Business Model Design

Designing the right business model is a transformative process that goes beyond simply choosing a structure or organizational form. It involves shaping the very foundation of your kitchen’s purpose, goals, and community impact. The business model you develop will not only serve as a blueprint for how your kitchen operates but will also reflect your values, vision, and the specific needs of the entrepreneurs and communities you intend to serve.

In this chapter, we’ll explore the critical steps in developing your business model, from clarifying your goals and engaging your community to understanding the array of organizational structures available.By thoughtfully considering these elements, you will be better equipped to design a business model that aligns with your mission, whether it’s fostering local food systems, creating economic opportunities, or cultivating a vibrant food culture. Along the way, we’ll guide you through key tools like the Business Model Canvas and Value Proposition Canvas, helping you map out a sustainable and impactful strategy. Whether your project aims to support small businesses, provide equitable access to kitchen space, or drive community development, this chapter will empower you to create a model that meets your unique objectives.

Clarifying Your Goals

The first step in your planning process is clarifying your vision and goals for your shared kitchen. Shared kitchens are at the intersection of local economies and food systems and thus can have broad, multifaceted benefits for entrepreneurs and communities. Kitchen founders look to kitchen projects to achieve a wide range of goals, such as earning a livelihood while supporting entrepreneurs, expanding kitchen access to those who cannot afford market rates, revitalizing neighborhoods, and strengthening access to local, healthy foods. Read the Alchemist Kitchen Case Study to learn more about a community development organization that created an incubator kitchen to further its mission to “connect communities with land, food and opportunity.”

While it is tempting to jump right into planning your facility, there are benefits to stepping back to reflect on your driving motivations and hopes for the project. What does success look like to you and key stakeholders in the project? Taking time in the beginning to examine what you want your kitchen project to achieve (often referred to as the project’s outcomes) will help you focus your planning efforts. Clarity about your mission and goals will animate your pitch and help you engage others in joining your vision. In the planning process, knowing what success looks like will help you determine who you are serving, what partners you need, and what business model and facility design will be the right fit. As the project progresses, a clear understanding of your goals will help prevent the project from getting sidetracked by tempting opportunities that take you in a different direction.

Regardless of the profit motive, most kitchens share a larger aim of helping their communities and can benefit from crystallizing these goals early in their planning processes. The 2023 Shared Kitchen Operator Survey highlighted some of the top goals among kitchens nationwide.

To help you brainstorm your aims, we have compiled examples of the positive community impacts that founders often hope to achieve when starting a shared kitchen or kitchen incubator.

The list should jump-start your thinking, not limit your options. The Industry Overview and Models, Community Programming and Services, and Business Incubation Programs chapters of this Shared Kitchen Toolkit illustrate numerous ways shared kitchens use their space and programming to support local food systems and entrepreneurial ecosystems.

Personal Goals

In addition to these community-focused goals, you may have personal goals you wish to reflect on. These could include having a rewarding career, providing a livelihood for your family and team, creating work/life balance, or growing an enterprise that can be scaled to multiple locations or sold for a profit.

Tips for Clarifying Goals

Articulating your goals is important for fulfilling your vision. If you are part of a team or community effort with various interests and ideas, you will want to engage the group in discerning the kitchen goals and mission. Community members and stakeholders often have different hopes for what a shared kitchen or incubator can bring to their community. Building consensus about the goals can help everyone feel more invested in the project. Here are some tips for how teams and solo founders can clarify and articulate their goals:

• • Reflect on the question, What does success look like? In small groups, ask each participant to paint a picture with words and then discuss the ideas that resonate with the larger group.

• • During brainstorming, be open to various responses and avoid getting hung up on word smithing or perfecting the ideas.

• • Try to brainstorm the impact you want to have separately from the solutions you think will get you there.

• • Go deeper by asking follow-up questions such as: What would that mean? Why is that important to you? What impact could that have on our community? What problem are we solving?

Once you have finished brainstorming, begin refining the ideas. Depending on how long the brainstorming takes, this can be done in the same or separate sessions.

