The business model canvas (BMC) is a simple yet effective tool! It’s perfect for all types of structures, markets, positioning, products and services. It is also ideal for an entrepreneur who is just starting or already has an existing company that is repositioning itself.
The business model is the key element of a business plan. It determines how a company can generate profits. Before any launch, it is essential to go through this process in order to validate the mechanism and coherence of one’s model. The task can indeed be tedious, but the business model canvas will save you hours of work!
Why use it?
It is used in all stages of your company’s evolution:
- During the idea stage to help you put your thoughts on paper and guide you in defining your success theories.
- During the start-up stage to make sure that your theories and action plan are consistent.
- During the growth or transition stage to refine and challenge your new ideas.
A picture is worth a thousand words:
The Business Model Canvas is a one-page document, composed of 9 blocks that will allow you to define your project at a glance and structure an idea coherently. The right side of the BMC focuses on the customer (external), while the left side focuses on the company (internal).
Anticipation rather than reaction:
By challenging your concept and identifying its limitations and the obstacles you may encounter, you anticipate certain bottlenecks and save time by avoiding them and adapting yourself as of now.
Share a clear global vision:
A well-crafted business model canvas allows you to communicate about the project to your employees, business partners or even potential incubators or investors.
The business model canvas is the ideal tool to assess your chances of success!
How to use it?
The 9 blocks of the business model canvas are the cornerstones of your business.
I would recommend that you print the chart in a large A1 format and use multi-colored post-its if you have several product/service categories.
You can start with any block of your choice. However, I find it easier and ‘smoother’ to start with the customer segments or your value proposition. Write a single keyword per post-it.
- Customer segments = These are all the people for whom you wish to create value.
Who are you helping? Who are you addressing?
- Value proposition = For each customer segment, you promise a benefit which happens to be your value proposition.
What benefit do you offer? What problem do you solve?
- Distribution channels = These are all the means through which you are in contact with your customers so as to deliver value to them.
Through which channels do your Customer Segments want to be reached? Which one works best?
- Customer relationships = They show the type of relationship you want to have with your customers.
How do you take care of your customers? How can you retain them?
- Income flow = This block describes how your income is generated.
What do your customers buy and what price are they willing to pay? In what forms (sales, subscriptions, packages…)?
- Key resources = They show which assets are essential to your business model and what resources are available to you.
What raw materials and stocks will you need? What human and intellectual resources are needed?
- Key activities = These are the strategic activities that create the value proposition for your customers.
What are the key activities you need to do in order for your business model to succeed?
- Key partners = These are the partners who help you deliver your value proposition. And yes, you probably don’t own nor control all the resources internally.
What activities necessary for your business model are carried out by your partners?
- Cost structure =This is usually the last block to complete since you should now have an idea of what you need to deliver your value proposition.
What are the costs necessary to achieve your value proposition, sustain the customer relationship and generate revenue (fixed and variable costs)?
It will be necessary to ensure that costs are lower than income flows in order to generate a profit.
Business model canvas: an example