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Is your business keeping pace with the times?

The internet has changed the way customers look and shop for products and services, and if you’re not taking that into consideration, your business may be missing out on key opportunities.

The Business Model Canvas1 (BMC) is a visual tool that focuses on the value you provide to customers. Whether your business is already running or you’re just starting up, a BMC can help you stay on top of the latest opportunities and revenue channels.

In this post, we’ll take a close-up look at the Business Model Canvas, checking out its strengths, weaknesses, and how it can be used alongside a traditional business plan to help your business grow.  

What is a Business Model Canvas?

The BMC is a template and a strategic tool focused on the vision and purpose of your business.

Since it is very visual, the BMC appeals to many entrepreneurs and is a great tool for brainstorming.

There are many models that describe how a business delivers a product or service to its customers.  A BMC lets you easily see and assess how your business model does this.

BMC vs. Traditional Business Plan

There are several key components of a successful business, and a BMC and a traditional business plan address them differently. The two approaches are similar in nature, but they differ significantly in focus, value, and depth of analysis.

Important Elements in Planning Your Business

As a visual tool, the Business Model Canvas has some key advantages. It provides information at a glance and can be useful as part of an initial pitch. It also focuses on customer value and can be an excellent tool for brainstorming.

One of the weaknesses of the BMC is that it doesn’t address finances in a thorough way. Additionally, while it describes how your business currently runs, it doesn’t have the power to guide you in making business decisions. 

A traditional business plan, on the other hand, does emphasize finances, making it an effective guide for decisions about how to run and grow your business. It also looks at the business from both the owner’s and the customers’ perspective. That’s why it’s necessary to have a traditional business plan in order to receive any significant funding.

Unlike the BMC, a traditional plan is less helpful to brainstorming and harder to read “at a glance.”

How Do You Create a BMC?

The typical BMC is displayed as a large rectangle subdivided into four sections: Offerings, Customers, Infrastructure, and Finances. 

Those four main sections are further divided into subsections. Each of the nine subsections focuses on a different area of the business model. 

Business Model Canvas

The 9 Subsections of a BMC

The Offering section consists of only the Value Proposition.  It defines the products and services the business supplies to its customers.  The term “value” refers to the newness, performance, design, accessibility, etc. that the customer perceives.  It is all about customer perceptions.

The Customer section has three subsections: Customer Segment looks at how the business model provides value to its most important customers.  It also asks what jobs these customers want done for them. Channels looks at how the offerings can get to the customer and through what preferred channels.  Lastly, Customer Relationships focuses on getting, keeping, and growing the customer base.

The Infrastructure section also has three subsections: Key Partners optimizes the operation via outsiders. Key Partners could be suppliers, financiers, contractors, and marketing firms.  Key Activities lists the activities needed to create value.  Some sample activities might be marketing, distribution, research and development, customer service, revenue streams, and manufacturing.  Lastly, Key Resources looks at the staff, the processes, available money and equipment or applications needed to create the value for the customer.

The last section, Finances, has two subsections: Cost Structure and Revenue Streams.  In Cost Structure, you estimate the start-up costs and money needed to get the business to a stage where it’s providing the desired profit.  This varies depending on the business model (cost-driven, value driven, etc.).  In Revenue Streams, you focus on how the customer pays for the value you provide.  Some examples are subscriptions, rentals, service sale, and asset sale.

A Sample Business Model Canvas

Bart’s Bicycle Shop is a brick and mortar store that sells bicycles tailored to the off-road, tween-age, and pleasure bicyclists.  Here is how Bart characterizes his business on a BMC.  It’s easy to see at a glance how he runs his business.

Bart Bicycle Shop

How to Create a Business Model Canvas

You can easily create a BMC for your business in just a few minutes by brainstorming the answers to some simple questions. Use the infographic below to help you gather your thoughts.

Sample Questions

Should You Use a Business Model Canvas

The advantage of a BMC is that it’s easily structured as a series of short phrases (think of them almost as sticky notes) placed in each of the sections.  It is a very visual, top-of-mind activity. That means it’s a great tool for quickly describing your overall business value and business model.  

It’s also an effective way for you to explain your business to an outsider.  Think of it as a pitch deck. If you’re at a stage of business where you need to get others excited about your business—whether those are investors, employees, or even business mentors—a BMC is a helpful tool.

Do You Need a Formal Business Plan if You Have a BMC?  

While the Business Model Canvas is a great one-page overview of your business, it doesn’t take the place of a traditional business plan.  A full business plan goes beyond purpose and vision and provides more in-depth information and therefore better guidance.

Use the Business Model Canvas to get your mind around the start-up idea and/or to talk through the next steps to grow your business.  Creating a BMC will show you whether you’re ready to take your business idea to the next step–a traditional business plan–or whether your idea needs further development.

Whether you’re getting started on your BMC or you’re ready to write a full business plan, SCORE is here to help.  Let us guide you take the next step in growing your business. Contact us today to get started.

1The Business Model Canvas was originally proposed by Alexander Osterwalder.  It has been accepted and utilized in many if not most of the business schools in the U.S.  

About the Author(s)

Carol Kerwin

Carol Kerwin received her Bachelor of Science in Electrical Engineering from Long Beach State College and a Masters in Business Administration from Pepperdine University.

Mentor, SCORE
 The Business Model Canvas – Is It Right for Your Business?