From an idea to a business plan Buna – case study August, 2016 BUSINESS PLANNING From an idea to a business plan Buna – case study August, 2016

BUNA cooperative Cup of awarness, please! 3 people, 3 paths, 3 set of skills & knowledge All leading to a common goal = Doing something you love without harming others and the environment

About BUNA cooperative FAIRTRADE 4 principles of Buna Non-profit OUR WAY Defining a ”problem” Developing an alternative (solution) Raising awareness (lectures, media, face to face) Offering a solution and making it sustainable.

Business model Canvas BASICS OF BMC

Introduction of BMC DEFINITION ”A business model describes the value an organization offers its customers and illustrates the capabilities and resources required to create, market and deliver this value and to generate profitable and sustainable streams.” (Osterwalder, A., Pigneur, Y., & Tucci, C. (May 2005). Clarifying Business Models: Origins, Present and Future of the Concept. Communication of the Association for Information Systems, Volume 15) BUSINESS MODEL CANVAS A visual tool designed by Alexander Osterwalder to facilitate when designing a business model. This component makes it easier to understand how the various components of a business effect each other. www.marsdd.com

The 9 components of BMC

Customer segments OUR TARGET CUSTOMERS For whom are we creating value? Who are our most important customers? WHO WILL WANT TO PAY FOR OUR PRODUCT/SERVICE? BUNA COOPERATIVE – CUSTOMERS: Customer profile: aware, quality, like to be different, inquisitive … Retail and wholesale Different products = different customers Mass market Niche market Segmented Diversified = needs & wants of different segments Multi-sided Platform = serve more needs … example are credit cards … on one side we want as many people as possible to use it, but we also have to have as many places as possible, where they can use them EXAMPLE: one of the most loyal target group of BUNA products are people who work for NGO’s and coffee lovers of Slovenia and abroad … aware owners of caffes

Value proposition What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundels of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? PROBLEM SOLUTION BUNA COOPERATIVE – SOLUTIONS: High quality product – fresh with known origin Zero waste No design / no logo / no stories – just facts Reasonable price Newness Performance Customization ”Getting the Jog Done” Design Brand/Status Price Cost reduction Risk reduction Accessibility Convenience / Usabilty EXAMPLE: all BUNA products are of known origine and environmentally friendly

Channels Through which channels do our Customer Segments want to be reached? How are we reaching them now? How are our channels integrated? Which one works best? Which ones are most cost-efficient? How are we integrating them with customer routines? HOW DO OUR PRODUCTS/SERVICES GET TO THE CUSTOMERS AND VICE VERSA? Awareness – how do we raise awareness about our company’s products and services? Evaluation – How do we help customers to evaluate our organization’s Value Proposition? Purchase – How do we allow customers to purchase specific products and services? Delivery – how do we deliver a Value Proposition to customers? After Sales – How do we provide post-purchase support? EXAMPLE: communal orderings of clothing … totally different type of offering products … but it was set up, because we wanted to offer a solution to a problem  BUNA COOPERATIVE – CHANNELS: Communication: lectures, media, face to face Sales channels: retail, wholesale, web, communal orderings Logistic: get it yourself, stores, post

Customer relationship What type of relationship does each of our Customer Segment expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? HOW DO YOUR CUSTOMERS RELATE TO YOUR PRODUCT? Personal assistance Dedicated personal assistance Self-service Automated service Communities Co-creation EXAMPLE OF BUNA – people bringing their own packaging to take away BUNA coffee – each customer is personally involved  BUNA COOPERATIVE – RELATIONSHIP WITH CUSTOMERS: Community that is getting larger and larger Customers find their own personal connection with products and services BUNA offers, but most of them are very personal

Revenue Streams For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? PRODUCT/SERVICE PRICE? TYPES Asset sale Usage fee Subscription Fees Lending/Renting/leasing Licensing Brokerage Fees Advertising FIXED PRICING List price Product feature dependent Customer segment dependent Volume dependent DYNAMIC PRICING Negotiation Yield management Real-time-Market EXAMPLE: how do we set prices for clothing? BUNA COOPERATIVE – PRICES: Fixed price for retail – price transparency Fixed price for wholesale

Key Resources What key resources do our value proposition require? Our distribution Channels Customer Relationship? Revenue Streams? WHAT DO WE NEED TO MAKE OUR IDEA HAPPEN? TYPES OF RESOURCES: Physical Intellectual (brand patents, copyright, data) Human Financial BUNA COOPERATIVE – RESOURCES: 3 people with different knowledge and skills Roastery Technical equipment each of us has (computer, phone, car …) Fairtrade and organic materials

Key partners Who are our key partners? Who are our key suppliers? Which Key Resources are we acquiring from our partners? Which Key Activities do Partners perform? WHO DO WE NEED TO WORK WITH TO MAKE OUR IDEA HAPPEN? MOTIVATION FOR PARTNERSHIP: Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities Key parteners can also be those who provide a substantial channel for our customer, when: A partner is a leading entity with a brand and market position and this adds to our credibility When partner has expertise to land contracts with key target customers When partner adds expertice to product solution in the way that increases value of the product for end customer. EXAMPLE: Key partners of BUNA are fairtrade companies from abroad that makes it able for us to develop our products  For example Afrotera with Burkina Faso. BUNA COOPERATIVE – PARTNERS: Suppliers of fairtrade and organic materials Renter Accountant

Key activities What Key activities do our Value Proposition require? Our distribution Channels? Customer Relationships? Revenue Streams? WHICH ACTIVITIES DO WE HAVE TO PLAN AND PERFORM TO MAKE OUR IDEA ALIVE? BUNA COOPERATIVE – ACTIVITIES: Roasting coffee Marketing and sales … communication Finding and keeping relationships with our partners CATEGORIES: Production Problem Solving Platform/Network

Cost structure What are the most important costs inherent in our business model? Which key resources are most expensive? Which Key Activities are most expensive? WHAT ARE THE COST WE HAVE TO PAY? IS YOUR BUSINESS MORE Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing) Value Driven (focused on value creation, premium value proposition) SAMPLE CHARACTERISTICS Fixed Costs (salaries, rents, utilities) Variable Costs Economies of Scale Economies of Scope BUNA COOPERATIVE – COSTS: Materials (import) Rent Human resources

CREATE YOUR OWN BUSINESS MODEL Workshop CREATE YOUR OWN BUSINESS MODEL

Instructions Groups Each group thinks of a simple business idea Within a group try to fill out the Business Model Canvas Prepare for a 5 minute presentation of your idea

PRESENT YOUR BUSINESS IDEA Presentations and discussion PRESENT YOUR BUSINESS IDEA

DIFFERENT FORMS OF ORGANIZING Why cooperative? DIFFERENT FORMS OF ORGANIZING

Cooperative DEFINITION: Firm owned, controlled and operated by a group of users for their own benefit. Each member contributes equity capital, and shares in the control of the firm on the basis of one-member, one vote principle (and not in proportion to his or her equity contribution). EXAMPLES: Buna cooperative – Slovene cooperative Mondragon – one of the most successful European cooperatives

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