Business model Canvas is a way to think about the business in a visual and intuitive way. In just 1 page, you can get your entire business represented.
When thinking about a business, the first thing most people tend to think is a business plan. A Business Plan is different from a Business Model. The business plan provides the details of your business. It takes the focus of the business model and builds upon it. The Business Model is a simplified version that helps to map, design, visualise your business opportunities, ways to deliver it and capture value.
The idea is to show all the key elements of your business in a single page. The Canvas consists of 9 key elements:
- Customer Relationships to be associated with Problems and Solutions (customer painpoints your magic source)
- Channels or Solution (your magic sauce)
- Key Activities (what you guys do to give the customer the value)
- Unique Value Proposition (what the customer actually gets)
- Key partnerships to be associated with Competitive Advantage (secret sauce to protect yourselves from competition)
- Key recourses (what you need to ensure your product success
- Channels (how do you reach the customers)
- Customer Segments (who are your customers)
- Cost structure (what are your costs and how much you need to charge)
- Revenue Streams (in what ways you make money)
Note that the canvas is designed in a way that the
- left half of the canvas is about your product and which is mostly under your control,
- and the right half of the canvas is about the market – many of which not under your control.
So the task is to fill in every section with relevant information related to your business idea and to map the network of relationships between each component you have selected and put in your Business Model. Possibly, the initial trial will lack consistency, but you can revise it any time you feel you should do it.
What are the advantages of using a business model canvas?
1. It forces you to think of your business in a more scientific and formal way.
2. It reduces your business model into a set of assumptions that you can then test to either validated or reject.
3. The overall design and layout forces you to think about the various key aspects of the business. When you see one part of the canvas empty, you know where you need to put more effort.
4. It is visual and intuitive. This makes it easier to communicate the ideas.
5. It is easy to create and maintain. This makes the business models very agile that can be constantly adapted to be in sync with the business realities.