Social, economic and political forces shape the environment in which we do business. As economies grow or shrink, demographics change and political regimes are replaced, so new business opportunities emerge. The recent changes in the global economy have given rise to a new set of business trends.
Here are eight of the most important developments that will lead to new business opportunities in the months ahead:
1. The imminent retirement of baby boomers.
The first wave of baby boomers are scheduled to retire in 2011, yet most of these people’s retirement funds have been sorely depleted as a result of the financial meltdown. They are going to be looking for smart ways to supplement their income from retirement annuity funds in the future.
If you can provide them with simple solutions to do this or with services and support as they seek to find new sources of income, then you will tap into an emerging market.
2. Economic uncertainty and fear.
Most people and organisations are still gripped by fear and uncertainty when it comes to making economic predications or taking bold bets on the future. The tumultuous ride in 2008 and early 2009 has left people with a longing for certainty and stability.
Those who can help alleviate uncertainty for others will tap into new markets and find new sources of revenue. Those who are brave enough to take some bold steps in these uncertain times may find that they pay off handsomely.
3. Government involvement in economies.
The meltdown of the financial services industry across the globe has put governments on the alert. With large amounts of state funds now propping up private enterprises, the influence of governments on economies has increased.
There is a strong likelihood of more regulation going forward. With new regulation comes opportunity; look at how accounting firms have benefited from increased regulation in financial reporting since the fall of Enron and the emergence of Sarbanes-Oxley.
4. Clean energy and greener business.
Although the recession has diverted people’s attention away from green issues, there is still a strong focus on managing businesses and the environment in a more sustainable way. Venture capitalists have large amounts of money set aside for green investments and many of the green ideas that were launched two years back at the height of the boom are now entering the market.
In the coming months we will see a host of electric cars come to market, many of them developed by new independent companies. We will also continue to see bio fuels become a more mainstream alternative to current fossil fuels. New industries are emerging and with those come opportunities for entrepreneurs.
5. Social networking and online community building.
Just when we think online and mobile social networking tools have reached their peak a new concept emerges. Currently Twitter is all the rage but what will be next? Social networking is now a mainstream activity and existing businesses are scrabbling to figure out what that means for their promotion, marketing and distribution efforts.
There are opportunities to create new applications for existing platforms and to help other companies figure out how to use existing applications to make them more competitive.
6. Mobile and cloud computing.
Many of the largest and most influential technology companies in the world – Microsoft, Google, Apple and Amazon – have made large investments in mobile and cloud computing, a style of computing in which dynamically scalable and often virtualised resources are provided as a service over the Internet.
They are likely to flex their muscle to make these investments pay off. As Apple continues to push the iPhone, Google will continue to develop its suite of online applications and Microsoft and Amazon will encourage users to embrace cloud computing.
Users will need support to embrace these new technologies and companies that can provide products and services to make the technologies more effective will ride the wave.
7. Micro enterprises and solo entrepreneurs.
The economic recession resulted in many layoffs. As people struggle to find work in traditional corporations, it is predicted that many of them will look to go into business for themselves. This will give rise to a new wave of micro enterprises and solo entrepreneurs.
These people are looking for ideas, opportunities and support as they embark on launching a business for the first time.
8. Training, retooling and low cost education.
Some people view the lack of opportunity in traditional job markets as a chance to develop new skills. For example, autoworkers in the US realise that many of their skills are no longer desirable in their home country. As a result they are looking for cost efficient ways of acquiring new skills.
Online and distance education solutions as well as any other low cost ways of providing education present big opportunities in the current environment.
Organisational Design Disruptions Do Not Occur In A Vacuum: Future Business Models
What is the shape of the world in which models need to operate and how do they come together to build future value?
In today’s ever-changing world, organisations are using a disruptive business model design to build unique approaches to creating value and organisations that are ready for the future.
At all scales, from micro-enterprise to multinational, operating in multiple settings and contexts, rethinking business models has become one of definite ways of offering customers something truly better than what already exists.
To ensure sustainable business growth, businesses need to navigate modern economic development and societal issues and in so doing articulate what meaningful, inclusive and enduring value looks like. In the past, a linear approach to business model design may have sufficed – inputs enter a logical process that creates outputs of value.
Today, to truly deliver a value proposition that can flourish, an understanding of the way that complex adaptive systems come together to create both outputs and outcomes is required. ACCA identified12 characteristics that organisations are combining as they build new business models. The full model and characteristics can be read here.
The accountancy profession is well placed to support the growth of business models of the future that help build resilient, inclusive and prosperous societies, by leading in strategic roles. In order to be ready to make the most of these opportunities professional accountants will demand new skills. Financial acumen, technical knowledge and ethical judgement are attributes that the accountancy profession can uniquely bring to support business model innovation across the three spheres of value proposition, value creation and value capture.
But to navigate the contours of a changing economy, new mindsets are required. These include the ability to:
- think like a system
- understand how to capture and assess new sources of value
- build creative capabilities to think differently and problem solve
- adopt a long-term mindset.
