Developing a New Business Model: An Online Short-Term Loan Platform

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MGMT20143 THINK BIG
Assessment 2
Idea Generation
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Executive Summary
Money is the most important requirement in today’s world. Without money, nothing can be
done. Money is required by individuals to cater to their daily needs; it is also required by the
businesses to maintain regular cash flow and to carry out the day to day operations of the
business. This report focused on developing a new business model that can cater to the monetary
needs of the people without much documentation work and collateral security to be mortgaged
by the needy person. The report discussed an online portal development that can provide short
term loan to the people who need immediate funds. The business idea is innovative as there are
many people who need money but cannot get a bank loan because of their monetary background,
but this online portal would help them and provide them monetary assistance to these people or
small businesses at a very less cost and also without much documentation.
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Table of Contents
Executive Summary.......................................................................................................................................2
Introduction....................................................................................................................................................4
Issues Identified in the Existing Innovation Needs........................................................................................5
Business canvas model..................................................................................................................................6
Benefits to Customer from New Idea............................................................................................................9
Key Interrelationships in the Proposed Model...............................................................................................9
Key Success Factors of the Proposal...........................................................................................................10
Assumptions and Critical Risks for New Business Model..........................................................................10
Overall Feasibility of Data...........................................................................................................................10
Conclusion...................................................................................................................................................13
References....................................................................................................................................................14
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Introduction
Money is the need of every individual, and it is not possible for everyone to have bank loans. It
is because everyone does not have a sound financial background and history. This is a proposal
of a new business model that will be developed to cater to the financial needs of the people or the
small businesses who seek to have short term loans at lesser interest rates. There will be a
discussion of the issues that the people are facing, and a solution in the form of business idea will
be provided in the report. The report will also discuss the risks and assumptions of the proposed
business model. The key components of the business model will be explained by the way of the
business canvas model. Interrelationships between the key components will be analyzed to find
out the major benefits of the proposed model of an innovative business idea.
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Issues Identified and Innovation Needs
As it is stated above that monetary needs are of everyone. Individuals and businesses all require
money to carry out their day to day operations in an effective way. It is thus important to think of
some new and innovative idea that can help the people and businesses to meet their short-term
monetary requirements. There are various options available to the people to meet their financial
requirements like the bank loans, bank overdrafts and financial assistance from other financial
institutions. But it is not easy for everyone to have loans and bank overdrafts as their financial
history might not be sound; they might not have any security to a mortgage for the loan. Also,
the loan processes are very time-taking and require a lot of documentation work (Firestone &
Rezende, 2016). This can be a difficult task for an individual having lesser resources and time.
All these issues urge for the development of such an option that can provide financial assistance
to the people without spending much time and having much documentation.
(Fig. 1: Loans from the banks)
(Source: Black enterprise, 2013)
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Business canvas model
Key Partners
 Banks
 Financial institutions
 Individual Developers
 Technology
Associates Broadcasting
Associates
Key Activities
 Utilization of
innovative
techniques
 Investment in
research and
development
department
 Short-term
loans
 Review of
present
operations
and activities
of people and
businesses
 Resolving
monetary
issues
 Marketing
Value
proposition
 Online portal
 Utilization of
the latest and
upgraded
technology
 Enhancement
of company
value
Customer
Relationships
 It helps in
maintaining
direct contact
with the
customers.
 Transparency in
dealings.
 Lower interest
rates.
 assistance in
focusing on the
customer issues
and resolve
them
Customer
segments
 Major
customer
segments are
the
individuals,
small
businesses
houses and
small
retailers.
Key Resources
Online
application
Service
development
crew
Cloud
equipment
Promotional
team
Customer
support
Mobile
applications
Channels
All the dealings
will be done
using online
portals.
