The Business Model CANVAS is a tool that is used to take stock of a company's business model.
In this article, you will discover the components of the Business Model Canvas and a ready-to-use business model canvas template for your own projects.
For a start-up project, this tool is perfectly suited as it is the right time to analyse the potential of your business model.
However, the Business Model Canvas is not only appropriate for a start-up, but also for the launch of a new project, product or service in your organization.
Before talking about the Business Model Canvas in more detail, I would first like to define what a business model is.
What is a business model?
A business model is defined as how a company creates value.
Every business or project starts with an idea; the business model is then the translation of this initial idea into a structure that generates profit or creates value.
So the business model must clearly define what the company will sell, to which customers, for what purpose, in what way, and for what profit?
So what is a Business Model Canvas, and how does it relate to the Business Model?
What is a Business Model Canvas?
The Business Model Canvas is simply a tool to structure and visualize your business model.
There are several Business Model CANVAS, but we will focus on Alexander Osterwalder's, which is the most comprehensive.
Alexander Osterwalder is a Swiss researcher and entrepreneur. He is the author of the book "Business Model: New Generation" with Yves Pigneur, which presents the CANVAS Business Model.
Osterwalder defines the BMC as:
A business model is a conceptual tool that contains a set of elements and their relationships and allows expressing the business logic of a specific firm. It is a description of the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating.
Below is an overview of the business model canvas.
Source: National Bank
Download the canvas
What is the purpose of the Business Model Canvas tool?
As you can see from this definition, the point of using a Business Model Canvas, is to synthesize your business model and present it in a visual and concise way on a single page.
This type of visualization helps you to structure your ideas, pushes your thinking and creativity, and ensures that you have identified the issue and addressed it from all its important angles.
Business Model Canvas vs. Business Plan
Do the Canva Business Model and the business plan mean the same thing?
Of course not!
While the Business Model Canvas represents and synthesizes the company's strategy and business model, the business plan focuses on the operational details.
The business plan is therefore a detailed, multipage document that describes how to operationalize the business strategy described in the business model.
The components of the Business Model Canvas
Alexander Osterwalder's proposed business model canvas has 9 components:
Customer segments
Value proposition
Channels
Customer relationship
Revenue Streams
Key resources
Key activities
Key partners
Costs structure
Each of these components is discussed in more detail below:
1. Customer segments
In your business model, you have to start by knowing your customers.
Who do you create value for?
Who are your target clients or target client segments?
Who are your biggest clients?
What needs must they satisfy?
What problems must they solve?
What is their profile (e.g., age, gender, income
level, lifestyle)?
It is very important to know your customers and the different segments to which they belong, in order to offer them a product or service that corresponds to them.
2. Value proposition
This is the offer that your company, project or service makes to its customers.
In order to formulate your value proposition, you need to answer the following questions:
What needs/problems do you address?
What value do you generate?
What are you actually giving your clients?
What are the features of your product/service?
What are the advantages of your offering?
3. Channels
In this component, you need to answer the following questions:
How do you reach out to your clients?
Through what channels do you distribute your products or services? Through what channels do you communicate with your clients?
Distribution channels can be direct, such as internet sales, or indirect, such as sales to wholesalers.
4. Customer relationship
Customer relations determine how you will interact with your different customer segments.
This includes your communication and customer retention strategy and involves answering the following questions:
How would you describe your relationship with your clients (e.g., transaction-based, community-oriented, personalized)?
What type of relationship do your clients seek?
5. Revenue Streams
Your company's revenues are all the money flows that are generated by your company.
Revenues can come from direct "one shot" sales, recurring subscriptions, rentals, licensing, brokerage fees, and more...
Where do your revenues come from?
How do your clients pay?
How do they prefer to pay (e.g., fees, sales agreement, contract agreement, subscription agreement, rental/leasing agreement, licensing agreement)?
What are your most profitable products or services?
6. Key resources
Before launching your project, it is essential to clarify the various human and technical resources in your business model.
This leads you to answer the question:
What do you need to have in order to deliver on your value proposition?
What resources are essential (e.g., human, physical, intellectual, material)?
7. Key activities
What needs to be in place for your business model to work? What are the key activities? For example, the supply chain, software development and more...
8. Key partners
It is not always necessary to provide all the key resources yourself. It is possible, and even advisable, to use partners in some cases.
Who are your most important partners and suppliers (or investors, associates, companies, distributors, etc.)?
Which partners help you carry out activities that you do not perform in-house?
Which partners provide you with the resources you do not have in-house?
9. Costs structure
The crucial point for every company is cost. It is therefore essential to keep costs under control. To do this, answer the following questions:
What are the cost of your key activities and key resources (fixed and variable)?
What are the costliest aspects of your business model?
Now it's up to you to adapt the Business Model Canvas to your project, by asking yourself all the questions for each of the 9 components.
Don't hesitate to share with us, in the comments below, your experiences with the Business Model CANVAS.
Comments