OINP – What is a good business model
The Ontario Immigrant Nominee Program (OINP) is a provincial economic immigration program. It allows the government of Ontario to nominate individuals for immigration to Ontario. OINP – Entrepreneur Stream is dedicated to entrepreneurs interested in starting a business in Ontario. It allows you to be nominated for Canadian permanent residency once the company is established in Ontario. This article explains how to draft a good business model for the OINP-Entrepreneur Stream.
What does the term ‘Business Model’ mean?
A business model shows how businesses shall create, deliver, and achieve value in the economic and social context. A complete business model should explain a methodology to operate the business, products and services offered revenue sources, customer base, and details of the initial investment.
Importance of business model from OINP standpoint
From the perspective of OINP, a good business model may get you up to 15 points, but you can also lose these points if your business model is unclear. A good business model (15 points) will be determined if all of the following are met:
Management structure and applicant’s role in the proposed business model
Generally, an OINP applicant shall also be an executive manager of their proposed business. As a business manager, you need to define your proposed business concept by answering three questions:
It is highly recommended that your proposed business concept is directly or indirectly from the industry where you have worked in the past, either as a business owner or a senior manager. It shows that you are not new to the industry, and your background experience significantly increases your success viability. You should also explain how your background and previous business ownership or management experience will help you to establish and operate the proposed business in Canada.
If you are planning to partner with another business, you must provide a reason for the business partnership and explain your business relationship with each partner. You must identify the partners, their proposed ownership percentage, whether the partners will make any investment into the business, and what role, if any, the partners will have in the business.
Product or services offered via the business model
You need to enlist all the products and services your business shall potentially offer. But just a list of products/services is not sufficient. You need to showcase the value proposition that your company provides. You can do so by explaining the following:
Revenue sources in the business model
You must demonstrate a workable plan for how your business shall generate revenue, earn profits and position itself in the marketplace. Typically, a company generates mainstream income by selling its products/services. You should list all sources of revenue; if your business has any secondary source of income other than the sale of goods or services, you should explain its origin, frequency and amount.
To make your revenue strategy plausible, you need to explain your pricing strategy. There are several pricing models, including cost-plus pricing, competitive pricing, value-based pricing, price skimming, penetrating pricing etc. You need to research which pricing model is the best for your business. Once you have chosen a pricing strategy, you should determine the selling price and, based on that, the projected sales volume. You can then easily forecast revenue by multiplying the selling price of each product with the units sold. You should also describe your means to support your business expenses during the months where business revenue is less than business expenses – usually during the first few months of business inception.
Customer base in the business model
An essential step in planning for a new business is analyzing your customers. You can’t market your products/services without knowing your customers. It is necessary to identify your target clients, their needs and how your business shall satisfy these needs. You need to be very specific when documenting your customer base. You should also explain the demographics of your potential clients and if the customer base is increasing or decreasing. Research on what is an influencing factor in clients’ decision making is also essential, i-e: if the client is price-conscious or quality conscious?
Other considerations in the business model
Your business model must be based on actual research. The proposed scale of business should be consistent with the industry’s averages in Canada. This means that your product selling prices, profit margins, production costs, sales volume, etc., should not be in contrast with similar businesses in Canada. If your company has a competitive advantage over the local companies, you must explain it with appropriate evidence. If you plan to purchase an existing business in Canada, your expansion plan must be based on the same principals, as discussed in this article. Never try to underestimate your expenses and over-estimate your revenues to enhance profitability projections. It is recommended that you seek business advice from an experienced business consultant in Canada to get your business concept reviewed before submitting it for OINP.
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