Business Model Canvas

ARE YOU ASKING THE RIGHT QUESTIONS?

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The Business Model Canvas is a template tool for helping you to develop a new business model or visualising and challenging an existing one.  The document was developed by Alexander Osterwalder and gives a ‘birds eye view’ of the proposed or existing model.

I have seen this canvas blown up to wall size in offices so that all staff can quickly understand the business model they are working towards. The visual nature of the canvas makes it an easy reference for management and staff. Having said this, the canvas asks important questions of your chosen business model and is helpful in exploring the main areas, whether you are a start up business or a growing one.

In this blog I will help explore each of the areas of the Business Model Canvas, as often is the case, there is no right or wrong answers so I would challenge you to complete one for your own business and share your thoughts with us.

The Business Model Canvas focuses on 9 main building blocks, let’s look at these and the considerations for each area;

Customer Segments

  • These are the types of users/customers who you are creating value for. Not everyone will have the same needs and you may target parts of your product/service at different customers. It is worth exploring who are your important customer.

Value Proposition

  • This is essentially how you create value for your customers, it does not always need to be the actual ways you make money. An example could be an artisan baker, they could sell bread products but they create additional value by offering recipes for free to their customers who in turn use products bought at the bakers to make the recipe. It is important within this section to think about the needs you are fulfilling.

Channels

  • What ways are you communicating and delivering the value? The example of the baker could be based around a shop but here is also use of digital marketing, local markets. This should again be thought of in combination with the customer segments you have identified. Think about the channel phases here, a client journey would be helpful to understand this.

Customer Relationships

  • This area looks at the types of relationships that each customer segment identified might want to have with you. You could think about a personal service, automated or do they want to be building their proposition with you, co-creation.

Revenue Streams

  • This area of the Business Model Canvas looks at what the customer segments are paying for, what they are prepared to pay and the ways they can do this.

Key Resources

  • Once you have thought about the above areas, you will need to look at what are your key resources needed to create the value proposition and deliver it through the channels identified. Are your resources intellectual property, physical or human based?

Key activities

  • What are the key activities you need to deliver the value proposition, through the channels and to develop the right customer relations. Working through this alongside your key resources section may identify parts of the business that can be outsourced and those that must be performed ‘in house’.

Key Partnerships

  • Parts of this section might fall out of the two sections above (key resources and key activities). You are unlikely to be able to deliver everything within your business so a motivation for partnerships may be to deliver particular activities. Again, the example of the baker may be the partnership with the flour supplier. Key partnerships can also link to those organisations that you leverage to deliver value to your customer segments.

Cost Structure

  • The three sections above are about the infrastructure needed to deliver the value proposition. Your cost structure will be determined by these areas, think about your most important costs are. Within this it is important to think about how segments will pay for different parts of your value proposition.

The above is a ‘whistle stop’ tour of the Business Model Canvas. I believe that this template is a great way to start to understand your business model and a very useful tool to start testing your assumptions. It does not replace a full business plan but it gives you some fantastic building blocks on which to create it.

Take a look at the template below and try and complete it. We will be happy to discuss this further with you at a one to one meeting with one of our experienced advisors. My advice would be, to start writing it, don’t worry about right or wrong and then use it to discuss your business model.

Good luck!