Find The Right Business Model

Find The Right Business Model

In any company, whether or not it falls under the ESS, the question of the economic model arises as soon as we want to create one or more jobs. The economic model (or business model), which is essential to ensure the economic viability and sustainability of the project, describes how the company will generate its profitability.

What is an Economic Model and How to Build It?

The economic model or business model is a coherent representation of the means by which the company will generate income from its activity and then reinvest it in its activity.

To build an economic model, a first objective must first be set, which corresponds to a global strategy. This objective helps you to measure and to set the means to implement to reach it: the costs. Opposite, you will therefore need to mobilize resources to finance these costs: income. Here is the basis of an economic tuition model!

Initially, the idea is not to ask yourself “How to generate money?” »But rather to consider the model as a whole, by defining your activities, your target audiences, your distribution channels but also your sources of income and your expenses. The Social business model canvas is a tool of great help in carrying out this reflection: adapted from the business model canvas, by Alexander Oserwalder, it makes it possible to ask the essential questions related to its economic model.

It is then a question of trying to define economic assumptions and to establish forecasts for each of them. You then define prices, strategic areas, the number of potential employees, etc. The economic model that you imagine at the start of the adventure will change and that’s normal. He is not permanent but alive. It must mature and be questioned over time according to changes in activities or funding partners.

To Implement This Step, Discover The Business Social Model Canvas

What are the different types of business models?

In the ESS, there are three main models: market, non-market and hybrid.

• 100% based on a merchant model, the participatory investment platform 

finances its activities thanks to the commissions taken on the fundraising carried out. She does not receive any subsidy. It is a market model.

• Les Petites Frères des Purves, a national association to help isolated elderly people, conducts its action by relying on the investment of its volunteers, public aid and private donations and therefore corresponds to a non-market model.

• The Baraty, an associative café in Grenoble, is self-financing up to 30% to 50%, thanks to its bar-restaurant activity. The rest comes from public aid. It is therefore a hybrid model. 

Hybrid models – often inventive – combine different types of resources: sale of goods and services, public aid, private donations, patronage, etc. Volunteering, volunteering and user involvement can also be seen as resources. 

France Active, The Main Funder of Ess Structures, Identifies Four Examples of Hybrid Models:

  1. Integrated: economic activity is merged into the social project. Example: the integration company Tri Valles supports people towards employment by developing a second-hand clothing sales activity.
  2. Redistributive or “Robin Hood”: beneficiaries participate in the price of the action according to their means. For example, the Solidarity 37 solidarity garage applies two price lists for its repair services: a sympathizing rate and a solidarity rate which includes a reduction on the hourly billing rate.
  3. Complementary: economic activity is at the service of action. Example: the consumer association CLCV, which denounces abusive practices and informs consumers, is based on the contributions of its members but also on the income from the sale of its publications.
  4. Accessory or “cash cow”: the lucrative activity is incidental and often dissociated from the heart of the social project.

Example: the ERIS association is a French school project for migrants. The team wishes to finance this component thanks to the profits of an association restaurant.

Get support to build your economic, legal or organizational model

The incubators provide support during the launch and structuring phase of projects, by offering courses of 6 to 12 months, made up of collective workshops and individual meetings with varying intensity. Here are some examples!

  • Coco Shaker (Auvergne-Rhône-Alpes): after 5 months dedicated to prototyping the offer and the company’s strategy, the entrepreneurs focus on marketing, communication and financial and legal management. The majority of the professional speakers of the course and the sponsors come from the traditional economic environment.
  • Alter’Incub (Languedoc-Roussillon, Poitou-Charentes and Rhône-Alpes): network of social innovation incubators, it offers 12-month support to develop projects until the creation of the social enterprise: support technical, individualized advice, networking, collective training, pooling of experiences, support in the search for funding, search for project hosting solutions, etc.
  • ADRESS’s KATAPULT program (Normandy): this incubation course takes place over 12 months and offers entrepreneurs training days led by experts, personalized support, mentoring by an experienced business manager, training sessions. co-development … The incubator works in the form of promotion also allowing the sharing of experiences between project leaders.

In addition, specialized funders, such as the France Active network, offer advice on the economic aspect and the financing strategy.

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