A business model Canvas is a simplified, one-page template that outlines the critical elements of a business. It’s used to quickly define and map a business concept in a coherent way. Think of it as a roadmap to how your business works.
To help you visualize what we’re talking about here, this is what a Business Model Canvas looks like.
What It Entails
To quickly understand what a business model canvas entails, and the meaning or function of each element, I’ve partitioned it into three primary sections. One is focusing on the business itself (internal), the second focusing on the customer (external), and one in between connecting the two (value proposition).
When you take a quick look at the template, you’ll realize that:
The left side forms the business or internal section of the BMC, which consists of:
- Your Business cost structure
- Your Business key resources
- Your Business key activities
- Your Business key partners
The right side forms the customer or external section of the BMC, which consists of:
- Business revenue streams
- Business Channels
- Customer Relationships
- Customer segments
What you have in between is the value proposition, a point of connection between the two major building blocks.
Let’s discuss each of them in order, using my simplified breakdown.
Value Proposition
A value proposition is all about the unique value you’re bringing to the market. It’s based on the specific problem you’re trying to solve, and in the process, delivering value to your customers. A value proposition is vital in defining your business’s role, the reason for its existence, and the difference between your business and your competitors.
One way of accessing your value proposition is by studying your target market and knowing what they want and why, and how you can effectively meet their demands. If your business is in the B2B ecosystem, you’re a partner to the other company, helping them achieve their customer’s value proposition.
Customer Segments
To help segment your customer base, you should study your target customers and group them according to attributes like age, taste & preference, gender, and even their spending habits. This exercise is crucial since you reach your customers and solve their problems in a personalized way. Below are some of the essential factors you should consider when grouping your customers.
- Who will appreciate your value proposition the most? Create a demographic breakdown and rank them in ascending order.
- Who will value your product or service, and at what price? This gives a better understanding of whom to target
Customer Relationships
Customer relationship is defined as how the customers interact with the business. Think of how your customers use the product or service. Is it an online business, or do you interact with your customers physically? Is it a boutique, a restaurant, or an online business delivering services to global customers? Once we’ve got this right, you can then work on building a long-lasting customer relationship.
Channels
A business channel is the most convenient way your customer or prospect accesses your product or service. More often, this is defined well within the marketing plan. When determining your business channel, it’s always important to think and act like the customer. You want to figure out if your target customer is active on social media, watches TV, or reads blog posts. This enables us to define the right channels for targeting them.
Key Activities
These are the day-to-day business operations that enable the business to deliver on its promises. The Key activities of any business entity depending on the value proposition. If the business is a restaurant, key activities could include cooking, reception, cleaning, etc.
Key Resources
Here, we’ll be looking at what your business needs to operate, from talent (staff), inventory, electricity, to an internet connection. All these can fall under essential resources depending on the business’s nature. For startups, you need to list the most essential resources, with an option to accommodate more once the business picks up.
Key Partners
A business that’s just starting may not have partners, depending on its value proposition. However, a newly opened grocery store will need to partner with local food suppliers. Your key partner doesn’t necessarily need to be a senior workmate with the corner office. It can be any external company, business, supplier, or an independent contractor working with your business to deliver value to your customers.
Cost Structures
The cost structure is one of the most vital elements when building a BMC Template. It’s defined as the cost of operating a given business, from running the critical business activities to delivering value to the customer. Most companies that capture this element incorrectly fail before realizing their business goals. Since everything revolves around money in a business setup, any miscalculation due to poor cost-structuring could bring the entire business down.
Revenue Stream
When you sell products or services, you expect money coming in at the end of the day. The revenue stream clearly defines how the business makes this milestone by exchanging value to the customer for cash. Here, how you price your products or services makes the difference. For example, when charging a fee per service or through a subscription model, it’s necessary to develop a revenue model optimized for profitability.
Why You Should Use BMC
Any form of business plan is popular and widely accepted among business owners. Below are some of the reasons why the best BMC format is the best business plan format for your business.
- It’s a simple yet effective, pictorial representation of your business that helps answer all the critical questions
- It makes it easy to come up with a business plan
- By studying a BMC, you can quickly learn a lot and even customize some things about your business
Need Help with a Business Model Canvas?
For small businesses and startups, a simple business model canvas is an essential tool that guarantees a successful execution strategy. I can help you in creating a BMC if you need. We will begin with a lean sample that clearly outlines the business’s key elements. Here, you want to work with someone who has done it before. Someone ready to help and committed to seeing your business grow from the ground up.
By working with me, I will take you through the entire process, step by step, always seeking to understand all about your business and listening to capture every bit of information.
If you would be interested in my services, contact me, and I will help you create an exceptional business model canvas for your business.