Got a new business idea, but don’t know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan? There is a one-page technique that can provide you the solution you are looking for, and that’s the business model canvas. Show
In this guide, you’ll have the business model canvas explained, along with steps on how to create one. All business model canvas examples in the post can be edited online. What is a Business Model CanvasA business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page. The business model canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It’s a one-page document containing nine boxes that represent different fundamental elements of a business. The business model canvas beats the traditional business plan that spans across several pages, by offering a much easier way to understand the different core elements of a business. The right side of the canvas focuses on the customer or the market (external factors that are not under your control) while the left side of the canvas focuses on the business (internal factors that are mostly under your control). In the middle, you get the value propositions that represent the exchange of value between your business and your customers. The business model canvas was originally developed by Alex Osterwalder and Yves Pigneur and introduced in their book ‘Business Model Generation’ as a visual framework for planning, developing and testing the business model(s) of an organization. Business Model Canvas (Click on the template to edit it online)Why You Need a Business Model Canvas
How to Make a Business Model CanvasThere are nine building blocks in the business model canvas and they are customer value proposition, customer segments, channels, customer relationships, revenue streams, key resources, key partners, key activities, and cost structure. When filling out a business model canvas, you will brainstorm and conduct research on each of these elements. The data you collect can be placed in each relevant section of the canvas. So have a business model canvas ready when you start the exercise. Business Model Canvas Template (Click on the template to edit it online)What are the 9 Components of the Business Model Canvas?
Let’s look into what the 9 components of the BMC are in more detail. Customer segmentsThese are the groups of people or companies that you are trying to target and sell your product or service to. Segmenting your customers based on similarities such as geographical area, gender, age, behaviors, interests, etc. gives you the opportunity to better serve their needs, specifically by customizing the solution you are providing them. After a thorough analysis of your customer segments, you can determine who you should serve and ignore. Then create customer personas for each of the selected customer segments. Customer Persona Template (Click on the template to edit it online)There are different customer segments a business model can target and they are;
Use STP Model templates for segmenting your market and developing ideal marketing campaigns Visualize, assess, and update your business model. Collaborate on brainstorming with your team on your next business model innovation. Customer relationshipsIn this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company. There are several types of customer relationships
You can understand the kind of relationship your customer has with your company through a customer journey map. It will help you identify the different stages your customers go through when interacting with your company. And it will help you make sense of how to acquire, retain and grow your customers. Customer Journey Map (Click on the template to edit it online)ChannelsThis block is to describe how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company. Channels play a role in raising awareness of your product or service among customers and delivering your value propositions to them. Channels can also be used to allow customers the avenue to buy products or services and offer post-purchase support. There are two types of channels
Revenue streamsRevenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions. A revenue stream can belong to one of the following revenue models,
There are several ways you can generate revenue from
Key ActivitiesWhat are the activities/ tasks that need to be completed to fulfill your business purpose? In this section, you should list down all the key activities you need to do to make your business model work. These key activities should focus on fulfilling its value proposition, reaching customer segments and maintaining customer relationships, and generating revenue. There are 3 categories of key activities;
Key ResourcesThis is where you list down which key resources or the main inputs you need to carry out your key activities in order to create your value proposition. There are several types of key resources and they are
Key PartnersKey partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged in oder to reduce risks and acquire resources. Types of partnerships are
Cost structureIn this block, you identify all the costs associated with operating your business model. You’ll need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners. Businesses can either be cost-driven (focuses on minimizing costs whenever possible) and value-driven (focuses on providing maximum value to the customer). Value propositionsThis is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment. A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes. Value propositions can be either quantitative (price and speed of service) or qualitative (customer experience or design). Value Proposition Canvas (Click on the template to edit it online)What Are Your Thoughts on the Business Model Canvas?Once you have completed your business model canvas, you can share it with your organization and stakeholders and get their feedback as well. The business model canvas is a living document, therefore after completing it you need to revisit and ensure that it is relevant, updated and accurate. What best practices do you follow when creating a business model canvas? Do share your tips with us in the comments section below. |