Question:

Describe about the Business Model Development.

Answer:

1.0 Introduction

Skill enables an individual to enhance their individuality. Attachment of the concept of “trade” in the skills reflects utilization of the individuals for the commercial purposes. This is the end of his personal space. Ineffective utilization of the possessed skills makes the individuals inactive, which stains the intellectual applications (Kindström and Kowalkowski 2014). This report adds a digital tone to the innate skills, possessed by the individuals from their infant stage. The “digitalization” proposed in the earlier sentence adds a modern touch to the lives of the individuals. Speculating the concept of “skills” from the modern perspective, humans hardly find time to make judicious utilization of the possessed knowledge. This is in reference to the drab, monotony that they undergo for attaining a meaningful existence. Incapability in this direction compels the individuals to encounter losses in their lives, which detaches them from their personal as well as professional development (Armstrong and Taylor 2014). In this perspective, the startup company, Skill Trader would be a relief for the public domain in terms of proper utilization of the possessed skills, expertise and knowledge.

The name of the startup company resembles its functionality. As a matter of specification, the main purpose of the company would be to indulge into commercialization of the skills, which the individuals possess. This would be done through a website named Skill Trader, which possesses flexibility to make proper utilization of the skills possessed by the individuals in exchange of some important work, which holds equal significance in terms of basic survival. Emerging successful in installing the website would enhance the productivity of the startup company (Bocken and Short 2016). Along with this, it would also bestow a better placement on the plight of the company. Exposure of rational and conscious attitude towards the execution of the business activities would pave the way of foreign market penetration for the company. Apart from this, indulging in fair competition with the contemporary brands would help Skill Trade personnel to bring add transparency in the business procedures. This step would mitigate the instances of customer and employees turnover.

1.1 Reasons for choosing the industry

In the ancient times, there used to be a system known as the barter system, where the people exchanged goods and services with others for the possession of quality and branded products. In this era, there was a dearth of financial flexibility (Saarijärvi, Grönroos and Kuusela 2014). However, with the passage of time, people have attained maturity and their needs have expanded. Along with this, the advent of globalization has added to the complexities of the skilled and efficient human beings in terms of efficient utilization of the possessed skills. The concept of brain drain gave rise to intense competition between the native and the foreign people in terms of the possessed skills, knowledge and expertise.

With the passage of time, the processes related to gaining information underwent significant changes. One of these changes is digitalization, which has eased the process. As a matter of specification, putting the search topic on the search engine exposes the user to various sites, which ceases their quest for information on diversified subjects (Vernuccio and Ceccotti 2015). Herein lays the symbolic significance of the phrase “skill trade”.

2.0 Concept Pitch

Assistance from the Australian government would prove beneficial for Skill Trader in terms of bartering the skills possessed by the public. Typical examples of this are the better employment opportunities for the native as well as the foreign students. Within this, providing equal access to the students would act as an agent for the student to nourish their academic careers. Providing quality services to the customers have become much easier in the present age of globalization. This is due to the modern and technologically advanced software, which helps in the execution of the business activities automatically. Satisfying the needs, demands and requirements of the clients would bring positive results for Skill Trader (Trkman, Budler and Groznik 2015). Within this, carrying out market segmentation would be a wise step for Skill Trader in terms of trading the skills of the public domain. Identifying the targets would bring focus in the business procedures of the company, which would escalate the sales revenue and add maximum value to the profit margin. However, compromising with the needs, demands and requirements of the customers would darken the parameter of corporate social responsibility of the company. On the contrary, adopting social media marketing would help the personnel to increase the trafficking of the audience towards the brand image. This type of engagement would enhance the stability in the relationship with the company and the customers (Carayannis,  Sindakis and Walter 2015). Hiring web developers, who possess adequate skills, expertise and knowledge, would help the company personnel to avert the cyber crimes. Taking the assistance from the statutory bodies of law would be fruitful in this context.

Utilization of software, which emit less smoke and can be recycled, would qualify the company as efficient in confronting the environmental challenges. Possession of strategic vision in terms of adopting solid waste management, waste disposals would help the company in preserving the ecological biodiversity (Caridà, Colurcio and Melia 2016).

