Tools for revenue and profitability optimization of circular business models

Important results from the project

The study includes three companies from different industries. The tools that have been developed for rent / subscription and sharing service can in a couple of hours give an initial indication of the profitability of a product in a circular business model relative to the existing linear as well as what affects and how much. The tool shows that for clothes and boats there are good opportunities to make more money in a circular business model than in the existing linear. For bicycles, this is a bigger challenge, although it may be possible.

Expected long term effects

The result shows that the tool works, and that companies that want to change to a circular business model have good opportunities to make more money from this than their existing linear model. Expected effects are that more companies will use the model. During the project, about ten companies have used the tool and it works because of its simplicity. In a couple of hours, a company can assess whether the linear products are more profitable in a circular business model.

Approach and implementation

The project started with an external monitoring where each industry was studied both nationally and internationally. With inspiration from that work, a business model canvas was first made with each party to find customer value that was then captured with an offer. Then the tool was created to calculate the financial result including sensitivity simulations. Parallel to this work, the bank´s view of the business was analyzed, as stock based business models often leads to retaining ownership and thus having to invest capital. Finally, a evaluation of environmental benefit was made.