Your Business Model Canvas Can Help You Keep Pace With The Times
This past year has changed the way customers shop for products and services. 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 Business Model Canvas can help you stay on top of the latest opportunities and revenue channels.
What is a Business Model Canvas?
The Business Model Canvas (BMC) is a template and a strategic tool focused on the vision and purpose of your business. Once completed, it is a visual, one-page document, that will highlight the nine important Key Areas of your business.
Why you should use a Business Model Canvas?
It is easily structured as a series of short phrases placed in the appropriate Key Areas. It's an effective tool for you to explain your business to outsiders, whether those are investors, employees or even in an executive summary of a business plan.
The Business Model Canvas is also used as a starting point when a business wishes to increase sales or improve its internal operations. How this is done will be described in a follow-on blog called Business Model Canvas PLUS.
How Do You Create a Business Model Canvas?
The typical Business Model Canvas is displayed as a large rectangle subdivided into nine areas. Each of the nine areas focuses on a different important area of the business.
The 9 Areas of a Business Model Canvas
Value Proposition: This defines the products and services your 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.
Customer Segments: This defines who your customers are. Is everyone a customer or are there special groups (niches)?
Channels: This looks at how the offerings can get to the customer and through what preferred channels.
Customer Relationships: This defines how you get, keep, and grow your customers.
Key Activities: This section defines those needed to create value and that are critical for your business.
Key Resources: This looks at the staff, processes, available money and equipment needed to create value for the customer.
Key Partners: This optimizes the operation via outsiders. Key Partners could be suppliers, financiers, contractors and marketing.
Cost Structure: This identifies important and critical expenses. It looks at both fixed and variable costs.
Revenue Streams: This identifies the different sources of revenue that support the business.
You can easily create a Business Model Canvas by answering the questions in this sample questions chart. See the Sample Business Model Canvas chart below.
A Sample Business Model Canvas
The chart below was developed for the San Luis Obispo chapter of SCORE and is shown as an example of a completed Business Model Canvas. It is an example of a normal Business Model Canvas result. Perhaps the only difference would be the Value Proposition shows more products than some small businesses.
You can use the Business Model Canvas to get your mind around a business start-up idea, talk through the next steps to grow your business, to help you write a Business Plan or use it as the first step needed when you develop a Business Model Canvas PLUS to help your business grow and improve its profitability.
Do You Need a Formal Business Plan if You Have a Business Model Canvas?
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. If you are planning to get a loan or funding for your business, a business plan will almost always be a requirement.
A full Business Plan goes beyond a Business Model Canvas. A Business Model Canvas defines key areas and explains what your business is or wants to be. A Business Plan is a document that describes a business's future objectives and strategies for achieving them.
Whether you’re getting started on your Business Model Canvas, BMC PLUS(soon to be released) or you’re ready to write a full Business Plan, SCORE is here to help. Let us guide you to take the next step in growing your business. Contact us today to get started or give us a call at 805-547-0779.
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.