As the website is new, it is devoid of any substitutes. The contemporary brands might come up with such innovative concepts, however, reaching till the stage attained by Skill Trader is a distant hope. Therefore, the stage is set for Skill Trader to deliver quality products and services to the customers. Exposure of consciousness towards levying quality products would influence the buying power of the customers as well as the suppliers. Moreover, maintenance of transparency in the business procedures would help the company to sustain its position amidst the competitive ambience of the australian market (Carayannis, Sindakis and Walter 2015).

Effective and judicious utilization of this website would make the customers independent in terms of performing the basic tasks. Establishing customer care services would prove beneficial for the company in terms of bringing noticeable changes in the business activities. In order to win the rat race, compromising with the needs of the customers would question the authenticity of the purpose with which the company would be established.

3.0 Business Objectives and Goals

The business model is a functional one which aims to strive to fulfill the changing demands of the labor market. The core business process would focus on the skill swap of the people which would underline the fact that the people should appreciate the skills of other persons (Jeston and Nelis 2014). In this process, the unique knowledge of other persons would be used for creating a lucrative fiscal exchange. The core business aims at creating an atmosphere of empowerment in which there is respect for the strengths of each other.

The core business process does not require fixed office space demanded by the conventional business start ups. The backup work can be carried out in a small room. The employment option for this kind of skill traders is simple and does not involve multiple recruitment agencies and companies (Ladley et al. 2015). This also makes sure that there is easy availability of the manpower required to do mundane jobs that address their best talents. However, the skilled trader job roles can be demanding and may require the candidates to give their physical effort (Grégoire 2016). The skilled trader would provide numerous options for the manual workers and these types of traders would be considered as “self-employed” ones.

The business goals of the skilled trader need to be formulated with the SMART goals. The goal of the skilled trade website is to record a 20% increase in the website skilled traders enrollment rate from the first year over a period of two years.

The goal is specific since there is a 20% increase in the enrollment rate in the website that is in the lookout of exchanging their skills at the cost of receiving his preferred service. If there is greater enrollment in the website, then there would be greater increase in the enrollment from the first year to the second year. The goal is realistic, since it is possible to achieve a 20% increase in the skilled trader’s enrollment rate in the website within a period of two years. This goal is expected to be realized in the second year, which would be 20% increase from the first year. The goal is also measurable since it uses a particular figure of 20%. The goal can be easily quantifiable in terms financial parameters. The goal is achievable one since it is possible to receive a 20% increase in the enrollment rate. It is realistic goal since it is not absurd or impossible to achieve a viable increase in the trader’s enrollment. Finally, the goal is time –bound as it specifies a particular time frame of two years for its achievement. The company needs to achieve 20% increase in sales of the second year than the first year. This goal would help the company to make skill trader a popular trade option in Australia.

4.0 Development of a Business Model Canvas

The formulation of effective business model canvas is important for developing specific business models which would help the website to fulfill the business goals. The primary objective of the skill trader website is to gain profitability over two years and increase the level of income. The business operations, hence, would focus on the different ways of generating more income from the website. The key partners of the website would be existing business owners who would like to venture into skilled trade. There would also be key partners who would need manual jobs done such as craftsman, carpentry, electricians and others. The key activities would be liaison with the job consultancies, hiring agencies and the different recruitment services, which would help the website to generate more number of traffic. It is also important to do extensive advertising so that customers are aware of such services. The key resources of the organization would include the employees of the organization who would include graphic designers, content development, host services, firewall specialist and the web pages created for maximum utilization of the organizational entity. The other resources would comprise of the managerial as well as administrative team that would be effective in fulfilling the organizational mission. The value proposition of the company would comprise of the unique features that would be provided by the website such as smooth functioning of the website, more user interfaces, no fixes, one tap request and easy scroll options. The customers should be able to go from one page to the other in minimal time. The loading time of the page should be low otherwise many clients may leave the website without viewing the contents. The company should maintain amicable working relationships with the clients so that they would be able to get more enrollments in their website. There should be more customer interaction and there should be chat options with the customers who would require assistance. If the company is successful in creating good rapport with the customers, then there would be greater amount of sales of the company.

Fig: Business Model Canvas

Source: Created by author

The company should use different channels for reaching out to the customers; It should use social media websites, good domain names and efficient host services, which would help the company to reach out to the desired target market. The company should also weigh the different channels and select the most cost effective one.

The main customer segments of the website would be high school diploma holders, Certificate holders on technical courses and experienced craftsmen.

