MODULE 6 – BUSINESS MODEL
Vertically Integrated Business Model – when the
Business Model
- refers to a company's plan for making a profit
- helps you develop strategies for customer acquisition
Key Components of a Business Model
- CREATING VALUE
- DELIVERING VALUE
- CAPTURING VALUE
Business Model Canvas
- created by the Swiss Consultant Alexander
Osterwalder as a result of his PhD thesis, entitled The
Business Model Ontology
- The 9 blocks of construction are:
o Customer Segments
o Value Proposition
o Distribution Channels
o Customer Relationship
o Revenue Streams
o Key Resources
o Cost Structure
o Key Activities
o Key Partners
Types of Business Models
1. Freemium Business Model - combination of the
words free and premium; works for new companies by
cultivating strong relationships with customers
2. Subscription-Based Model - allows companies to
charge consumers monthly or yearly subscription
3. Peer-to-Peer Business Model – a company acts as
the go-between businesses
4. Franchise Model - provides a sense of working for
oneself with the added security of having a company’s
backing
5. Direct Sales Business Model - a company’s
employees will be the ones who demonstrate and sell
the products
6. Affiliate Marketing Business Model – promote and
sell products from other companies online to get paid
a percentage of the sales they make
7. E-Commerce Business Model - companies and
individuals buy and sell products and services online
8. Drop-Shipping Business Model - sell various
products on their websites, but supplying and shipping
these products is done by a third-party wholesaler
9.
company controls both supply and distribution
10. Consulting Business Model - experts will provide a
service that speaks to the consumer’s needs; common
examples of this could be online tutoring, mentoring,
and freelance work in several different fields
11. Ad-Supported Business Model - emphasizes the
importance of advertising
12. Enterprise Business Model - specific aspects of a
business are modeled, such as infrastructures
13. Lock-In Business Model or Lock-In Strategy - takes
customer loyalty and kicks it up a notch
14. Multi-Brand Business Model - a parent company will
offer similar products with different brand names
15. Razor and Blade Model - works by selling products or
services to consumers at a lower price
16. Distribution Based Business Model - facilitates the
distribution of products or services offered from the
manufacturers to the consumers
17. Direct-to-Consumers Business Model - consumers
buy products or services directly from a company’s
website, eliminating the middleman
18. Low-Touch Business Model - products sold using
this model can be consumed or used with little
interference from salespersons or customer service
19. Fractionalization Business Model - companies will
sell partial usage of their product or service to
consumers
20. Pay-As-You-Go Model - consumers will pay for the
service or product as they use it
21. User-Generated Content Business Model - type of
content distribution platform where the users create the
content
Time Value of Money
- fundamental financial concept that revolves around the
changing value of money over time
- The three main reasons that make TVM an important
concept:
o INFLATION - loss of purchasing power
o RISK OR UNCERTAINTY - difference
between what is received as an outcome and
expected when the investment or expenditure
was made
o LIQUIDITY - makes it easy for owners to sell
their assets
Revenue Generations
- process of creating sales of products and services, with
the goal of creating income
Price Structure
- an approach in products and services pricing which
defines various prices
- Types of Pricing Structure:
o Market Penetration - pricing the products
lowest compared to other competitors
o Price Skimming - introducing a product or
service with the highest possible price
o Economy Pricing - products are priced at an
affordable rate
o Psychology Pricing
o Premium Pricing - price tag for the product
is highest
Price Elasticity - measure of how consumers react to the prices
Two Types of Price Elasticity
1. Price elasticity of demand - measure in economics
2. Price elasticity of supply - shows how the quantity of
supply is affected
Channels of Distribution
- represents a chain of businesses or intermediaries
- Types of Distribution Channels
1. Direct Channel - producer sells goods directly
2. Indirect Channel - producer produces goods on a
large scale
3. Hybrid Channels - manufacturer uses more than
one channel
Strategic Partners - another business entity with which you
form an agreement
Different Types of Strategic Partnerships:
- Horizontal Partnership: Businesses within the same
field join alliances
- Vertical Partnership: Businesses team up with
companies within the same supply chain
- Equity Partnership: An investor acquires a
percentage interest
- Joint Venture: Two or more businesses form an
entirely new legal entity
- Merger: Two companies agree to go forward as a
single new company
- Acquisition: One company takes over another
company
MODULE 7 - INTELLECTUAL PROPERTY
TANGIBLE ASSET - has a finite monetary value and usually a
physical form
INTANGIBLE ASSETS - do not physically exist yet they are
valuable; can be considered indefinite
Intellectual Property
- includes intangible creations of the human intellect
- owned and legally protected by a person or company
from outside use
COPYRIGHTS - provide authors and creators of original
material the exclusive right
- DURATION: lasts during the lifetime of the author plus
50 years after the author's death
- COST: 200,000
TRADEMARK - a symbol, phrase, or insignia that is
recognizable and represents a product
- DURATION: 10 years
- COST: 2,592
PATENT - property right for an investor
- DURATION: 20 years
- COST: ranges from 45,000-68,000 pesos excluding
the annuities
TRADE SECRET - a company's process or practice that is not
public information
Non-Disclosure Agreement (NDA), also known as a
confidentiality agreement (CA), confidential disclosure
agreement (CDA), proprietary information agreement (PIA)
or secrecy agreement (SA), is a legal contract or part of a
contract between at least two parties
Non-Compete Agreement - is a contract between an
employee and an employer
PH IP Law: Republic Act No. 8293 STEPS ON CREATING A PROJECT EXECUTION PLAN

