Business model, market and exit strategies
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www.medtechchallenge.com
Transcript of Business model, market and exit strategies
www.medtechchallenge.com
•Understand business models and go to market strategies•Understand exit strategies
a plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products
Take a stab at your Business Model Canvas
Basic Types of Business Models
MANUFACTURER
Distributor
Retailer
Franchise
But, you need a bit more granularity than that…
The LICENSING MODELSign over rights to commercialisation to another party
The Add-On ModelCompetitively priced core offering
Numerous extras that drive up the final price
The Advertising ModelOffer advertisers access to highly targeted consumer niches (often in the absence of selling their goods or services)
The AFFILIATE MODELSomeone who helps sell a product in return for commission, even if they never actually take ownership (or even handle) the product
The BAIT AND HOOK MODELDisproportionate amounts of the value are captured on components, refills, etc.
Switching costs results in monopolistic pricing
The FREEMIUM MODELGive away something for free in return for your personal details so they can then market to you so you will buy from them in the future
The LOW COST MODELDrive significant volumes of customers by charging a very low price
The LOSS LEADER MODELYou lose money selling at that price, but it enables a different lucrative opportunity
The PREMIUM MODELYou charge so much for it (either vanity or necessity drivers) that your profit margins are astronomical and cover the fact that your customer base is quite limited
The PAY AS YOU GO MODELActual usage is metered and you pay on the basis of what you consume
The RECURRING REVENUE MODELSecure the customer on a long term contract so that they are consuming your product or service well into the future
The DEMAND AGGREGATION MODELAssemble all the sellers and buyers for some stuff in the same virtual location
The PERSON-TO-person exchangesConnect one person that has something someone else wants with the person who wants it
The ONE-OFF EXPERIENCE MODELNowism offering unique experiences to customers at a given place during a specific event
Social media + offline event organisers, pop-up stores, online retailers
DisruptionIt is happening everywhere• Education ► TED Ed• Finance ► Bitcoin, ApplePay• Technology ► Nest•Media ► Spotify, Netflix• Telco ► WhatsApp•Medical ► Automata• Travel ► Airbnb
AND TECHNOLOGY ROADMAPS TOO
A go-to-market strategy (GTM strategy) is an action plan that specifies how a company will reach customers and achieve competitive advantage. The purpose of a GTM strategy is to provide a blueprint for delivering a product or service to the end customer, taking into account such factors as pricing and distribution.
…to sell
Go-To-Market Strategy1. Define market value proposition2. Identify primary target market3. Review existing market channels4. Create detailed channel approach
Basic building blocks
Business SummaryProduct StrategyChannel StrategyMarketing StrategyCustomer experienceTechnical requirementsEvaluationTimeline & Execution
Strategic objectiveso Create awareness, first customerso Maximize market shareo Defend market share (against competitors)o Maximum profitability
Technology roadmapsA planning process for a specific product or service to identify
o Technical processeso Technology gapso Opportunities & riskso Critical requirements, targetso Technology alternativeso Milestones for meeting those targets
Basic building blocks
Business & technical assetsCost/complexity driversProduct hypothesisProduct requirementsProduct planningTimelineRisk & mitigation strategies
Market Segment Est. Revenue Market Trends Target Customers Customer Needs Technology Reqs.
Market Segment
#1
$25M
Market Segment
#2
Low cost competitors
J&J
Cook Medical
Next-gen product to maintain market shareNew market
Novel surface coatingPowerful ICT platform
cancer
wound care
Your product is a bunch of hypotheses that need to be validated• Start by listing the higher level ones and refine as you go along
What product would you need to build for which market segment?