5.0 Initial Start up Cost Consideration

There are always some more considerations for a business more than renting an office and furnishing. In the initial stages of any business the start up costs need a methodical and careful business planning with a meticulous accounting. Even though the business tends to neglect most of this accounting part, yet the process needs a methodical analysis (Nicolò 2015). In this section the cost considerations of the business will be discussed so that the business can keep the operations floating with the abysmal outcomes.

5.1 Planning before the launch of the business

For any start up business, the effort of the creating a methodical business plan, therefore Skill Trade needs to create a detailed map of the business. The business plan will enforce the considerations of the start up costs for the business. If the business underestimates the necessary expenses there are possibilities that there may be sudden increase of the expenses which will eventually decrease the net profit of the business (Brun 2016). This situation is never expected for any small business owners; therefore the business should avoid the situation of having this sudden increase or decrease of the expected expenses. The startup costs are generally the expenses that are incurred while the process of the creating a new business is occurring (Dunn and Liang 2015). As each of the business has different outcomes, it may require different kinds of costs. Online businesses will not require same as a coffee shop or a book store. However, this particular business is providing services to the consumers; therefore it would also have few unique expenses. The potential costs of the business are discussed below.

5.2 Research Expenses

For Skill trading, the company has to do a careful research of the industries where the brand will promote its skills, Therefore the company will need to do a watchful research for the industries and the consumer needs before starting the business. There can be two ways for conducting the necessary researches before starting the business; the company can hire a different market research firm for aiding their business or else the company can research on their own. In this scenario Skill Trader will hire a market research company that will assist the company in the entire research procedure. For this purpose, the proposed budget is $20000.

5.3 License, Insurance and Permit fees

Having the business registered is a fundamental step for the any business. The licenses and the permit will allow the business to operate without any possibility of closing down from any non compliance. The registration of the business also important as this protects the intellectual properties of the business. For this purpose Skill Traders will allocate $2000.

5.4 Equipments and Supplies

Skill Trader will need few fundamental equipment and the primary supplies. The office place is one of them. For making this decision the company will have to make decision over the fact whether it will buy the office premises or take a lease for few years. Initially Skill Trader will take a lease. Other than that the company will also have to buy some equipment for the office purpose. Therefore for this purpose the proposed budget will be $10000.

5.5 Promotion and Advertising

Promotions and advertising refers to a significant part of the business as it is an essential part of the cost consideration and it helps the brand to place itself in the market. It will also include marketing of the company in order to attract customers towards the business. Therefore the proposed budget for this purpose will be $2000.

5.6 Employee Expenses

The business has to allocate a certain amount of money for hiring the employees and their wages, benefits and salaries. If there is a failure for compensating the employees would lead to a bad publicity and low morale of the employees. For this business the human resources of the company are the most significant asset of the business. Therefore this purpose initially the company will allocate $10000.

5.7 Technological Expense

The technological expenses refer to the cost of the information system, website, software such as payroll software and accounting software for the company. For this purpose Skill Trader will allocate $2000.

5.8 Cash on hand

For any startup business, it is necessary to have a good amount of money as miscellaneous expenses. Skill Trader will allocate $3000 for this purpose.

6.0 Funding Sources

This refers to the capital of the business. Every business needs a good amount of capital and for that purpose Skill Trader can have two kinds of financing for the brand, debt financing and equity financing (Blank 2013). The equity financing refers to the issuance of the stocks; however as a startup business Skill trader will not be able to have this kind of financing. Debt financing will refer to the loan that the businesses take form the bank or the financial institutions. In this case the source of the funding would be the bank.

7.0 Reflection and Conclusion

This specific idea of the startup business was chosen for utilizing the skills and knowledge. In this era of digitization businesses have undergone several changes and therefore several new and innovative business ideas came into the market. This business has identified the necessary shortcoming of the various companies related to the IT businesses. Therefore this company would only provide skilled labors to the companies who may need them on a contract basis or for a temporary period. These engagements would help the companies to hire skilled labors for a certain amount of time so that they do not have to spend a huge amount of money for the skilled labors for an extended period of time. The company has set its SMART business goals so that it would not be a problem to measure the benefits. However the resources are a major part of the business, especially the human resources, therefore the company would have to have a methodical development of the human resource unit of the company. By increasing the productive inputs the company will be able to reach its goals.

