際際滷

際際滷Share a Scribd company logo

APS1015 Class 5 - Intervening in Systems Part 2

Download as PPTX, PDF
S
Social Entrepreneurship

This class will focus on the remaining 2 elements of the system intervention process: financial modeling and target setting. Students will be led through the process of understanding how to determine a viable business margin for their venture, and how to set reasonable yet motivating business targets that guide business model execution.

1 of 12
Downloaded 25 times
APS 1015: Social Entrepreneurship Class 5: Intervening in Social Systems (part 2) Monday, May 26, 2014 1 Instructors: Norm Tasevski (norm@socialentrepreneurship.ca) Alex Kjorven (alex@socialentrepreneurship.ca)
息 Norm Tasevski Agenda Recap of Empathy Mapping & Business Modelling(last class) Building an Intervention Step 3: Financial Modeling Step 4: Target Setting Prep for Monday 2
息 Norm Tasevski Intervening A 4 Step Process 3 Step 1: Empathy Mapping Step 2: Business Modeling Step 3: Financial Modelling Step 4: Target Setting
息 Norm Tasevski For our purposes, this is a process for determining whether business model generates a viable margin Who determines viability? The Steps: Assess revenue model (# units, unit price) Assess expense model (fixed, variable) Generate margin 4 Financial Modeling
息 Norm Tasevski Step 1: Assess Revenue Model 2 parts: # units sold and price/unit How do we define a unit? The value proposition perceived as having value by the customer, and to which the customer is willing to pay a price The relationship between units and price: The more custom a unit, the fewer that can be offered and the costlier the unit is to make. The product is perceived as more valuable, and therefore price is higher The more commoditized a unit, the more that can be offered and the cheaper the unit is to make. The product is perceived as less valuable, and therefore price is lower How do we determine price? This iscomplicated 5 Financial Modeling
息 Norm Tasevski Financial Modeling Determining Price 6 Determine cost + desired margin (see step 2) Ask people!!! (friends, potential customers, etc)
息 Norm Tasevski Step 2: Determine Cost Model 2 parts: fixed costs, variable costs Fixed: The costs that dont change as more units are sold Example: rent Goal: determine the total fixed costs incurred Variable: The costs that do change as more units are sold Example: raw materials used to build the product Goal: determine the per unit fixed costs incurred A note: all fixed costs are variable over time! 7 Financial Modeling
息 Norm Tasevski 8 Your Best Friend
Break 9
息 Norm Tasevski The key business and social metrics used to execute the business model in a way that aligns with the financial model Business targets: Revenue targets (e.g. # units sold in the quarter) Expense targets (e.g. target marketing budget) Social targets: Output targets (e.g. # people employed) Outcome targets (e.g. increase in community resiliency) SMART 10 Target Setting
息 Norm Tasevski Baseline vs. Target Baseline: your starting point the reference metrics Target: the measurable improvement from the baseline Linking targets to the business model Each element of the canvas deserves their own metrics (e.g. target # customers, target #/type of activities to run) 11 Target Setting
息 Norm Tasevski What did we learn? 12

More Related Content

APS1015 Class 5 - Intervening in Systems Part 2

  • 1. APS 1015: Social Entrepreneurship Class 5: Intervening in Social Systems (part 2) Monday, May 26, 2014 1 Instructors: Norm Tasevski (norm@socialentrepreneurship.ca) Alex Kjorven (alex@socialentrepreneurship.ca)
  • 2. 息 Norm Tasevski Agenda Recap of Empathy Mapping & Business Modelling(last class) Building an Intervention Step 3: Financial Modeling Step 4: Target Setting Prep for Monday 2
  • 3. 息 Norm Tasevski Intervening A 4 Step Process 3 Step 1: Empathy Mapping Step 2: Business Modeling Step 3: Financial Modelling Step 4: Target Setting
  • 4. 息 Norm Tasevski For our purposes, this is a process for determining whether business model generates a viable margin Who determines viability? The Steps: Assess revenue model (# units, unit price) Assess expense model (fixed, variable) Generate margin 4 Financial Modeling
  • 5. 息 Norm Tasevski Step 1: Assess Revenue Model 2 parts: # units sold and price/unit How do we define a unit? The value proposition perceived as having value by the customer, and to which the customer is willing to pay a price The relationship between units and price: The more custom a unit, the fewer that can be offered and the costlier the unit is to make. The product is perceived as more valuable, and therefore price is higher The more commoditized a unit, the more that can be offered and the cheaper the unit is to make. The product is perceived as less valuable, and therefore price is lower How do we determine price? This iscomplicated 5 Financial Modeling
  • 6. 息 Norm Tasevski Financial Modeling Determining Price 6 Determine cost + desired margin (see step 2) Ask people!!! (friends, potential customers, etc)
  • 7. 息 Norm Tasevski Step 2: Determine Cost Model 2 parts: fixed costs, variable costs Fixed: The costs that dont change as more units are sold Example: rent Goal: determine the total fixed costs incurred Variable: The costs that do change as more units are sold Example: raw materials used to build the product Goal: determine the per unit fixed costs incurred A note: all fixed costs are variable over time! 7 Financial Modeling
  • 10. 息 Norm Tasevski The key business and social metrics used to execute the business model in a way that aligns with the financial model Business targets: Revenue targets (e.g. # units sold in the quarter) Expense targets (e.g. target marketing budget) Social targets: Output targets (e.g. # people employed) Outcome targets (e.g. increase in community resiliency) SMART 10 Target Setting
  • 11. 息 Norm Tasevski Baseline vs. Target Baseline: your starting point the reference metrics Target: the measurable improvement from the baseline Linking targets to the business model Each element of the canvas deserves their own metrics (e.g. target # customers, target #/type of activities to run) 11 Target Setting
  • 12. 息 Norm Tasevski What did we learn? 12

Editor's Notes

  • #13: NORMFocus on the distinction between entrepreneur and enterprise