Sustain your FCH, sustain your vision: why business models and financing matter
Why does it matter?
Business models and financing systems are crucial aspects of your FCH and should be considered and designed from the very beginning of the project. They are closely connected with your Hub's vision, have impacts on your community, and relate to your Hub's infrastructure.
Developing an appropriate business model for your FCH will enable you to evaluate your available resources, potential capacities, and foreseen risks, ensuring long-term sustainability and creating value in ecological, social, and economic terms for your Hub, communities, and neighbourhood.
Additionally, presenting a solid case for your FCH project and articulating its financial status can attract potential investors, funders, and partners to strengthen your FCH's creation and maintenance.
Key Aspects
Find out the key aspects to take into account when you want to design a business model and/or a financing system for making your Fab City Hub sustainable in the long term.
Define your value proposition
One of the first steps to consider is to benchmark the offer and cost of your services, but also to carefully consider what already exists and what is needed in your local environment. To this end, you may consider carefully mapping your ecosystem beforehand.
Pay attention to resource availability
A key element to making your business sustainable is to rely on resources, both material and immaterial, that are available in the long term and do not harm ecosystems. If you overlook these two aspects, your project may fail for the following reasons:
a lack of resources can cause disruptions and increase costs that may be unsustainable for your business
using resources that harm the environment can increase operational costs and negatively affect employees, stakeholders, and the community that sustains your project
Your business model should be designed around available, local, and responsible resources to ensure long-term viability, reduce costs, minimize negative environmental impacts, and fulfill social responsibility obligations.
A very useful activity you can organize to better understand what available resources exist in your local environment is a Resource Flow Mapping workshop.
Embrace diversity
When designing your Fab City Hub's business model, it is crucial to embrace the principle of diversity. This concept can encompass various aspects that are relevant to your business model's design, such as:
By diversifying the services and/or products offered by your FCH, you can reduce the risks associated with market fluctuations and trends, while simultaneously expanding your customer base and potentially increasing your revenues. This will result in a more competitive and resilient Hub.
Diversifying your Hub's stakeholders can provide access to a broader range of resources, expertise, and networks. For instance, by developing relationships with suppliers and partners from various regions, your Fab City Hub can obtain access to new sources of raw materials and distribution networks. By forming partnerships with a diverse range of stakeholders, such as public institutions, policymakers, or government representatives, your Hub can enhance its reputation and strengthen its commitment to social responsibility and stakeholder engagement. This, in turn, can attract more customers, employees, and investors. Additionally, a diverse group of stakeholders with different backgrounds and perspectives can stimulate innovation and creativity to address business challenges.
To gain a better understanding of the importance of establishing key partnerships and learn how to do so effectively, you can refer to the corresponding step on this page, where you can discover inspiring tools and examples that will aid in your efforts.
Get your governance right
The governance structure of your FCH and the business model that will ensure your hub's long-term sustainability are closely intertwined and mutually dependent. In fact, governance structures provide fundamental frameworks that enable companies to identify decision-makers, delineate authority to act on behalf of the organization, and establish accountability for the behavior and performance of the organization and its employees.
Selecting the appropriate governance model that aligns with your FCH's vision, community, and infrastructure is critical for achieving organizational success. A company that adopts the right governance structure utilizes transparent decision-making processes, openly reports on its activities, actively engages with stakeholders, effectively manages risks, and assumes responsibility for protecting its assets, including its reputation.
Therefore, to establish an effective and successful business model, it is imperative to design and select a suitable and consistent governance structure that aligns with your organization's objectives. Take a look at the "GET YOUR FCH's GOVERNANCE RIGHT" step to address this challenge and discover inspirational cases and tools for designing a governance model that is tailored to your FCH.
Tools/Stories
Find here a curated selection of Tools and Stories from the Fab City Hub Network that could inspire you to design a suitable business model and financing system for your Fab City Hub.
Find here a list of other resources collected to learn more about business models and financing system for Fab City Hubs.
→ The HUB-IN Business and Financing Models Guide features a compilation of Business Models (Chapter 2) and Financing Models (Chapter 3) from actual cases of innovative hubs that can serve as inspiration for your FCH. This guide highlights the interrelationships that exist among the business, financing, and governance model cases, and offers practical insights into how these models are being utilized across Europe to facilitate heritage-led regeneration. Its aim is to furnish you with a foundation for investigating the numerous funding and financing options that are accessible, which you can then replicate for your Fab City Hub.
→ Listen to Vincent Guimas from Fab City Grand Paris explaining the economic model that has been designed and tested for the FCH in Paris. In particular, you can look at min 21 to learn more about the details.
→ You can also download this presentation about a business model for FCHs presenting the case of Paris:
→ Read an interesting (preview of a) book for designing a sustainable business model
The following preview presents a selection of business model patterns ( = generalised business model solutions) to recurrent problems in the value creation activities of organisations that could be of great inspiration for you to think about your challenges and actively experiment to design a business model for meaningful goals.