Understanding Business Models and Value Propositions for Micro-Enterprises

California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity Microlending Academy Peer Discussion OFN: Building a Value Proposition

Todays Agenda Review key points from OFN webinar Review some of their suggestions Discuss Give feedback on role or services CAMEO could provide California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Todays Questions Why do you need a Value Proposition? How would it help you? What is a Value Proposition? What are some ways to develop one -- or several? Would you like help with this process? California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Business Model A business model describes the rationale of how an organization creates, delivers and captures value. California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Business Model Obsolete Many businesses decline because the assumptions that inform their fundamental business decisions -- about society, markets, customers, products, technology, mission -- become obsolete or invalid. Peter Drucker California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Business Model Invisibility Why is it so difficult for companies to pull off the new growth that business model innovation can bring? Here s why: They don t see their current business model well enough to know if it would suit a new opportunity or hinder it, and they don t know how to build a new model when they need it. Harvard Business Review California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Business Model Generation Alexander Osterwalder and Yves Pigneur California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Benefits of Value Proposition Increased Sales Deliver the right message to key audiences, leaving partners and clients clear about you, your products, your value Use resources (time, people, money) effectively, leading to increased deals & impact California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Benefits of Value Proposition Cohesion Cohesion creates efficiency, team work, clarity. Having staff going off in different directions creates muddle Self Sufficiency Clarity allows you to hone or redesign your business model to improve self sufficiency and impact California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

What is a Value Proposition A positioning statement that explains what benefit you provide for who and how you do it uniquely well It describes your target customer, the problem you solve, and why you re distinctly better than the alternatives Must reflect the mindset of the customer The more specific the better California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Value Proposition Mad Lib For (target customers) Who are dissatisfied with alternative) (the current Our product is a (product features) That provides capability) (key problem-solving Unlike (the product alternative) California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

What are you best at -- compared to banks, credit cards, MCAs California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Identify Customer Segments You probably have 3-7 customer segments Who are you creating the most value for? Which customers are creating the most value for you in terms of sustainability, impact and mission? What customer problems are we solving? What is the best language to use with them? What kind of relationship do we want to have w. them? California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Montana CDC They have seven customer segments Unbankable start up 1. Nearly bankable start up 2. Partially bankable start up 3. Nearly bankable existing 4. Partially bankable existing 5. Business Purchase 6. Community Facility 7. California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Accion New Mexico We offer the most competitive combination of speed, pricing and terms by evaluating our client s business as a whole, matching loan terms to use of funds and determining a healthy debt structure for our clients. We provide a community of support if you need it. California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

How did Accion NM create it Held team meetings with staff to identify issues, strengths, weaknesses Compared product, service, process to the competition Brainstormed words, phrases to best state valued offered Compiled draft of value proposition Did role plays until everyone could deliver value proposition comfortably California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

What Do You Think? Would it help to create a value proposition? Could CAMEO help in some way? Have we clearly identified our Customer Segments? Have we developed a Value Proposition for each customer segment? Have we engaged staff so they can easily, comfortably state our value to each customer segment? Does our value proposition align with our business model? California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity

Thanks!! California Association for Micro Enterprise Opportunity California Association for Micro Enterprise Opportunity