In the previous blog post, we talked about the importance of incorporating Business Model Canvas for aspiring tech services entrepreneurs, and in this one, we shall delve deeper by discussing how it varies for Traditional Tech Services (TTS) firms compared to Emerging Tech Services (ETS) ones. At the end of this blog, we have created a free template for BMC and samples for it
As a tech entrepreneur, you need to address five key points before laying the groundwork for your Business Model Canvas. You can find out more about this by watching our webinar video on our YouTube channel, but for now, we will discuss in more detail how tech service firm entrepreneurs use positioning to their advantage.
A Business Model Canvas (BMC) has 9 main sections but can be tweaked according to the needs of your own firm.
These sections include Key Partnerships, Key Activities, Key Resources, Value Proposition, Customer Relationships, Distribution Channels, Customer Segments, Cost Structure, and Revenue Streams. We will go over each section briefly.
The relationships with suppliers, manufacturers, vendors, customers and other stakeholders an organization must maintain to achieve their business goals.
This targets optimizing processes, reducing the risks of uncertainties and maintaining a directory of where to obtain essential business resources and activities.
There are two types of partnerships to be considered,
> Subcontractors:
They are hired by contractors to handle specific tasks in larger projects. They help manage overflow, reduce costs. Subcontractors can either be individuals or companies and act as outside consultants to keep projects on track during busy periods and tighter deadlines.
> Strategic Business Relationships:
They involve partnerships between service firms and product providers. The service firms use the provider's technology or products in exchange for benefits like referrals or discounts. This allows the firm to expand offerings, increase visibility, and reduce risk without needing to develop or acquire new technology. In this scenario, the PSF acts as a Managed Service Provider or VAR.
The steps an organization must take in order to achieve its identified value proposition.
Key activities are planned by the organization and can be updated as goals evolve or shift. These activities are crucial to how the business operates and require continuous feedback and research to ensure smooth operations. Areas such as product manufacturing, service distribution, marketing, sales, customer relationships, and networking are all addressed under key activities.
The assets that an organization requires to perform its key activities.
Identified key resources are those which help achieve the tasks involved in key activities. These include human, financial, physical and intellectual (patents, copyrights, etc.) resources. Time-saving processes and tools such as methodologies, SOPs, technology, and procedures are also included.
An organization's unique offering of products/services in the tech market and proposals as to why it will be successful.
To succeed, tech businesses must deliver unique value through performance, design, or specialization. Since differentiation is crucial, standing out with a clear, evidence-backed promise helps build a strong identity in a competitive market. This organization-specific specialization should also be incorporated within marketing efforts to improve brand identity. Regularly updating strategies based on client feedback and market research is also important to keep things streamlined.
How an organization interacts with its target customers and maintains relationships with them.
For tech firms, it is important to navigate their relationship-building strategies and leverage off of their contracts for long-term established bonds based on trust and delivery of promised products/services. Face-to-face contracts, referrals, attending social events for networking and marketing outreach all help in creating new customer connections.
They act as the link between the organization and its consumers. The target audience can be reached through the marketing and distribution of the products or services being offered.
Invest in a more capable website. Your website often contributes to a prospect’s critical first impression of your firm. If you aren’t proud of the image it portrays, or if your site doesn’t clearly explain who you serve and what you do, you are handicapping business development.
The types of people or businesses that are interested in acquiring a company’s products or services.
Understanding your target audience allows you to focus your business narrative effectively. It's crucial to target industries with strong growth potential for traditional and emerging tech industries alike. Regularly researching your clients, especially your key audience, helps you understand their needs and preferences better, even after there is a shift within a market. By adjusting your approach based on this research and feedback loop, you can grow faster and increase profitability. For ETS firms the OODA loop can be implemented for customer preferences and not just emerging technologies.
The major drivers of organizational expenses, or total cost, that need to be tracked and managed are those that contribute to achieving the identified value propositions.
The organization’s cost structure depends on the type of products or services provided, which can be either value-driven or cost-driven. Costs can be fixed (e.g., salaries, rent) or variable (e.g., one-time or recurring expenses). For service firms, key performance indicators (KPIs) are useful in tracking the costs associated with running the business.
The ways in which an organization aqcuires money.
This involves analyzing the current strategies the tech organization is using to procure subscriptions, generate sales, and more. The discussion also touches on the pricing of products or services, including what the customer base is willing to pay, whether through fixed or dynamic pricing models.
For more of a detailed read, refer to useful resources online, such as ones written by authors Patrick, Tim, Alexander, and on the website durichitayat.net.
The main concerns for traditional tech firms and emerging tech services firms may be different and much more specific, which is going to be discussed below.
These are the questions TTS firm entrepreneurs ask as they build a BMC for their business.
Here's what you should be asking as an emerging tech services firm entrepreneur while you're creating your very own BMC.
Utilizing the Business Model Canvas is a powerful step for aspiring tech entrepreneurs looking to navigate the complexities of building a successful business. By reflecting on the essential questions outlined throughout this post, you can clarify your value proposition, identify key activities, and understand your cost structure model.
Don’t wait to take your first step—create your own BMC today! Sign up to receive our template and sample directly in your email. Your entrepreneurial journey begins now!