How to design a business canvas model?
If you are into any business, you must have a proper Business Canvas Model to portray the compact big picture of your business and this is pretty essential while dealing with your partners, customers and most importantly with investors. Now let’s jump into the detail!
What is a Business Canvas Model?
Business Canvas Model is a strategic management and lean startup template for developing new or existing business models. It is a visual chart with elements describing a product’s value proposition, infrastructure, customers, and finances. It assists any business in aligning its activities by illustrating potential trade-offs. The Business Model Canvas was initially proposed by Swiss business theorist Alexander Osterwalder based on his earlier work on Business Model Ontology. [1]
Key components of a Business Canvas Model
As you can see from the below image there are nine major components to consider while designing a business canvas model. Let’s find out how to figure out these for your business. [2]
Key partners
Who are your key partners or suppliers? If it’s a tech product, the server and storage provider could be your partners. If it’s a retail business, your suppliers or producers could be listed here. There could be so many partners in a business like logistics partner, payment gateway partners etc. Try to figure out them for your business.
Key activities
What are the major activities that your business do? Does it produce software? Does it provide customer support? Does it sell any retail product? Include the activities that your business do to maintain the relationship with different elements of your business. Also, consider the activities that your business have impactful for the society.
Value proposition
What core values do you serve or deliver to your customers? The collection of products and services that a business offers are primarily served to meet the needs of its customers. Include the unique values that you propose in your product for customers. Also, consider the major problems that you are solving through your service or product.
Customer relationship
How do you maintain the relationship with your customers? You can set relationship with them by providing training, workshop or customer support. You can also make the relationship with your targeted segments via different associations and media.
Customer segment
Who are your target customers? Which classes are you creating values for? Who could be your potential buyers if you are in a retail business? Who could use your service? Who could be most benefited by your product or service? Try to segment your customers according to their demography, habit, adaptability, and financial capabilities.
Key resource
What are the resources that you have or need to serve your proposed value? These could be your product or application. Figure out these resources according to your distribution channels and customer relationship.
Distribution channel
How do you reach your potential customers? What marketing channels do you use? Which channels work best or cost-effective? Distribution channels could be your Facebook page, your website, your personal or business blog or any media coverage.
Cost structure
What is the cost of operating your whole business? Some could be recurring cost and some could be due to promotional activities. Include the cost of sourcing, storing and transportation for retail products. Estimate your product development and maintenance cost for IT products. There are two other signified costs; one is for product marketing and another one is administrative like staff salaries, office or showroom rent, and utilities.
Revenue stream
For what values or services do your customers pay? How much revenue you generate per sell? Remember, you should find out multiple revenue sources for the values that you provide to your customers. Also, try to figure out which revenue source is providing the most and how much does every revenue stream contribute to the overall revenues?
If you have a clear and concise idea of how these components of your business are working, it would be very easy for you to operate your business, measure performance and ROI of business and strategize your next course of actions. So take your time to think, plan and execute your business based on the business canvas model. Good luck everyone!
Sources:
[1] Wikipedia (https://en.wikipedia.org/wiki/Business_Model_Canvas)
[2] Image courtesy: Strategyzer (https://strategyzer.com/)
Want to start an online business
