If you have ever attended a Pitch Event or watched Shark Tank, then you understand how important it is to know and talk about your business. The business model canvas is an effective way to properly design and communicate your business model.
What is a business model canvas? Like the name states, this canvas methodology focuses on nine segments of a business model visualized on a page. It helps you to look at each segment closely so you can determine the best way to deliver value and make money. We will present the key segments of the business model canvas, how to use it to understand your business, and a couple of questions to consider as you develop a plan.
Here, each segment asks you to think about the desirability, viability, and feasibility of a business. The business model canvas is your blueprint for running a smooth business operation.
Value Proposition - Find out how to write a value proposition about ways your products or services satisfy your customer’s needs.
Customer Segments - Define the different groups, people, or organizations your plan reaches.
Channels - Identify how your company communicates with or reaches its customers?
Customer Relationships - Learn more about the types of relationships you create with the parts of your customer segments.
Revenue - Click here to learn how to define what is your business worth? What amount of cash does your company generate from each customer segment?
Costs - Learn how to use the cost structure segment of the BMC to determine how much money is associated with operating your business.
Key Resources - Define assets you require to execute your business model.
Key Activities - List the most important things a business must do in order to properly execute your business model and generate profit.
Key Partnerships - Define the network of suppliers and/or partners that make your business work.
How can I apply a BMC to my company?
The business model canvas can be completed by taking time to brainstorm and complete each segment, by doing a brain dump, or by answering the questions associated with each segment. Here are a few questions to consider when completing each segment of your BMC:
What does my product/service do or allow my customer to do that they can’t do now?
Where does my customer go to do this now?
What are the main types of market (customer) segments?
How do I find out which segment is my ideal customer?
How does my ideal customer know of my products or services?
How do customers buy my product or service?
What are the types of revenue models?
How can my company define the best way it makes money?
What are three costs associated with starting your business and sustaining it from 6 months to 1 year?
Which activities/resources are associated with the most costs in my business?
Which suppliers and partners do I have to make for my business to succeed?
Are there geographic locations that can connect me to suppliers and partners that make my business grow?
The purpose of this article was to help you to understand how to use the BMC as a tool for building a business. You can find more details about the types of tools that will help you define your business segments below: