1 00:00:00,650 --> 00:00:02,070 We're almost done. 2 00:00:02,070 --> 00:00:04,850 Now I've covered all the working parts of my business model. 3 00:00:04,850 --> 00:00:07,950 So let's look at how that translates into money. 4 00:00:07,950 --> 00:00:12,340 As I mentioned in the previous videos, I can easily obtain our costs by looking at 5 00:00:12,340 --> 00:00:16,150 the key resources, activities and partnerships. 6 00:00:16,150 --> 00:00:19,950 And since I've already completed that, this should be fairly easy. 7 00:00:19,950 --> 00:00:23,990 My start-up costs are going to be the hardware, initial software and 8 00:00:23,990 --> 00:00:25,890 any other setup costs. 9 00:00:25,890 --> 00:00:27,150 If I want to be official and 10 00:00:27,150 --> 00:00:31,040 create a company early on, I'm going to have those legal costs as well. 11 00:00:31,040 --> 00:00:34,690 I will also have ongoing costs for subscriptions that I pay for. 12 00:00:34,690 --> 00:00:37,560 As well as occasional costs, like attending conferences, or 13 00:00:37,560 --> 00:00:41,090 my educational activities and even paying an accountant during tax time. 14 00:00:42,270 --> 00:00:46,660 Listing out all these costs helps me understand my base expenses and 15 00:00:46,660 --> 00:00:48,390 the kind of revenue that I need to bring in. 16 00:00:49,400 --> 00:00:52,910 The last part of my business model is my revenue. 17 00:00:52,910 --> 00:00:55,930 Now that I understand my value proposition better, 18 00:00:55,930 --> 00:00:59,690 I have a better picture of how to maximize my revenue streams. 19 00:00:59,690 --> 00:01:03,950 Going into this my thought was, well yeah, I'll charge a client, you know, revenue. 20 00:01:03,950 --> 00:01:07,210 Obviously I'll just, you know, get the money from them the one time. 21 00:01:07,210 --> 00:01:08,540 But now the plan is, 22 00:01:08,540 --> 00:01:14,140 for each client I start with a fixed price point that's product feature dependent. 23 00:01:14,140 --> 00:01:18,090 Since I'm targeting a market that doesn't really know how to maintain their site or 24 00:01:18,090 --> 00:01:22,530 resolve their problems when they occur, I can charge a recurring fixed payment for 25 00:01:22,530 --> 00:01:25,900 maintenance, hosting and any other services. 26 00:01:25,900 --> 00:01:29,595 Finally, I can gain additional revenue from each customer by up-selling. 27 00:01:31,700 --> 00:01:33,575 Well, that about covers it. 28 00:01:33,575 --> 00:01:37,050 Let's put this information down in a better format that suits our 29 00:01:37,050 --> 00:01:38,810 purposes more. 30 00:01:38,810 --> 00:01:42,780 To use this as an internal reference, I'm going to keep it as a mind map, 31 00:01:42,780 --> 00:01:45,770 which is this diagram I've been drawing all along. 32 00:01:45,770 --> 00:01:47,630 If this is something you'd like to do, 33 00:01:47,630 --> 00:01:51,080 there's a lot of great free mind mapping software out there. 34 00:01:51,080 --> 00:01:53,880 If I want to use this for business considerations, 35 00:01:53,880 --> 00:01:58,380 I can put together a more formal document that goes somewhat like this. 36 00:01:58,380 --> 00:02:00,200 I'll start with a summary. 37 00:02:00,200 --> 00:02:03,970 In this section, I'm going to list the profile of my company, general overview, 38 00:02:03,970 --> 00:02:08,250 you know, name, purpose, legal status, and so on. 39 00:02:08,250 --> 00:02:10,900 I can also include what I have already achieved, 40 00:02:10,900 --> 00:02:12,610 any clients that I have worked with, and so on. 41 00:02:12,610 --> 00:02:17,960 Most business plans then follow with an industry or market analysis. 42 00:02:17,960 --> 00:02:22,060 Here's where you list your market size, your competitors and trends. 43 00:02:22,060 --> 00:02:23,980 This information is very important, 44 00:02:23,980 --> 00:02:27,450 because it shows that you understand your playing field. 45 00:02:27,450 --> 00:02:30,230 For this example, it's kind of hard to get that information. 46 00:02:30,230 --> 00:02:33,060 But if this were anything other than a freelance business, 47 00:02:33,060 --> 00:02:36,930 you should be spending a bit of time gathering all this information. 48 00:02:36,930 --> 00:02:40,140 Not only does it arm you when going into business, 49 00:02:40,140 --> 00:02:43,200 you'll also gain an understanding of what already works, 50 00:02:43,200 --> 00:02:46,390 what are existing sales avenues, and revenue models. 