Nick Niemann, an Omaha, Neb., attorney who has worked with hundreds of financial planners and their entrepreneurial clients, analyzes every business he encounters based on nine main factors.
Without strength in each of these areas, Niemann says he’s found that businesses tend to struggle and even fail.
“My foundation for this comes from an international project I was involved in called Business Model Generation.” That project lead to a handbook and a website of the same name, both of which were produced with the help of 470 contributors from 45 countries, says Niemann, who sits on the board of director of the Nebraska chapter of the FPA. The book itself is co-authored by Alex Osterwalder and Yves Pigneur.
Niemann, who uses the project’s research to teach a business model workshop to CEOs around the country, outlines the factors as follows:
1. What is the company’s value proposition? What does it make and sell?
2. Which are their customer segments? Who buys from you?
3. What are their customer channels? How does the company reach and deliver a product or service to customers?
4. How does the company keep customers? Airlines, for example, use frequent flier programs.
5. What are the company’s key resources, including property, equipment, people and patents?
6. What are its key activities? Does it manufacture goods or offer a service, for example?
7. Who are the company’s key partners? This refers to the people outside of the company who enable it to function. For YouTube, for example, those people comprise the users who upload their videos to the site.
8. What are the company’s revenue streams and how do workers get paid? This would include an analysis of whether a company sells something for a fixed or a variable price.
9. What is the company’s cost structure? The Walmart cost structure, for example, reaches back to its suppliers and dictates how those suppliers will do business with the giant retailer.
For more information, go to www.businessmodelgeneration.com.
Ann Marsh writes for Financial Planning.