- Intellectual Property Code of the Philippines - Set goals and timelines

- Set dependencies
Intellectual Property Office of the Philippines
- Balance workloads
- shortened as IPOPHL; a government agency - Manage communication

The Office shall be divided into six (6) Bureaus: BUSINESS ROADMAP

a) The Bureau of Patents; - outlines the direction you will take

b) The Bureau of Trademarks; STEPS ON CREATING A PROJECT EXECUTION PLAN

c) The Bureau of Legal Affairs; - Set goals

- Gather information
d) The Documentation, Information and Technology Transfer - Organize into themes
Bureau; - Prioritize initiatives
- Add time frames
e) The Management Information System and EDP Bureau; - Review and revise
f) The Administrative, Financial and Personnel Services Bureau HOW TO RATE GOALS ACCORDING TO PRIORITY

- Determine choices
Copyright infringement takes on three forms: - Pick and rate criteria
- Calculate
1. Administrative – between state authority and a
person
2. Civil – between a person against another person MODULE 9 - FINANCIAL ANALYSIS AND ACCOUNTING
3. Criminal - to punish someone for committing a crime
FINANCIAL ANALYSIS
Copyright infringement is punishable by imprisonment ranging
from one (1) year to nine (9) years and a fine ranging from Fifty - process of evaluating businesses
Thousand Pesos (P50,000.00) to One Million Five Hundred - goal is to analyze whether an entity is stable, solvent,
Thousand Pesos (P1,500,000.00) liquid, or profitable

CASH FLOW - net amount of cash

MODULE 8 - EXECUTION AND BUSINESS PLAN
• EXECUTION PLAN - the “how-to” for your venture
• BUSINESS PLAN - document that explains the
commercial potential of a business
• SCOPE DEFINITION - entails defining what the project
intends to achieve
• GOAL STATEMENTS - lists out specific project
requirements
• QUALITY AND TECHNICAL SPECIFICATIONS
• RESOURCE ALLOCATION - allocation of resources
• PROJECT SCHEDULING - divide the project into
small units
• ORGANIZATIONAL CONSIDERATIONS
CASH FLOW STATEMENT - financial statement that provides
aggregate data
PROJECTED CASH FLOW STATEMENT - used to evaluate
cash inflows and outflows
TYPES OF CASH FLOW
1. Cash Flows from Operations - cash entering or
leaving your business
2. Cash Flows from Investing - movement of money
3. Cash Flows from Financing - overview of cash
EXPENSES - cost for a business to continue operation
Primary Activity Expenses - all expenses incurred
Secondary Activity Expenses – all expenses linked to non-
core business activities
FORMULA FOR NET INCOME TYPES OF DEPRECIATION

Total Revenue - Total Expenses = Net Income 1. STRAIGHT-LINE

2. DECLINING BALANCE
INCOME STATEMENT
3. DOUBLE DECLINING BALANCE (DDB)
- profit and loss statement; important part of a 4. SUM-OF-THE-YEAR'S-DIGITS (SYD)
company’s performance reports that must be 5. UNITS OF PRODUCTION
submitted to the Securities and Exchange
Commission (SEC)
MODULE 10 - RAISING CAPITAL
Single-Step Income Statement
CAPITAL
- simple calculation
- refers to financial assets, including funds
Multiple-Step Income Statement
RAISING CAPITAL
- segregates the operating revenues
- means getting the money you need to grow your
EQUITY
business
- represents the amount of money that would be
WAYS ON HOW YOU RAISE CAPITAL
returned to a company’s shareholders
1. Personal Investment
LIABILITY
2. Ask Friends and Family
- something a person or company owes 3. Crowdfund
4. Take Out a Loan
Current liabilities 5. Find an Angel Investor
- short-term (12 months or less) a. Angel investors by definition are accredited
by the SEC and have at least $1 million in net
Non-current liabilities worth and an annual income of at least
- long-term (12 months or greater) $200,000
6. Pitch to a Venture Capital Firm
BALANCE SHEET
Business Accelerators
- reports a company's assets
- a program that gives developing companies access to
FORMULA USED FOR A BALANCE SHEET mentorship
- two main kinds of business accelerators:
SHAREHOLDERS’ EQUITY + LIABILITIES = ASSETS
1. Seed programs - last two to four months and focus on
BREAKEVEN POINT less mature start-ups
2. Second-stage programs - last up to six months and
- revenues equal costs
focus on more mature start-ups
BREAKEVEN TIME
Common services:
- amount of time required for the discounted cash flows
- offering access to investor
RETURN OF INVESTMENT (R.O.I.) - networks
- mentorship
- financial ratio - office space
DEPRECIATION - an opportunity to pitch directly to investors at the end
of the program
- an accounting method of allocating the cost
Business Incubators

- program that gives very early stage companies access

to mentorship

The startup incubators and accelerators in the Philippines:

- Aim-Dado Banatao Incubator

- Ideaspace Foundation
- Impact Hub Manila
- Qbo Innovation Hub

Grants

- quantity of money

Types of Grants

1. Project or Program Grants - granted to support a

particular activity of a nonprofit organization
2. General Purpose Grants - can be used as the funded
organization sees fit
3. Start-up Grants - provide what is often referred to as
"seed money"
4. Facilities and Equipment Funding - might cover all
or part of the expenses
5. Planning Grant Funding - provide funds to support
the initial research efforts
6. Technical Assistance Grants - to support the
administrative functions

There are three main sources for grant funding:

1. THE GOVERNMENT - often federal, sometimes state,

and occasionally local
2. PRIVATE BUSINESSES AND CORPORATIONS
3. FOUNDATIONS - distribute many millions of dollars
per year