A small catering company won’t have its own marketing department, but it still needs branding, marketing services, social media, shop signage, menus etc. The design and supply of such services could be handled by the owner, but by investing a small amount with a local marketing agency, a much better result can be delivered. For the outside catering business, getting good customer testimonials and using them on a simple website is valuable. Using social media to promote special events at the restaurant and keeping regular customers informed is a job that needs focus. An external partner, working just a few hours a week, can keep social media alive.
As you can see there are a lot of aspects that need to be put into the Cost Structure in order to see what it takes to run your business. Costing your key resources, key activities and key partnerships should be fairly easy. You should work out the costs against each Customer Segment (see Part 1) where you can so that, when you combine with the revenue, you can see which areas of the business are more profitable. Indeed, you may find some customer segments are making all the profit and others are actually loss making. You still may decide to keep the loss-making units as they provide brand awareness or increase the perceived value of the company as a whole.
Hopefully, you will have seen from the two articles the benefits of analysing your business using the Business Model Canvas. It allows you to break down the important aspects of the model into easily manageable parts, and then combine them again to get a full overview of the profitability of your company.
And, as you will see from the quote below, none of this is new: “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.” Mr Micawber (From David Copperfield by Charles Dickens – 1850).
David Tee has over 35 years experience in technology development, entrepreneurship and international consulting. He has founded and worked in Cambridge IT startups, consulted for a Silicon Valley-based advisory firm, and supported the development of innovation-focused incubation services across the world. He is currently on assignment in Turkey, and lives between Europe and India.