Start to define your user requirements/product features and priority level for product launch versus subsequent generations
Start to define your engineering requirements
Version 1.0 – Product Launch
User Requirements Product Features Priority Level
Small device envelope Portable
Minimal training Simple user interface
Cost Reduction Modular components
Low
High
Medium
Take a stab at your Product Requirements list
Version 1.0 – Product Launch
User Requirements Product Features Priority Level
Small device envelope Portable
Minimal training Simple user interface
Cost Reduction Modular components
Low
High
Medium
1.0 Product Planning
Task Deliverables Inputs Owner Approval Start End1.1 Business Case Tech Roadmap Market Analysis Exec Mgmt Board Nov’13 Feb’141.2 Funding $50k grant Proposal Prod Dev Exec Mgmt Dec’13 Feb’14
2.0 Product Design
Task Deliverables Inputs Owner Approval Start End2.1 Suppliers Select supplier(s) RFP Prod Dev Exec Mgmt Dec’13 Jan’142.2 Functional specs Fnctnl design specs Prod Req Doc Prod Dev Exec Mgmt Jan’14 Feb’142.3 Prototype Fnctnl prototype Prod Req Doc Prod Dev Exec Mgmt Feb’14 Jun’142.4 Documentation Doc Plan2.5 Quality Q&A Plan2.5 Development Dev & Manuf Plan3.0 Product DevelopmentTask Deliverables Inputs Owner Approval Start End3.1 Product Build PRD, MRD, Specs3.2 User Materials3.3 Cost Analysis Dev costs3.4 Pricing Cost structures3.5 Profitability Expected rev/costs
4.0 Product Testing
Task Deliverables Inputs Owner Approval Start End4.1 Alpha Testing QA Test Plan4.2 QA Testing Doc Beta Plan4.3 Beta Testing Final Prod Acceptance
5.0 Product TrainingTask Deliverables Inputs Owner Approval Start End5.1 Internal5.2 Channel
6.0 Product Promotion
Task Deliverables Inputs Owner Approval Start End6.1 Availability Prod Release @ conf.6.2 Press Kit6.3 Analysis6.5 Demos6.6 Presentations6.7 Conferences
7.0 Product Packing & Distribution
Task Deliverables Inputs Owner Approval Start End7.1 Packaging7.2 Distribution
JANUARY MARCH MAY JULY SEPTEMBER NOVEMBER
FEBRUARY APRIL JUNE AUGUST OCTOBER DECEMBER
Year 1
Year 2
Year 3
Year 4• Xxxxx• Xxxxx• xxxxx
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High level example1. Product that is the focus
of the roadmap2. Critical system
requirements & their targets
3. Major technology areas4. Technology drivers &
their targets
Energy-efficient vehicle
MPG, reliability, safety, cost
Targets: 100mgp by 2017 & 150mpg by 2025
Materials, engine controls, sensors, modeling, simulation
High level example5. Technology alternatives6. Recommend technology
to pursue7. Create the technology
roadmap report
Technology alternatives that can satisfy these targets identified with estimated timeline for how it will mature with respect to the technology driver targets. Identify decision points for when it will be dropped from further consideration.
An exit strategy is a contingency plan that is executed by an investor, trader, venture capitalist or business owner to liquidate a position in a financial asset or dispose of tangible business assets once certain predetermined criteria for either has been met or exceeded
Merger & Acquisition (M&A)• Win-win for bordering companies with complementary skills, assets,
resources• Large company can more quickly grow revenue or access customers
than create new products organically
Initial public offering (IPO)• Offering sale of stock in the business on public markets (like the ASX)
Sell to another person• Offering sale of stock in the business on public markets (like the ASX)
Sell to Your Employees• An employee stock option plan can direct payroll into a trust to
purchase investments, like company stock
Milking the cow• Distribute profits as dividends to investors• Pay off investors• Hire someone else to run it
Liquidation & close• Close the business doors and liquidate assets
Exit Tips• Most of the time, companies are sold, not
bought, and require an active sales process
• Deals can unravel if they drag on – cold feet phenomenon• Every step should have a deadline
• Establish trust and open communication –friction is the enemy• Clean house before the visitors arrive
Exit Tips• Don’t get greedy – holding out for all increases
your chances of getting none
• Plan for the exit early – the end game should be part of your overall operating strategy
• Negotiate tough but fair – remember that you may be working for the acquirer when the dust settles
Strategy for your exit strategy• Deal Strategy – who? When? How? Why?• Positioning & Pitch – making them want you• Packaging & Valuation – the whole nine yards• Process Management – Set meetings, generate momentum,
manage communications• Execution – get heat on the deal
What is your exit strategy?
•Getting the business model right is critical• Investors want to know exactly how you’ll make money
so they can understand how they will make money•Go to market strategies and technology roadmaps are
critical living documents•Knowing the exit strategy upfront helps you make better
decisions the entire journey
• Refine your business model canvas
• Refine your business model figure