• Try to classify your goals into buckets, such as personal, organizational, entrepreneurial, community, economic development, and food system. These broad themes will help everyone see the big picture and will help you identify key partners and potential funders.
• If you have several goals, reflect on whether you feel you can achieve all of them or if they should be prioritized. While a shared kitchen/incubator can be a tool for achieving multiple outcomes, attempting to do too much initially can reduce your chance of success. Consider focusing on priority impacts and expanding your vision over time.
• Write your priority goals in clear language that people unfamiliar with the concept can understand.

As your project evolves, you should frequently return to your goals to reflect on how your plans align with them. Place your goals somewhere prominent so you and your team can see them easily and often. Remember to review your goals periodically and iterate as needed as you gain new insight.

Crafting Your Vision and Mission

Once the project goals have been clarified and there is consensus among the project team and stakeholders about the desired impact of the kitchen, it’s a good idea to craft preliminary mission and vision statements for your project or new organization. This gives everyone involved a succinct message about the purpose of your project.

Mission statements are common for both nonprofit and for-profit endeavors. Vision statements are used more by nonprofit and social enterprise organizations. The two statements are closely related but distinct. A mission statement clarifies the organization’s core purpose, while a vision statement is a concise expression of the benefits your project would bring. La Cocina, a nonprofit food business incubator LaCocina in San Francisco, CA, has mission and vision statements that illustrate this distinction:

Numerous nonprofit resources are available online or through regional nonprofit assistance centers to help you write your mission and vision statements. It is best not to spend too much time crafting the perfect statement in the early stages. This painstaking process can dampen enthusiasm, and the statements may change as the project evolves. A simple statement that expresses your overarching purpose will suffice in the beginning. Try to avoid using jargon or buzzwords that may confuse or alienate people unfamiliar with the industry.

Articulating Your Values

Every organization, whether for-profit or nonprofit, benefits from identifying the core values or guiding principles that govern its operations. These reflect the core beliefs you aspire to incorporate into the kitchen’s culture, policies, and initiatives. Core values should be authentic to your kitchen and reflect important shared values within the organization that everyone is committed to standing behind – even when challenging. In a shared space, thinking about the values you want to cultivate in the kitchen culture is essential. These values will help members work respectfully with each other in the space.

CommonWealth Kitchen in Massachusetts expresses its values as Joyful Collaboration, Equitable Community, Courageous Learning, Uncompromising Integrity, and Holistic Sustainability. They go a step further by illustrating How we live it, What we expect from members, and What we look for in our partners. These statements identify how their values shape their programs, policies, and partnerships.

Creating a Strategy Screen

As you explore opportunities, a strategy screen can help you discern if a particular option will serve your vision or distract you from it. A strategy screen is a tool that helps make your decision-making criteria explicit. If you are part of a team or community-based project, a strategy screen can help build consensus about the criteria for action and make it easier to evaluate strategic choices collectively. A strategy screen also helps you articulate the logic of your choices to stakeholders in the future. Developing a strategy screen early in your planning is best before facing complex or contentious decisions. A strategy screen usually consists of three to five criteria listed as evaluation questions, such as Is it consistent with our mission? Will it contribute to our impact goals? or Will it be financially sustainable? When faced with a strategic decision, use these questions to reflect on how the choice will further your aims, either through discussion or a scoring system. See the References chapter for further guidance on developing your strategy screen.

Developing Outcomes

In the nonprofit and public sectors, a project’s positive impacts are often called outcomes. If you are seeking funding or working with public or institutional partners, you will want to develop outcome statements that you can use to measure your success. Outcomes are similar to goals but are more specific, narrow, and measurable. If a goal is what you aim to do, an outcome is the impact you will have if you succeed. To have the greatest impact, align your outcomes with the goals of the entrepreneurs and community members you aim to serve. The success of a shared kitchen is dependent on the success of its members in achieving their goals. Therefore, business success metrics, such as increased revenue and wholesale accounts, are important to integrate into your outcomes. Engage with entrepreneurs in your market research to learn more about their aspirations and priorities. Check out the References chapter for more information on developing outcomes.