Business models of the future: Systems, convergence and characteristics attempts to answer fundamental questions; why does business model innovation matter? What is the shape of the world in which models need to operate and how do they come together to build future value?
Developing A Business Model That Works
Use these six tips to create the financial section of a business plan that will get your company off the ground.
The following excerpt is from Scott Duffy’s book Breakthrough.
What’s the first step in figuring out how to execute your big idea? Creating a working model for your business.
We’ve all been brainwashed into thinking that the best way to do this is to sit behind our desks and write a long, detailed business plan. You know the kind: It starts with a fancy cover and your mission statement, then describes your team, market, product, competition, and so on.
Most entrepreneurs spend a lot of time and resources writing their plan. Too often, they get feedback from all the wrong people. Their friends and family want to support them, but they’re telling the entrepreneurs only what they want to hear — that they have come up with the next Google or Apple or Tesla (keep in mind, none of this feedback is coming from customers).
By the time the entrepreneur gets to the last section in the business plan — the financials — he’s totally sold on the idea. Sometimes the financial section is left unfinished or dropped entirely as the business is launched.
And why not? We’re passionate. We’re committed. We know we can’t fail. So what are we waiting for? Let’s go!
Here’s the problem: Most entrepreneurs change their business model six times when working through the financial section of their plans. While running the numbers, they identify key distinctions with regard to income and expenses. They gain a deeper understanding of what it will take to break even and how to achieve free cash flow. As a result, they come up with better-informed strategies for attaining their desired financial outcomes.
The most important part of the initial business planning process, and the one people most often neglect, is getting your numbers to tell a story that makes sense for you and your investors. If you start at the beginning of the plan only to learn that your assumptions about the business don’t add up once you reach the end, you’ve lost valuable time and money.
Regardless of whether you’re in startup or growth mode or moving to the next stage of your business, mistakes can be costly, so here’s what I recommend:
1. Start with the last page first
Once I have a basic understanding of what I’d like to build, the market, my target customers, the business opportunity, and the product, I dig right into the numbers and create a simple one-page spreadsheet that clearly identifies how the money flows. Basically, I write business plans backward. I’ve learned that once the numbers tell the story you want, the rest of the plan will write itself.
2. Don’t wait
Don’t make this process more difficult than it needs to be. Limit your model to one page. Create the simplest, most basic spreadsheet you can that identifies income, expenses, breakeven, cash flow, and the capital required to achieve your outcome. Use conservative assumptions, and don’t rely on best-case scenarios.
3. Get out of the office
You’ll learn more about your business by getting into the market than you ever will sitting behind a desk. At least 50 percent of your time should be outside the office gathering information that can be applied to your plan. That means contacting industry insiders to learn more about the market, talking to prospective customers about their needs, and testing your competition’s products and services.
4. Be careful who you listen to
When we have an idea we passionately believe in, we’re convincing. It’s easy for our family and friends to tell us we have a winner on our hands because they want to be supportive.
But when you’re modeling your business, the people whose feedback matters most are current and potential customers. Listen to what they have to say and apply what you learn to your model. Let their feedback, and not your enthusiasm, sway your projections.
5. Don’t throw out negative feedback
Sometimes it can be difficult to absorb negative feedback in a constructive frame of mind because we’re so close to our projects and have so much on the line. We start rejecting and deflecting feedback that isn’t in line with what we believe.
But honest, educated feedback is like gold — use it to open your mind and ask tough questions about your assumptions. You must be obsessively committed to asking what you can learn from this feedback and how you can apply it.
This is especially important for people entering new markets where they don’t have prior experience. Getting feedback from others who’ve lived in the space will add to your perspective. Sometimes you’ll learn that there are things you don’t know as a newcomer that would significantly impact your financial results.
In fact, this holds true throughout your business’s lifetime. The entrepreneurs I know who’ve built the most successful and thriving businesses are obsessed with getting constant feedback from the marketplace and adapting their businesses based on evolving market needs.
Related: Developing a Stable Business Model
6. Be open to what the numbers tell you
The worst thing you can do is try to manipulate a model to match your assumptions. You need to approach your financial model with a completely open mind.
Recognise that it will probably take longer than you initially thought to get to market, generate revenue, create profits, and accumulate the cash flow you need to operate and further invest in the business. By being open, you’ll be able to make distinctions, apply them to your business, and set yourself on a path to success.
You need to be clear on where you want to go and put a simple and adaptable plan in place to help you get there. The clearer your vision is upfront, the easier it will be to back a plan to help you get there. Being obsessed with customer feedback will enable you to tweak strategy in a way that evolves with the market and helps keep you on top of the competition.
This article was originally posted here on Entrepreneur.com.
4 Types Of Business Models To Suit Your Business Concept
There are four main types of business models, see which one suits your business concept.
Different types of business models suit different types of businesses. A business model is the way that a company sells products to its customers. It describes how a business creates, delivers, and captures value.
What type of business model should you adopt?
A business model defines how the enterprise delivers value to customers, gets them to pay for that value, and converts those payments to profit.
There are four basic types of business model that any for-profit business will fall into:
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