The dealings
will take place
by using the
Mobile app
Promotions
Through
websites
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Cost Structure
The company cost structure of the business will
include the following:
 Platform
 App designing
 Salaries of developers of the application
Revenue Streams
 Customers
 Advertisements on online websites
 Interests from the customers
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Benefits to Customer from New Idea
The business model has various benefits to the customers. The business idea is developed to
provide short-term loans to customers like an individual and the small business. The business
idea will help the customers to have easy loans directly in their bank accounts by using the
application. The application will help the customers to reduce the documentation work as there
are no requirements to provide any documents for the loans. The application will need only some
of the personal details and general information about the borrower. The process will also take
very little time to provide the loan directly to the customers. There is no need to mortgage
anything in case of obtaining loans by the online application. Banks and other financial
institutions ask for financial history, but this application will focus on the current and present
operations and activities of the people and the business that is borrowing money (Khan &
Ahmad, 2017). It is thus a very helpful application for the customers to cater to their short term
financial requirements. The returning period of the loan amount can also be decided by the
borrower according to the convenience. The interest rates are lower than the market, so it does
not create any burden on the customers. The customers can have full information about their loan
status and repayment process though the application. It results in the transparency of operations.
Key Interrelationships in the Proposed Model
There must be interrelationships between all the key components of the proposed business
model. The first interrelationship is between the customer relationship and the revenue streams
of the business model. It is important for the business model to have good techniques and
methods to establish a good relationship with the customers so that more and more customers get
attracted to the services of the business. Another interrelationship is between the key activities of
the business and the revenue stream of the business. If the business provides good and
satisfactory services to the customers, they will have customer loyalty which will help the
business to increase its revenues. There is one more major interrelationship between the key
partners and the key activities of the business. If the relationship with the partners is marinated,
the key activities can be accrued out effectively because the key activities of the business are
related with the finances which would be provided by the banks and financial institutions only
(Emekter, et. al., 2015).
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Key Success Factors of the Proposal
There can be situations in which the business can fail to provide effective services to the
customers. In that case, there are certain critical success factors that can help the company to
fight with the issues and stay in the market for a longer run. The first success factor is the
effective communication and advertising policies of the business. By making effective use of the
advertisement and promotional strategy, the business can succeed in the market (Kladou &
Mavragani, 2015). Another success factor is the strategy of customer relationship of the business.
It is important to maintain good relationships with the customers so that the customers build trust
and loyalty in the business.
Assumptions and Critical Risks for New Business Model
There is no business which can be established without any risk or assumptions. This business
model also has some risks and assumptions. The first risk associated with the business model is
the non-repayment of the loan by the borrowers. Another risk related with the business is that the
customers may not have trust in an online portal providing loan and financial assistance. The
customers may think as a fraud.
The assumptions made for developing the business model are that there is a stable financial
market. The customers need short-term financial assistance. There is growth in the small
businesses, and for that, they will need money for operating their daily operations (Kim, et. al.,
2015).
Overall Feasibility of Data
Score(-5 to +5) The overall potential of the
Business Idea Based on Each
Part
Suggestions for improving
the Potential of the business
Part 1
Monetary needs of the target
market segment
High Provide assistance to the target
customers in short duration of
time, so that time utility is
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created
Significance of customer
relationship
High It is important for the business
to maintain regular connection
and transparency with the
customers
Part
The growth rate of the
financial market
High Provide low interests rate
loans to the customers
Part 3
Advertising about the business
idea
High Usage of online advertising
and direct marketing
techniques to make the
application popular
Part 4
Attainment of the objectives
of the business model
High By implementing regular
upgradations in the application
and marketing strategy, the
business will be able to
achieve the pre-deteremined
objectives of the business
(Opreana & Vinerean, 2015)
Part 5
Performance of other similar
businesses
Moderate It is important for the business
to focus on the strategies
adopted by the competitors to
make sure that the best
services are provided to the
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customers
Overall Feasibility After analyzing all the factors
that can have an impact on the
performance and success of
the business, it can be said that
the business model is highly
feasible.
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Conclusion
The report concludes that there is the business idea of providing online loan to the people and
business houses to carry out their works and operations. The business model is highly feasible as
there are various benefits associated with the business model. The proposed business will
provide short-term financial help to the people. All the conditions are in favour of the business
models; it can be a successful business. There are certain risks related to the business model but
by implementing success strategies, the business can resolve the issues.
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