Therefore, it is best to identify your economic outcomes before you launch your program and integrate these into your member application and data management systems. You will also want to set clear expectations with members about their need to share this information from the beginning. For additional guidance, check out Measuring Your Business Incubator’s Economic Impact, published by the International Business Innovation Association (InBIA) linked in the References chapter.

If you want to demonstrate your project’s full ripple effect on the local economy, you will need to measure the secondary effects, known as indirect and induced impacts. These reflect the chain reaction that results when the direct impacts, such as increased business and personal spending, spur additional economic activity. Indirect and induced impacts are generally calculated by economists, economic development agencies, academics, or consultants using an economic multiplier methodology known as the Input-Output Model. EI software programs simplify the analysis for those familiar with and trained in the methodology. You will find program suggestions in the References chapter.

In general, the cost of conducting a comprehensive economic impact analysis can make it impractical for many kitchen projects. However, for large-scale initiatives or those involving public funding, investing in a professional economic impact study may be worthwhile to demonstrate the project’s broader benefits. Additionally, partnering with local colleges or universities could provide an opportunity to develop an economic impact study as a research project, offering a more affordable way to measure the project’s value to the community.

Engaging Your Community

If your project is community-based, it is wise to begin engaging stakeholders and cultivating community support early in the planning process. Community outreach events can be helpful tools for gathering input from entrepreneurs, learning about community needs, and discerning support for a kitchen project in the community. Outreach events will help ensure your project reflects the community’s priorities, make your project vision more inclusive, and create new opportunities for collaboration and partnerships. They are also a great way to discover potential collaborators, committee members, and champions for the project.

Outreach is especially important in the beginning, but it is vital to cultivate engagement throughout your project to lay a foundation of support for the kitchen when it opens. During the process, try to resist the urge to promote a specific facility plan until after you have gathered feedback and conducted market research to find out what entrepreneurs and businesses need. It can be difficult to pivot to other options if supporters have been sold on a particular model that turns out to be infeasible.

It can be easy to underestimate the time and resources required for an effective engagement process. Sketching out an engagement plan with a timeline and budget will help you know what to expect and identify any help you need. See the Funding Strategies chapter for information about planning grants that may be available to help fund your outreach and market research activities.

Outreach Approaches

Here are some of the different ways to organize the initial community outreach for a kitchen:

Inclusive Outreach

When developing your outreach, consider the needs of the different entrepreneurs, producers, and workers in your community. Recruit translators for immigrant populations and publicize the availability of these services. Offer childcare for evening and weekend meetings to encourage parent entrepreneurs to attend. Include food to meet the needs of busy business owners. Offer alternate communication channels for people who cannot attend meetings or are uncomfortable speaking in groups.

Partnering with organizations that serve diverse segments of the local community and developing diverse leadership within your organization can make your outreach more inclusive. For example, the Food Innovation Network (FIN) in Tukwila, WA, engages its diverse, multicultural communities with the help of community food advocates. These advocates are leaders in their communities and also in FIN, participating in strategic planning and serving on its steering committee. They provided pivotal support to planning FIN’s incubator, shared kitchen, and food hall – Spice Bridge – by encouraging community members to participate in events, recruiting focus group participants, and sharing community insights with FIN leadership.

Gathering Feedback

Whichever engagement approach(es) you take, create ample opportunities for the community to provide input. You want to allow people to share their ideas, challenges, and values so your project is responsive to local needs. Here are some tips for gathering this feedback:

The insights you gain from the gathering feedback stage will be integral to focusing your research efforts in the next stage. With clarity on your goals and feedback from your community, you can begin studying the need for shared kitchen space and developing your kitchen business model.

Developing Your Business Model and Plan

Creating a sound business model based on market research and services research can improve a kitchen’s viability and profitability. In for-profit enterprises, the business model is the way in which you plan to make money. In a nonprofit, it is essentially how you will sustainably provide your services. Your business model will be unique to your community and will hinge on your understanding of who your customers are, what they value, and how you will deliver that value to them in a profitable or sustainable way.