8.0 Reference List and Bibliography

Angerer, M., Brem, A., Kraus, S. and Peter, A., 2017. Start-up Funding via Equity Crowdfunding in Germany-A Qualitative Analysis of Success Factors. The Journal of Entrepreneurial Finance, 19(1), p.1.

Armstrong, M. and Taylor, S., 2014. Armstrong’s handbook of human resource management practice. Kogan Page Publishers.

Blank, S., 2013. Why the lean start-up changes everything. Harvard business review, 91(5), pp.63-72.

Bocken, N.M.P. and Short, S.W., 2016. Towards a sufficiency-driven business model: Experiences and opportunities. Environmental Innovation and Societal Transitions, 18, pp.41-61.

Brun, E.C., 2016, June. Start-up development processes in business incubators. In ISPIM Innovation Symposium (p. 1). The International Society for Professional Innovation Management (ISPIM).

Carayannis, E.G., Sindakis, S. and Walter, C., 2015. Business model innovation as lever of organizational sustainability. The Journal of Technology Transfer, 40(1), pp.85-104.

Caridà, A., Colurcio, M. and Melia, M., 2016. Designing a collaborative business model for SMEs. Sinergie Italian Journal of Management.

De Mel, S., McKenzie, D. and Woodruff, C., 2014. Business training and female enterprise start-up, growth, and dynamics: Experimental evidence from Sri Lanka. Journal of Development Economics, 106, pp.199-210.

Dunn, P. and Liang, C.L.K., 2015. Fallacies versus realities in financial planning and management among entrepreneurs: Lessons from the trenches. Journal of Small Business Strategy, 13(1), pp.95-104.

Edelman, L.F., Manolova, T., Shirokova, G. and Tsukanova, T., 2016. The impact of family support on young entrepreneurs’ start-up activities. Journal of Business Venturing, 31(4), pp.428-448.

Ghezzi, A., Cavallaro, A., Rangone, A. and Balocco, R., 2015, April. A Comparative Study on the Impact of Business Model Design & Lean Startup Approach versus Traditional Business Plan on Mobile Startups Performance. In ICEIS (3) (pp. 196-203).

Grégoire, P., 2016. Unskilled traders, overconfidence and information acquisition. Journal of Behavioral and Experimental Finance, 9, pp.1-5.

Honig, B. and Hopp, C., 2016. New venture planning and lean start-up activities: A longitudinal empirical study of entrepreneurial success, founder preferences and venture context. In Models of Start-up Thinking and Action: Theoretical, Empirical and Pedagogical Approaches (pp. 75-108). Emerald Group Publishing Limited.

Jeston, J. and Nelis, J., 2014. Business process management. Routledge.

Kindström, D. and Kowalkowski, C., 2014. Service innovation in product-centric firms: A multidimensional business model perspective. Journal of Business & Industrial Marketing, 29(2), pp.96-111.

Kirkwood, J., Baucus, M. and Dwyer, K., 2016. Ethics in Entrepreneurship Education: The Case of a Student Start-Up Entrepreneur. Journal of Business Ethics Education, 13, pp.91-116.

Kiznyte, J., Welker, M. and Dechange, A., 2016. Applying Project Management Methods to the Creation of a Start-up Business Plan: The Case of Blendlee.

Ladley, D., Lensberg, T., Palczewski, J. and Schenk-Hoppé, K.R., 2015. Fragmentation and stability of markets. Journal of Economic Behavior & Organization, 119, pp.466-481.

Mullins, J., 2013. The New Business Road Test: What entrepreneurs and executives should do before launching a lean start-up. Pearson UK.

Nicolò, D., 2015. . Corporate Reputation, Business Plan and Start-up Sustainability. Start-ups and Start-up Ecosystems: Theories, Models and Case Studies in the Mediterranean Area, p.12.

Saarijärvi, H., Grönroos, C. and Kuusela, H., 2014. Reverse use of customer data: implications for service-based business models. Journal of Services Marketing, 28(7), pp.529-537.

Stucki, T., 2014. Success of start-up firms: the role of financial constraints. Industrial and Corporate Change, 23(1), pp.25-64.

Trkman, P., Budler, M. and Groznik, A., 2015. A business model approach to supply chain management. Supply Chain Management: An International Journal, 20(6), pp.587-602.

Vernuccio, M. and Ceccotti, F., 2015. Strategic and organisational challenges in the integrated marketing communication paradigm shift: A holistic vision. European Management Journal, 33(6), pp.438-449.