How Using A Business Model Canvas Can Help You Flesh Out Your Venture Idea
Does writing a business plan for your startup idea feel a bit overwhelming? If so, the Business Model Canvas could be for you. Developed by founder and CEO of Strategyzer Alexander Osterwalder, the Business Model Canvas (sometimes called the Lean Canvas) is a simple, one-page tool to capture the essential elements of your startup idea in one place.
Why Use The Business Model Canvas?
The simplicity of the Business Model Canvas allows you to focus on the essential elements of your business idea and identify potential issues so you can address them early on before you invest too much time, money and effort.
Completing it requires thinking through how all nine aspects of your business will work together. This will reveal whether your business model is solid or whether you need to reevaluate and modify your idea.
Use The Business Model Canvas To:
–Brainstorm ideas with your co-founders, team or SCORE mentor.
–Distill your business idea to the essentials so you can see the big picture.
–Create a one-page pitch deck to get potential partners or investors interested in your idea.
–Serve as the foundation for a more detailed business plan.
–Develop an action plan with next steps.
–Quickly compare several different business ideas to choose the most promising concept.
–Rapidly pursue an opportunity when you don’t have time to write a complete business plan.
The Business Model Canvas Explained
The Business Model Canvas consists of nine squares representing the different focus areas that are the building blocks of any business. The Business Model Canvas template lists questions to ask about each area and provides space for your answers. You can type directly into the template, print it, and write on it, or enlarge it or copy it onto a whiteboard for a group brainstorming session.
We recommend completing the nine blocks in the following order, and we’ve listed some key questions in each section that will help you uncover the information that should be included:
Value Proposition
What will you sell, and why will customers buy it? What makes your business different from your competition? When developing your value proposition, focus on the benefits to the customer rather than the features of your product or service. Strategyzer offers a downloadable Value Proposition Canvas and explainer video if you’d like to dig further into value proposition.
Examples Of Answers Include:
–Gaining status
–Getting a job done
–Convenience
–Improving performance
Customer Segments
Who are your target customers? If you have different customer segments, describe each of them.
Examples of answers include:
–New homeowners
–Parents of young children
–Local small businesses
–Customer Relationships
–What types of relationships will you create with your customers? Each customer segment may have different expectations, so identify these if needed. How will your customer relationships support your business model?
Examples of answers include:
–Transactional
–Long-term
–Personalized
–Self-service
–Channels
–What channels will you use to communicate with customers, build awareness of your business and convince them to buy? How will your product or service be purchased and delivered to customers? What happens after the sale?
Examples of answers include:
–In-house sales force
–Retail store
–E-commerce website
–Wholesaling to retailers
Key Activities
What are the most important activities needed to deliver your value proposition, reach your target customers through the appropriate channels, build customer relationships and generate revenue?
Examples of answers include:
–Manufacturing
–Sourcing products
–Customer service and support
–Sales and distribution
Key Resources
What are the essential elements you need to carry out your key activities?
Examples of answers include:
–Building or equipment
–Human resources
–Financial resources
–Intellectual property, such as patents
Key Partners
Who will help you perform key activities? Who will provide key resources to help you accomplish your key activities?
Examples of answers include:
–Suppliers
–Distributors
–Manufacturers
Cost Structure
What are the costs of your business model? Include both fixed and variable costs. Identifying your key activities, key resources and key partnerships will help you determine your cost structure.
Examples of answers include:
–Rent
–Employee wages
–Product costs
–Sales costs
–Revenue Streams
How will your business make money? You may generate multiple revenue streams from each customer segment, product or service. For example, a software company could bring in revenue from software sales, subscriptions and customer training services.
Examples of answers include:
–User subscriptions
–Product sales
–Licensing fees
Jumpstart Your Startup
When you’ve completed the Business Model Canvas/Lean Canvas, you’ll have a concise summary of your business concept that you can build on. As your startup gets off the ground, your business model may evolve. Revisiting your Business Model Canvas from time to time can help ensure you’re considering changing circumstances, which will help keep your fledgling business on track.
A SCORE mentor can help you fill out your Business Model Canvas or take the next step and help you turn it into an in-depth business plan. Contact SCORE to find a mentor and start working on your business idea today.