Whether you are a for-profit or nonprofit, it is important that your business model be able to withstand competition and weather key threats, such as a loss of funding. As the popularity of shared kitchens and. kitchen incubators has grown, kitchens are facing increased competition from other kitchens, some run by savvy, well-funded, experienced teams. In the 2023 Shared Kitchen Operator Survey, 46% of respondents reported that competition had increased, and 47% said it had stayed the same. In this environment, it is important to hone a competitive advantage that will endure in the face of competition. Nonprofit kitchens also face competition for members, real estate, and funding. Grant funding for kitchen projects is uncertain and may not be available in the future. Therefore, developing a business model that optimizes diverse revenue streams, differentiates services, and delivers outcomes efficiently to sustain the kitchen is more important than ever.

Your business model is a set of assumptions and hypotheses about your value proposition and the key activities and resources needed to deliver that value to members/customers. At this stage, it helps to explore all your options and define these assumptions so that you can more clearly test them and modify your plans before investing so much that changing course becomes too difficult. You will likely continue to iterate your business model as you move through the planning process. This means you are adjusting as you learn and will be more likely to succeed.

Value Proposition Canvas

During the business model development process, you can refine who your target members/customers are and reflect on how well your planned kitchen will meet the needs of members by utilizing the Value Proposition Canvas (VPC) tool. For teams and community-based projects, this tool can help you distill the insights from your interviews, focus groups, and services research to build consensus among stakeholders about which needs the project will focus on. The VPC will prompt you to examine entrepreneurs’ key jobs, pains, and gains and define how you will provide value. It is helpful to do a separate canvas for each of your member or renter segments, such as entrepreneurs versus special event renters. You can learn more about the tool and get instructions at the Strategyzer website or through the book Value Proposition Design(see References). Your value proposition is foundational to your pricing and marketing strategies. You can find additional discussion about communicating your value in the Pricing Models chapter and see example value proposition statements in the Marketing chapter.

Business Model Canvas

You can begin honing your business model with the information from your VPC and market research. The Business Model Canvas (BMC) is a quick way to explore different scenarios. Perhaps you are debating creating a network of existing community kitchens or building a new facility. Or maybe you are unsure whether you want to provide services yourself or outsource the services to a partner organization. Maybe you are contemplating which facility type or service model will work best in your community and market.

The BMC will help you sketch out each of your options using a worksheet with nine building blocks: key partnerships, key activities, key resources, value propositions, customer relationships, channels, customer segments, cost structure, and revenue stream. It is best to work through your BMC before creating a formal business plan. Its flexible format encourages you to think through different iterations and identify potential problems to help you focus.

Check out the book Business Model Generation or the Strategyzer website for more information on how to make the most of the tool. If the traditional BMC does not fit your needs, consider the Lean Canvas (a problem-solution framework designed for startups) or the Mission Model Canvas (designed for impact-driven projects).

Business Plan

A business plan is a helpful tool for synthesizing and presenting your project to potential funders and stakeholders. A plan is often necessary for business loans or other outside funding for the project, such as grants and angel investments. Building a business plan imposes a planning discipline that is valuable to all projects, regardless of profit goals. If you have completed the research and planning suggested in this Shared Kitchen Toolkit, you will have much of the information you need for your business plan, including your financial forecasts, market and competition assessment, and marketing plan.

It is a good idea to build a business plan after you understand the needs of the entrepreneur/producer and explore the services and business model you plan to provide. At this stage, filling in the business plan will not feel as daunting, and it will be a useful exercise to summarize your current best thinking about how you will operate and sustain your kitchen.

Popular business guidance has shifted away from looking at the business plan as the first task in planning. Lean Startup, The Startup Owner’s Manual, and other influential books from the technology sector have highlighted the need to spend time understanding your customer needs and honing your business model before investing in a detailed business plan. The risk of completing a business plan too early is that the time investment you make in creating it may discourage you from changing your business model in response to new information. It is for this reason that were commend you complete other research first.

Establishing Your Organizational Structure

If you are starting a new legal entity for your kitchen, a key component of your business planning will be determining the right business structure. Shared kitchens and incubator kitchens can be incorporated as nonprofits, for-profits, social enterprises, and projects or partnerships of public or educational institutions. Each structure has different benefits and challenges related to mission, funding, taxation, control, revenue, and liability. Evaluating these options will help you better define which structure is right for you.

