Building a Million Dollar Business Part Time #14: How to Do a Business Model

The Hot Mommas Project is making CLOGS, but not the kind you think.

The Hot Mommas Project is making CLOGS, but not the kind you think.

The Hot Mommas Project has no business model. Is that wrong? Okay, maybe that is not totally true. We have 5 out of 6 parts of a business model.  The clincher: We’re missing the economics.  So, to rationalize this – I have decided there are two primary ways to look at business models. This can be summarized as:

A. What I teach my students at GW.
B. The “Because it would be cool” theory.

A. Okay, let’s first start with what I teach my students about business models. One of the best business model tools out there is a 6 part process constructed by a team at Syracuse led by Michael Morris.

The 6 parts of the business model – in layperson’s terms – according the the Michael Morris paper are:

1. How we create value – what you do/make and put out there in society
2. For whom – okay, this one is self explanatory
3. Internal comp advantage – operational efficiencies or processes that make you better
4. External com advantage – how folks outside the company know you’re better
5. Economics – how you make money
6. Exit strategy – what is your exit from this business, is there one?

This is an incredibly back-of-the envelope description of the paper by Mike Morris and his team, but, you get the general idea.  There is a grid at the back of the paper I have students fill out using various business examples. First, we start with a seemingly non-businessy example. Mine is Lord of the Rings. I hand out a summary about the filming, the tax advantages they gained filming in New Zealand, how they filmed it all at once, how they locked in the stars for all three in doing that, the rights to the book, the cult following, and some other stuff. Then, using information we just know – because we walk upright and have cable – the students talk about how the movie makes money.  That’s fun. That’s when they realize they know more than they thought about business. Last, is the exit strategy part. This is a zinger. LOTR really shows students how movie makers put in a TON OF MONEY for something that they HOPED would make a ton of money back in a relatively short period of time.  There is, however, no way to be sure.  What does this sound like? Uh?  Venture Capital?  So, the movie industry has been doing this for a loooooong time before VCs became the Britney of finance.  Mark Ordesky was one of the LOTR producers and we have talked about collaborating on this curriculum, which would be cool. Which gets me to my next point.

P.s. Don’t confuse business model with business plan. Here is a good piece on business plans.

B. The “because it would be cool” business model.

I started the Hot Mommas Project because it was needed (See first post, and blog brief or about page).  I also thought it would be cool. People had, and continue to have, all sorts of ideas for how the Hot Mommas Project can make money. However, I am pretty much just forging ahead with what fills a need in women’s education. Exposure to role models correlates with women’s professional success. So, we provide role models on paper so the stories of those leaders can be read anywhere, anytime, free.  (Side note: We used to sell the cases, but, that was a pain.)  Family and work life balance is a HUGE issue globally impacting the supply and demand side of employment. So, Hot Mommas Project cases address the personal lives and backgrounds of case protagonists are discussed along with business lessons such as the 4 Ps of marketing and what have you.  All of this is geared to be taught in a classroom, so educators are preparing the next generation of workers with the toolkits that research – and reality – shows they need. I am not sure how we are going to make money to be honest. I’ve thought of a coaching network with exclusive access to our data. I’ve thought of workshops and conferences. I just don’t know. All I know is I’m doing the right thing by starting this initiative and I’ll let the case readers tell me what they need.

page_po_fashion_70s_01_0706041803_id_32471I am intrigued by the term “CLOG” – which I made up the other day – since what we are producing is a hybrid between a case study and a blog. So, maybe we’ll be the inventor of CLOGS, but, a clog we can all be proud of and not just associated with bell bottoms and unattractive hair styles. Here is a sample CLOG (the kind we are building).

Others who I perceive have a “because it would be cool” business model:

Guy Kawasaki and www.Alltop.com. Here is Guy on Twitter.  More on Alltop. Even MORE!

Peter Shankman and Help a Reporter Out. Here is Peter on Twitter. More on HARO.

Both of these guys are successful and intelligent. My guess is they don’t get involved in much of anything that won’t ultimately make scads of money.  However, at the outset they appeared very personally connected to their ventures and doing it because they though it would be cool….not just for money.  Is this true guys? I would love to know and will forward you this post.  Clearly there are big markets for both areas in which Guy and Peter are involved. Ted Leonsis, friend of the Hot Mommas Project, won’t get involved in a market under 10 million clients.

The Hot Mommas Project is involved in the education market, specifically written products which is a $15 billion dollar market globally.  Can you help us brainstorm a financial model for the Hot Mommas Project?