The Business Model Canvas
Learn how to use the business model canvas
The Business Model Canvas is the go-to-guide for business owners and start ups wanting to build a successful business model with ease.
Do you know what successful businesses have in common? They have a really strong value proposition [think what they offer] and understanding of their audience. They also know how their business is going to generate money.
As a business owner who's just starting out, you often don't have other departments or people to lean on for support, so it can be hard to nail down what your business model really is and who it’s best for.
And if you’re like most people, the sound of a business plan can feel daunting and time consuming, especially if you’re running the show solo.
Which is why we wanted to share with you an industry secret. Want to know what it is? It’s the Business Model Canvas, developed by Alexander Osterwalder, designed to help you to understand and define your business model with ease.
The Business Model Canvas is a strategic business management tool to help you understand and define your business model - whether that be for your business, a department you manage or even a competitor’s business.
Understanding who your audience segments are, your value proposition and how your business is going to generate money - are crucial questions to ask and know, to set yourself up for the best possible chance of success when starting a business.
For those that aren’t familiar with the Business Model Canvas, the framework consists of 9 key components.
The 3 key Benefits of the Business Model Canvas:
Focus
It brings together the nine core components of your business on one page. Which means you can say goodbye to pages and pages of information in a traditional and outdated Business Plan template.
Flexibility
The framework highlights the nine core components so you can see the relationship between each component and how one effects the other.
Transparency
As each key area of your business is on one page, it’s fully transparent, which means all teams and people across your business can see how everything works together.
For those that aren’t familiar with the Business Model Canvas, the framework consists of nine key components which we will take a deep dive into.
The nine Core Components that make up the Business Model Canvas:
Customer Segments
Who are your customers? Think about who your product or service is serving? What do they think, feel, do? What are their pain points [that you can help them with]?
Value Propositions
Here, think about what the business can deliver to help the customer segments that you have identified. Consider each pain point and ensure you have a solution to help. Then, rank your solutions ‘value propositions’ in order of importance.
Channels
How are you going to build a relationship with your audience? Through what channels? This component, links to your customer segments and value propositions, so think about their journey and interaction with you and list out the channels you’re going to use to communicate your value propositions.
Customer Relationships
How are you going to Get, Grow and Keep your customers? So in other words, how are you going to acquire customers, activate them, and then ensure they stay with you?
Revenue Streams
How are you going to make money from the product or service you offer to your customer segments? Think about it in terms of the: revenue model [strategy] and the pricing [tactical]. For example, do you offer a subscription based service or product based?
Key Resources
What are the key resources you need as a small business owner to make the business model work? What assets? What roles? What do you already have access to and what do you need to have access to, to make this work?
Key Activities
What business are you in? As in, what are the most important things your business must do to make the business model work. Is it production, problem solving, marketing? What do you need to become an expert in?
Key Partners
Who are the key partners and suppliers you will be engaging with? Remember, if you’re doing something for someone they are a client, if they’re doing it for you, they are a partner. For example, do you have any agency partners? Manufacturers? Suppliers?
Cost Structure
What are the costs associated with your business model? What are the fixed costs Vs variable or ongoing? Make a list of all of the costs to run your business.
Once you’ve got a handle on the nine core components it’s easy to see how they all relate to each other and how fundamental they are to ensuring the success of your small business.
If you’re ready to give the Business Model Canvas a go for your business, head on over to our FREE page to download yourself a free copy of our Business Model Canvas Template.
We’ve designed the Business Model Canvas template with business owners in mind to take the burden away from building a success and meaningful business model.
Enjoy your free Business Model Canvas template today.