Nonprofit Organizations

Nonprofit status provides benefits in terms of tax exemption and eligibility for receiving tax-deductible donations. As the Alchemist Kitchen case study illustrates, it positions your organization to receive grants and sponsorships that for-profit organizations are often not eligible for. However, it can also place limitations on your revenue-generating activities and your ability to obtain loans and lines of credit. In some cases, an organization may need to develop both a for-profit and nonprofit entity to achieve its goals.

You will need to file paperwork with the Internal Revenue Service (IRS) to become a registered nonprofit. The most common nonprofit tax status is 501(c)(3), but there are also 501(c)(4) and 501(c)(6) designations that have somewhat different requirements and allowable activities. Gaining IRS approval can be a lengthy process that often takes at least a year to complete. Consult with a qualified accountant and attorney to determine if this structure aligns with your goals and what paperwork is required.

Nonprofits operate with a board of directors who manage organizational policy, hire and fire staff,oversee financial decisions and ensure the organization’s integrity. A nonprofit board can bring community connections and accountability to the organization and help lend credibility and social capital to the project. However, compared to a small team of private owners, a board disperses decision-making power, giving founders less control over the project’s direction over time

When establishing your nonprofit, you should plan the structure and composition of the board and begin assembling your board members early in the process to establish organizational stability. Your board should be composed of key stakeholders who bring important perspectives, useful expertise, and/or valuable connections to the project.

Establishing an advisory board to act as an additional guiding body for your project can be helpful.While the advisory board will not have the final say in the decision-making when you work under an umbrella organization, an advisory board can serve as an interim board, providing strategic input in your organizational development and laying the foundation for a future board of directors.

If the project involves collaborations and partnerships, you will want to take time to define the roles, agree to the funding and profit-sharing terms and memorialize these in written form. This may bed one in the corporation’s operating agreement, in partnership agreements, or in memorandums of understanding (MOUs) with other entities.

Nonprofit Umbrella Organizations

Because of the significant work and time involved in establishing a new nonprofit, new organizations often start as projects of another nonprofit entity known as an umbrella organization. This allows them to benefit from the umbrella’s tax-exempt status while they are building organizational capacity. To find an appropriate sponsor organization to serve as an umbrella, research nonprofits in your community. When choosing an umbrella organization, consider the following:

• Are they aligned with your mission?
• Do they understand and support entrepreneurial endeavors, or do they bristle at serving for-profit businesses?
• Do they have stable and professional management capacity?
• Do they have a track record of responsible and transparent financial management?
• What fee or percentage will they charge your project for the oversight and accounting involved in serving as your sponsor?
• Does the organization have a positive reputation and track record that will add credibility to your project?
• Can they provide additional support services to your project, such as payroll or marketing?

Additional Business Structures

Once your mission, assets, and revenue streams are more fully defined and you have developed your business model and plan, you may want to consider an alternative business structure like a cooperative or social enterprise/social purpose corporation. These structures can offer benefits such as shared ownership, community investment, or a focus on social impact, making them ideal for projects with broader community goals. Since each state defines these structures, be sure to seek legal counsel before incorporating to understand their specific requirements.

Cooperatives

The cooperative (co-op) model is well known and has wide applicability in various industries, including agricultural producers, breweries, tool shares, bike and vehicle shares, housing, mutual insurance, grocery stores, and more. In a co-op, ownership is shared among a group of member-owners rather than shareholders. Different types of co-ops exist, including producer, worker, consumer, and multi-stakeholder cooperatives. Often, co-ops appear when an existing solution is not adequately meeting a community’s needs. By pooling resources and sharing ownership, co-ops help lower barriers to ownership, reduce costs, and increase bargaining and purchasing power.

Food entrepreneurs sometimes express interest in forming a co-op to collectively run a shared kitchen or retail store. However, setting up and managing co-ops can take significant time investment from member owners. Whether a cooperative is the right model for your kitchen will depend on your team, stated mission, goals, and desires of your community. Ultimately, the success of a co-op depends on the organization and dedication of the member-owners. See the References chapter for more information on forming a cooperative.

