What is Business Model Canvas?

What is Business Model Canvas and how it helps businessmen with planning.

Most startupers don’t have time and appropriate knowledge to make business models and business plans. And that’s ok. There is an affordable and convenient solution – Business Model Canvas invented by Alexander Osterwalder and Yves Pigneur.

Business Model Canvas is a strategic management and entreprenerial tool. It allows you to describe, design, challenge, invent, and pivot your business model. It can be startup company, business project or even operating enterprise model.

This tool helps quickly display the main business processes of your startup company on one page. You can quickly rewrite it in case of changes. They will certainly come; the question is how you will react.

Nine building blocks of Business Model Canvas are as follows:

1. Value propositions. Value you offer to the market, your product or service. This block should focus on basic, minimum viable product. Don’t go into the details, they may change.

2. Customer segments. When looking at customer segments, it is important to group people into multiple segments to better satisfy their needs.

3. Customer relations. Attraction and retainment of customers, development of customer loyalty.

4. Channels. How do you raise company awareness and reach customers (communication)? How do you deliver your products to customers (distribution)?

5. Key activities. How do you maintain customer relations, reach new markets, create value propositions, and earn revenues? What activities are required to implement your business model?

6. Key resources. What is required to make your business model a success? These resources can include personnel, equipment, raw materials, knowledge.

7. Key partnerships. Potential and existing partners of your startup company. Organizations or people who are ready to make a positive impact on your business project or are already engaged in it.

8. Cost structure. What activities, events, purchases are you going to spend your money on? What amount is needed for your business project or startup company?

9. Revenue streams. What are the expected or existing sources of revenue, which make your business model work?

These building blocks can be grouped as follows:

- Value propositions;

- Infrastructure (key resources, activities, partnerships);

- Customers (customer segments, channels, relations);

- Financial resources (cost structure, revenue streams).

Perfect way to work with Business Model Canvas.

Business Model Canvas is most effective, if you develop these blocks in the following order:

1. Customer segments. It’s better to start by defining customer segments. Focus on segments that are able to bring the greatest profit.

2. Value propositions. Elevator Pitch tool can be helpful here.

3. Revenue streams. What activities do you expect revenues from? If some activities are performed for free, don’t forget to add them to this block.

4. Channels. How do you communicate with and deliver your products to customers?

5. Customer relationships. How do you build and maintain communications with customers?

6. Key activities. What should be done and what will you do every day to make your business model work?

7. Key resources. Who and what is required to make your business model work?

8. Cost structure. How will you spend the earned money? This block should reflect key activities and resources, as they need investment.

Source: @ua_bizidea