market Opportunities

Indicate the market areas with recognized opportunities for development, expansion, competitive dominance, etc.

Example of Ice Glee LLCBusiness model: Production and distribution of mixtures for frozen cocktails

Market opportunities:

• International expansion.
• Introducing new machines designed especially for creating frozen cocktails at home in small batches, which will be sold at a high price.
• Start to produce mixtures for hot cocktails that are perfect for winter consumption.

Separation and Synergy

Separation and synergy are used to rationalize the Business Model.

Separation

It is not unusual for a company to have several parallel business models at the same time. ("Combined Business Model"). Their existence fundamentally affects the quality and manner of organization and management. That is why their individual recognition and definition are necessary. That is Separation.

Synergy

Once the individual Business Models have been identified, the next step is to consider the potential for synergy between them. This involves analyzing how the separated Business Models can work together in real-world business scenarios, taking into account the availability of resources. The Synergy module is then used to combine and rationalize the separate models into a cohesive and effective overall Business Model for the company.