Market demands Market battle field Other operators and service providers Figure 4.30 A simplified profitability model Based on your role(s) and targeted end-user/internal customer segments, choose a suit- able range of services for the potential customers, and forecast the market share and income potential, based on a realistic tariff, competitive situation, marketing efforts, market demands, end-user segment potential and market regulations. Choose appropriate technologies for investment purposes, based on the service offer- ings, and estimate expenses for investments, network operation, marketing, leased capacity etc. Perform the business analysis by means of financial calculations. ROCE (return on capital employed) is maybe the most important profitability measure used to assess the operating performance of a company. A reason for this is the return on investment employed shows how well the resources of the company have been managed, regardless of how the resources are financed. Document it all in a business plan. The business plan contains guidelines, technology choices and overall targets, such as overall growth estimates. It can be regarded as a choice of direction or consolidation of previously elaborated (open) scenarios and (secret) visions. It is followed by execution. Such a plan acts as a spider in the overall picture, with the role chosen by the actor/operator, with 'business opportunity arms' to targeted end users and their assumed service profiles, and with guidelines for the corresponding design of the network (if any) and the interconnect requirements. When available, a relationship between planning/investments and the related effects on the balance sheet. profit and loss account and cash flow is a key tool. Telecom Business Let us now look at a very simple connection between the business model and the three ROCE components: revenue, expenses and total capital. The equation in Figure 4.31 gives the percentage profit. Revenue comes from the services in the consumer and enterprise list in the busin