In many cases, developing a business plan can be complicated, or it can even turn out to be inefficient. We live in a changing world that demands far more flexibility than a business plan of several dozen pages can offer, especially when that plan is updated once a year at best.
One of the best alternatives is to use a model that is more flexible and practical and better suited to today’s new business models.
The Business Model Canvas was created for exactly this purpose. It is a simple and powerful system that helps you map out the business plan you need. It is simpler and less rigid than traditional methods, and it is also highly effective.
That is why today we will look at what the Business Model Canvas is, what it is used for, and how you can build one in a few simple steps.
What Is the Business Model Canvas?
The Business Model Canvas is a highly useful tool based on a template that offers a new way to develop business plans.
The template lets you lay out ideas that drive the development of your business. Size does not matter, whether your venture is a large company or a small online store. In both cases you will need a business model that helps your venture grow as well as it possibly can.
The Business Model Canvas was developed by Alexander Osterwalder in 2009. Based on his template, different versions were later created for specific niches.
The model was well received by entrepreneurs around the world, since it is a versatile and very effective method.
What Is the Business Model Canvas For?
The main purpose of the template behind the Business Model Canvas is to capture your entire business model visually, on a single page.
Learn to Design Your Own Business Model Canvas
If you want to develop a Business Model Canvas yourself, you will be glad to know it is easier than it looks. In just 9 simple steps you can develop your own business model, one that is highly effective and contributes to building an efficient business.
Below, we describe the steps you need to follow to fill in your own business model. Take note!
Choose a customer segment
This step is fairly simple. Here you need to define which customer segment you expect to reach with your venture. Generally, when you start a business you should avoid aiming at the entire universe of existing customers. Start small and scale up from there.
This is where market segmentation comes in. You will need to group the customers you want to target and specify them in the corresponding box. Below are the most common segments you will come across.
- Mass market: this is essentially a very large sector, and the goal is to reach as many people as possible.
- Niches: niches refer to a smaller, more specific market with very detailed needs.
- Segments: a segment refers to a broader group than a niche, and its members do not necessarily share the same needs.
- Diversified: these are different segments with different needs.
- Multi-segment: multi-segments are segments made up of other groups of segments, which generally have distinct needs.
Create a value proposition
To develop a value proposition, you need to describe the full set of features and benefits your venture will bring to the customer segment you chose. This point is extremely important, and business plans often overlook it. Do not make that mistake; give it the attention it deserves.
The elements to consider when developing a value proposition include the following: performance, design, and price. Once you have all these aspects covered, you will have the value proposition you are going to offer your customers.
Choose your channels
When we talk about channels, we mean the means that allow us to deliver our business proposition to our customers. These channels can vary widely, and they may not even be our own.
In short, channels are all the tools we can use to reach our customers. With them you can build awareness and brand recognition so that potential customers can identify you.
Build closer ties with your customers
Building ties with your customers is extremely important. Customers will feel cared for by the company, and this creates short- and long-term loyalty. The most common methods for building that bond include the following:
- Personal assistance: this assistance is delivered in person and is without a doubt the best option for more direct contact with your customers.
- Automated services: although this is not really a method where we serve customers directly, an automated system lets you respond to all their needs very quickly.
Determine your revenue streams
Revenue is an extremely important part of any business model. Having a steady source of revenue will keep your venture in good financial health, and this will allow it to keep growing.
This part of the business model covers all the revenue streams that will sustain your business. There are several ways your venture can generate revenue, whether through the sale of a product or service, through subscriptions, and so on.
The best method will depend entirely on the type of business you are planning. For example, if your business is based on manufacturing, it should clearly focus on sales.
Define your key resources
Without a doubt, this is an extremely important aspect of the Business Model Canvas. It includes all the material, human, financial, or intellectual resources the company will need to operate. This is very important and something you should pay special attention to.
Determine your key activities
Any business, regardless of its economic activity or size, needs to carry out a series of processes. These processes depend on its economic sector. The most common activities include the following:
- Production: production is a model that includes the design, manufacturing, and delivery of a specific product.
- Problem solving: if your company is dedicated to solving various problems for your customers, this will be your key activity.
- Platform: in some cases, businesses need a platform (an online store, for example) on which the business model is based. In these cases, a series of activities come into play to properly handle development and management.
Partners
A company cannot survive on its own, which is why it is important to have the partners you need in order to grow. However, when we talk about partners, we are not referring to investors who put money into your venture.
We mean all the suppliers, partners, and other key allies who are not part of the company but who play a truly important role in its proper development. Having partners gives the company access to the materials and raw materials it needs to carry out its activities.
Create a cost structure
The final point in our business model is the cost structure, and it is just as important as the others. This structure lets you understand the expenses associated with running the company.
This is very useful for setting the price and costs of the products or services you will offer your customers. It should list all the regular expenses that are part of the process. This makes it possible to minimize costs wherever possible and to optimize work in order to increase the company’s output.
Conclusion
Without a doubt, the Business Model Canvas is a powerful tool and an excellent one for any type of business you have in mind. With this template you can detail, box by box, each of the aspects that will make up your business.
In addition, the Business Model Canvas will help you reach the deeper aspects that will shape your venture. As you fill in each box, you will get to know your new business better and better. Once you have completed all 9 boxes, you will have a detailed map of what your company is and where it is headed.