51 00:02:46,390 --> 00:02:49,690 It's important to know what companies before you have tried. 52 00:02:50,900 --> 00:02:55,770 Sometimes, this section is broken down to industry and competitor analysis. 53 00:02:55,770 --> 00:02:56,780 It's up to you. 54 00:02:56,780 --> 00:02:58,010 I tend to put them together, 55 00:02:58,010 --> 00:03:00,440 since your competitors are part of your industry anyway. 56 00:03:01,930 --> 00:03:04,850 Next up, is the customer analysis. 57 00:03:04,850 --> 00:03:09,640 This section indicates that you have done all your research about your customer. 58 00:03:09,640 --> 00:03:11,420 I did that, so I'm just going to list it out. 59 00:03:11,420 --> 00:03:15,840 I'm gonna list out my target customers, their demographic information, and 60 00:03:15,840 --> 00:03:17,430 the needs of a typical customer. 61 00:03:18,460 --> 00:03:23,090 All the information I went over when I explored my customer segments. 62 00:03:23,090 --> 00:03:26,240 The next big section is our marketing plan. 63 00:03:26,240 --> 00:03:29,900 This is where we describe our brand, how we get our customers to 64 00:03:29,900 --> 00:03:33,640 know about our product and service, and how we distribute it to them. 65 00:03:34,690 --> 00:03:37,950 The information for this section comes straight from two sections of 66 00:03:37,950 --> 00:03:42,770 the business model, our channels and our customer relationships. 67 00:03:42,770 --> 00:03:46,110 Like we just talked about, my channels are very traditional. 68 00:03:46,110 --> 00:03:50,650 So I'm going to rely on a few ads, word-of-mouth, and a lot of networking. 69 00:03:50,650 --> 00:03:54,390 Evaluation, purchase, and distribution happen directly with 70 00:03:54,390 --> 00:03:57,960 the customer since the relationship is a one-to-one. 71 00:03:57,960 --> 00:04:01,280 I'm going over all this briefly, because I detailed it earlier. 72 00:04:01,280 --> 00:04:04,640 But you should be writing out each of these points in as much detail as 73 00:04:04,640 --> 00:04:08,250 possible when putting together your formal plans. 74 00:04:08,250 --> 00:04:10,770 Next up is our operations plan. 75 00:04:10,770 --> 00:04:14,170 This section goes over the key operational processes that 76 00:04:14,170 --> 00:04:17,220 the company needs to undertake to ensure success. 77 00:04:17,220 --> 00:04:20,920 In simpler terms, that's our list of key activities. 78 00:04:20,920 --> 00:04:24,440 It sounds too complicated to call the activities of my freelance business 79 00:04:24,440 --> 00:04:25,985 an operations plan. 80 00:04:25,985 --> 00:04:28,770 So I'm just going to say key activities in my plan. 81 00:04:28,770 --> 00:04:33,220 Remember, a business plan doesn't have to adhere super strictly to any format, for 82 00:04:33,220 --> 00:04:34,750 such simple uses. 83 00:04:34,750 --> 00:04:37,260 Now, we can also break this information down into primary and 84 00:04:37,260 --> 00:04:38,890 secondary activities, if we need. 85 00:04:40,150 --> 00:04:43,210 Lastly, we're going to include our financial plan. 86 00:04:43,210 --> 00:04:45,900 This includes the revenue model that we discussed. 87 00:04:45,900 --> 00:04:48,010 As well as the associated cost structures. 88 00:04:49,130 --> 00:04:52,810 Business plans seem like they're designed for more complicated ventures. 89 00:04:52,810 --> 00:04:55,990 But as you can see, we can modify it to suit our needs. 90 00:04:55,990 --> 00:05:00,160 The goal in this exercise wasn't the format for the final product, but 91 00:05:00,160 --> 00:05:04,380 to show you that running through the business model is the more important part. 92 00:05:04,380 --> 00:05:07,590 Once you know how all the working parts fit together, 93 00:05:07,590 --> 00:05:11,570 it's simple to put that down on paper in multiple formats. 94 00:05:11,570 --> 00:05:13,450 My personal favorite is the mind map. 95 00:05:13,450 --> 00:05:18,200 It helps me keep an eye on the big picture and it's really simple to implement. 96 00:05:18,200 --> 00:05:20,970 I hope that the exercise helped you understand how to 97 00:05:20,970 --> 00:05:24,850 create your own business plans, regardless of what you're getting into. 98 00:05:24,850 --> 00:05:26,170 Good luck with creating your own.