Public Agencies

Some kitchen projects emerge from initiatives of public entities, such as cities and counties, as part of their economic and/or community development missions. Other quasi-governmental agencies, public-private partnerships, and special districts such as ports, public housing authorities, and downtown districts, are also occasional kitchen sponsors, and, depending on their mission or charter, may operate under similar management structures as public entities.

Publicly owned status can bring organizational resources and financial stability to a kitchen project. However, it can also weigh down management and decision-making with bureaucratic requirements. This can make it more difficult for the kitchen/incubator to move at the speed of business and adapt to meet its members’ needs. Therefore, it is important to weigh the benefits against other considerations like the political environment, decision-making, public meetings, procurement policies, hiring processes, financial management, and fundraising.

Public agency involvement can take many forms. Some municipalities champion new projects by funding feasibility and design studies but have a separate 501(c)(3) nonprofit organization operate the facility (sometimes with public funding) after it is built. This can be done in a variety of ways, including by creating a new 501(c)(3), working in partnership with an existing nonprofit, or issuing a request for proposal (RFP) to select a qualified organization to manage the facility through a competitive process. This public-nonprofit approach can shepherd the project through the critical planning and development processes while positioning it for other long-term funding, such as grants and donations. Another role public entities can play in supporting new projects is by selling or leasing publicly owned lands below market value to the project. See the Site Search and Project Management chapter for more considerations when selecting a site or building.

Educational Institutions

Universities and community colleges can also be involved in developing shared kitchens and incubator kitchens as part of their educational missions and community service activities. These incubator kitchens may be located on the institution’s campus or in separate satellite facilities. Educational institutions often bring unique assets to the project, including faculty expertise and lab resources in food science and agriculture, professional business acumen, entrepreneurship or business programs, access to student interns, and connections to fundraising capabilities. These partners can also lend credibility and expand the reach of a project.

While the involvement of universities and community colleges in incubator development brings numerous benefits, it’s important to be aware of potential drawbacks. Operating within an institution’s organizational structure can limit flexibility and autonomy in areas such as hiring, purchasing, policies, payments, and management. Some institutions may also find it challenging to align with entrepreneurial projects that stretch outside their mission, timeline, or comfort zone. Therefore, evaluating the project with leadership and ensuring alignment is crucial before pursuing this structure.

Overview of Business Structures

The chart below summarizes the benefits, limitations, processes, and considerations for each organizational structure to consider.

Final Thoughts

 

Your goals, mission, vision and values will guide your project as you develop your unique value proposition and explore different business models. Engaging your community and gathering feedback will help you identify opportunities and ensure your plans align with community interests. Completing BMCs and a business plan ensures you are looking at the key components that will drive impact and profitability.

Selecting the appropriate organizational structure for a shared kitchen is crucial and involves several options, each with distinct benefits and limitations. Nonprofit organizations offer tax exemptions and grant eligibility but face restrictions on revenue activities. Nonprofit umbrella organizations provide initial support and tax benefits but must align with the sponsor’s mission and have good governance. For-profit organizations offer flexibility and growth potential but require careful consideration of liability and tax implications. B Corp certification gives for-profit entities a way to demonstrate their social responsibility but involves a rigorous process. Co-ops promote shared ownership and community benefits, relying on member commitment to succeed. Social enterprise hybrids attract social impact investments, balancing profit with mission-driven goals. Public agencies provide stability and resources but come with bureaucratic challenges. Educational institutions offer access to academic resources and credibility but need alignment with educational missions and policies. Each structure requires careful consideration of its suitability to the shared kitchen’s goals, financial needs, and operational strategies.

In the next chapter, we’ll explore how shared kitchens can expand their role beyond providing production space by offering a variety of community programs and value-added services. From hosting public events like farmers’ markets and pop-up dinners to offering workforce training and food safety classes, these services can enhance your kitchen’s impact while generating additional revenue. Understanding how to engage the community and tailor services to meet local needs will help you build a kitchen that is both sustainable and deeply connected to the people it serves.