The Business Model Canvas
Now that we’ve spoken about the Business Idea Canvas, our next tool in line is the Business Model Canvas. This revolutionary tool is a simple, yet powerful method for setting structure to your business idea/new product/new branch of your existing business in order to understand your “business model.”
Well, that’s a catchy, often over used term, but what is a business model? Investopedia defines it as:
“The plan implemented by a company to generate revenue and make a profit from operations. The model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs.”
In short, your business model is the way you make money over and above what you have to spend to do it. And the business model canvas is a clearly organized and comprehensive way to sum that up.
Here’s a picture of a standard business model canvas template and a short explanation of each section:
- Customer Segments: Who are your customers? What do they think? See? Feel? Do?
- Value Propositions: What are you offering your customers? Why do customers want to buy/use it?
- Channels: How are these propositions promoted, sold and delivered?
- Customer Relationships: How do you interact with the customer through their ‘journey’?
- Revenue Streams: How does the business make money from the value propositions?
- Key Activities: What uniquely strategic things does the business have to do to deliver its proposition?
- Key Resources: What unique strategic assets must the business have to compete?
- Key Partnerships: Who is essential to work with to make this happen?
- Cost Structure: What are the business’ major cost drivers? How are they linked to revenue?
As you fill this out, scratch it up, run it by others and reiterate, you’ll start to really discover the core of your business–it’s business model. It will give legs to a new idea, keep direction for your company and help you as a manager to focus on the key components, the heart and soul, of what your company has to offer and what it needs to do to keep growing.
We hope this tool helps you to continue your success!
