Business Model Canvas Presented By: Ed Rappuhn SCORE Nashville, TN Presented at: ACLEA 53 rd Mid-Year Meeting January 28 th January 31 st, 2017 Nashville, Tennessee
Ed Rappuhn SCORE Nashville, TN Ed Rappuhn is a SCORE mentor, workshop facilitator, and past chapter chair. He has been with SCORE since 2009 and specializes in Business Modeling and assisting clients with business plans and strategy. He authored biweekly small business articles published in the Tennessean from 2013 until 2016. Prior to joining SCORE he was an owner of EFT Source, Inc., Product Manager at FISI, Consultant with Deloitte Haskins and Sells, and Marketing Representative & Manager for Burroughs Corp. He has also taught and tutored in Metro Public schools. Ed earned a BBA from MTSU, an MBA from the University of Tennessee, Knoxville, and an MAT from Belmont University.
What is a Business Model and why should I care? Ed Rappuhn, SCORE Nashville A business model is a visual representation of your law practice. It is like a business plan but is designed to be viewed on a single canvas and to be dynamic - changing as your practice changes. There are many formats for business modeling. I use the Business Model Canvas designed by Alexander Osterwalder and Yves Pigneur and explained fully in their book Business Model Generation. You should care because your law practice is a business and like any business you are looking to produce profitable results. To maximize profits, you need to understand what you are selling, who is buying it, how it is produced, and your cost structure and revenue streams. Should you expand your practice? If so, should you grow within your area of expertise or should you add new specialties? What advantages do you provide versus your competition? Who, exactly, is your ideal client? These are but a few of the questions a business model can help to answer. The canvas is divided into 4 main parts. The center defines WHAT you sell. The right side addresses WHO your clients are and how you relate to them. The left describes HOW you produce your services. The bottom focuses on HOW MUCH in terms of cost and revenue.
Starting in the center of the canvas (the WHAT), the Value Proposition is how you define your products or services. Few, if any, products or services can be sold if they do not provide value to the buyer. Consider an equation where Value = Benefit Cost. Your goal is to provide greater value than your competitors. Be clear and concise about what you offer. Avoid jargon and ambiguous terms. Use a headline, followed by facts. Think of your value proposition in terms of an elevator pitch; a way to describe your offerings to a stranger between the lobby and the fifth floor. If you are unsure of how to define your value proposition, ask clients directly, What, if anything, about my services do you value? You might believe something is significant, but do clients care? It s their opinion that matters. Clients have different desires and expectations so some might find one value proposition more enticing than another. One client might be interested in specific expertise such as estate planning or criminal defense. Another might be price sensitive. Still others might look at your ability to handle a wide range of business needs including: initial set-up, contract review, intellectual property, tax planning, and mergers/acquisitions. A smaller practice might specialize in a limited number of offerings but provide more reasonable pricing or fixed fees for certain services. A larger firm might bill a higher hourly rate but be able to handle all of the client s needs. Where does your practice fall in the continuum? The right side of the canvas, the WHO, has 3 parts: 1. Customer Segments define the markets for your value proposition(s). Here you acknowledge that a given value proposition doesn t have universal appeal. You can break down your segments demographically, business vs. individual, or by interests. Your value proposition might be different as you focus on specific customer segments based on the client s different needs or interests. By breaking your market into segments you know where to focus your marketing, advertising and promotion. Also, what skills are needed in your associates? Should you add a partner, internally or externally? 2. Channels are the methods by which your value propositions reach your various client segments. Do you advertise, rely on word-of-mouth and referrals, or use your website and search engine optimization as your primary marketing tools? Do you meet at your office or your clients homes or offices? You will likely use more than one channel depending on your value propositions and customer segments. 3. Customer relationships can make clients prize your value propositions. Build strong relationships by providing extraordinary client service, complete service offerings, and value beyond what you promise. Positive customer relationships increase client retention and referrals to new clients. Ongoing client services are generally less expensive than generating new business, so strong client relationships should lead to higher profits.
The left side of the canvas, the HOW, also has 3 parts: 1. Key Resources are the business assets and personnel critical to produce your value proposition. These include employees, office space, materials and resources, computers and research subscriptions, intellectual property, and financial resources. 2. Key Activities are what you do to get your value proposition to clients. This includes not just legal services, but also marketing, billing, and all the other activities that you perform. 3. Key Partners include vendors, others that help market your value proposition, and alliances with cooperative businesses and law firms. A small practice that has partnerships with other firms providing complimentary services can be attractive to your clients. Across the bottom of the canvas is the HOW MUCH? The left side of this segment is your Cost Structure. Include all costs associated with providing your value proposition to your various clients. These are the direct and indirect costs associated with your key resources, activities and partnerships. The right half of this section is Revenue Streams. Think of every way your value proposition can generate revenue. This obviously includes direct billings of your value proposition. But it can also include ongoing retainers or reviews. Could you include referral fees from other practices? You now have a completed business model. But you re not done. A change to any area of the model can reverberate throughout the model. For example, adding or losing a key partner can change several other segments of the model. Or competitive forces outside the model can make you adjust your value proposition, which can affect any number of other areas. You might add services or associates based on client needs. The beauty of the business model is that these changes can be easily seen and made on the single canvas. Get additional assistance and free business mentoring from SCORE by going to our local website at www.scorenashville.org. If you are outside Middle Tennessee, go to the national website at www.score.org. We can help you better understand your business model or assist in many other facets of your business.
Business Model Canvas Notes
Business Model Canvas from Business Model Generation by Alexander Osterwalder and Yves Pigneur
Business Model Canvas Estate & Tax Planning Practice sample
Business Model Canvas from Business Model Generation by Alexander Osterwalder and Yves Pigneur