What is the Business Model Canvas?
If you are just starting out your business, you are probably thinking about writing a business plan, and if you are anything like me, you are probably terrified of this process. The truth is that most people hate writing business plans. They are just too long to write, there are too many areas that you would need to know about your business, but how can you know when you did not even start yet. And then in the end (unless you are getting an investor) who is going to read it?
The days where you start your business by writing a business plan are long gone. But at the same time, you don’t want to start your business by not having any plan.
What do you do?
Lucky for you there is an easier way where you can still document your business goals and activities in a fast, concise, and portable way. And that way is by creating a Business Model Canvas or BMC as they like to call it.
The Business Model Canvas is a tool that enables you to visualize, design, and update your business model as you go. It helps you identify key elements of your business, so you can develop a clear view of your value proposition, operations, customers, and finances to decide where you need to focus your time and attention as you start your online business.
Plus is it only one page long, so you can easily share it with others to get feedback and update as you go? And on top of that, you won’t lose your nerves or hair while doing it.
What is business model canvas? – Here is what a Business Model Canvas looks like
The key business activities:
The Key Business Activities
If you don’t recognize all of these terms, no need to be alarmed. Keep on reading to find out more about 9 key elements you need to focus on.
The first step is to understand who your customers are. Who are you resolving a problem for, or fulfilling a special need? You need to understand them well. What do they need, want, like, and feel? I would advise you before you start filling this in, to do some market research around your customers’ needs so you are crystal clear on your customer’s needs and wants, so you can tailor your business around resolving their problems and challenges.
So if you have done some market research about your customers, you should know all about what they are struggling with, what are their problems and challenges. This will help you get clear on what value you are going to deliver to the customer. What problems and challenges are you helping to solve? And what things do you have to offer them for a customer to pick you over your competitor?
Channels are all about where you are communicating with your customers. What platforms are you using to reach out to them? Do you have a website, e-commerce store, social media profile, email marketing platform? Write them all down here. And remember you don’t need to be active on all of these platforms. Choose the ones that work the best for you and your customers.
Customer relationships will help you get clear on what type of relationship do you have with your customers? How do your customers interact with you from the moment they get interested in your offer, to the time they make a purchase? Is the communication strictly online, is there a dedicated person or a team to manage your customer relationships.
This is all about how your business makes money. What are your customers willing to pay for and how does that add up to your revenue? For instance, if you are a coach, are you offering online training materials, 1:1 coaching sessions, do it for your services? How are you planning to make money with your business!
Key activities are related to your value proposition. What are the key things you need to do in your business in order to deliver the best possible value to your customers? If you are a business coach, problem-solving and customer service will be the key activities you want to focus on to make your customers happy.
What resources does your company require to bring your business to life? Do you need physical resources like buildings, vehicles, or machines? Or do you need intellectual resources around building your brand, proprietary knowledge, or creating partnerships? Or do you need human resources to manage your business, or maybe financial help in terms of cash or credit?
Key partners are the relationships that you have with other businesses that will help you deliver the value to your customers? What external partners do you need to perform your key activities? If you are selling physical products who are your key suppliers?
Cost structure will help you define all the costs and expenses that your business will incur. Are your costs fixed or variable? You should ask yourself how do your key activities drive your cost structure? If there are any cost components that are not directly linked to your key activities, I would go back and see if these costs are really necessary.
And now you are done with mapping out the first version of your business model canvas.
But remember this is a living and breathing document that you can update as you are creating your business. If one thing does not work, you get to test another and update your business model canvas, so you always have a one-page view into your most important business activities you need to focus on.
It’s Your Turn.
There you have it. That is what a Business Model Canvas is and how to make it work for your business!
Now, I’d love to hear from you.
Have you already created a Business Model Canvas for your business or is this the first time you are doing this?
I want to know about your journey. Let me know in the comments below.