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How to Repair Canvas
If a tear or a rip happens to your canvas, whether a tote bag, a boat cover, awning or some other canvas item, you can fix it with just a few simple steps. Canvas repair is simple enough to tackle yourself.
Test the Canvas
Before you go to the trouble of canvas repair, check out the fabric to make sure it’s worth fixing. Sun and elements will take their toll on canvas fabric over time, and the material will fray, fade and become thin. Grasp the canvas tightly in both hands with your hands spaced about six inches apart and pull sharply. If the canvas tears easily, it’s best to replace it instead of repairing it.
Gather Materials
If you decide to repair the canvas, get a piece of matching canvas for a patch and a matching piece of backing fabric that won’t fray. You’ll also need heavy polyester thread for stitching, a sturdy needle for hand sewing and a roll of double-sided sticky tape to hold the patches in place while you sew.
Patching the Tear
Cut the piece of replacement canvas and backing fabrics so they are four inches wider and longer than the tear. Cut strips of the double-sided sticky tape to fit around the perimeter of both pieces of fabric, and affix the sticky tape strips to the undersides of both pieces. Position the canvas patch over the tear on the top side and the backing fabric patch under the tear on the under side, and press both pieces firmly into place.
Thread the needle with the polyester thread, pulling it to make a double strand for extra strength. Tie a knot in the ends of the thread. Stitch around the edge of the patch, making sure the thread goes through the top patch, the canvas and the backing patch. Take small and even stitches, positing them about one-eighth inch from the edge of the patch. When you reach your starting point, make a knot and clip off the excess thread.
No-Sew Fabric Repair
If your tear is only an inch or two in length, consider using an adhesive-backed patch instead of sewing on a patch. These patches are quick to apply, and they generally work well.
Clean the fabric well and allow it to dry if necessary. Most adhesive patches require that you prep the canvas with alcohol pad. Remove the adhesive backing and position the pad directly over the tear, making sure the patch extends out from the tear on all sides.
Liquid Adhesive
You might also try a liquid adhesive to repair canvas tears. Make sure the canvas is clean, and then position the canvas on a work surface so the tear is accessible. Place a sheet of paper under the canvas to protect your work surface. Position both sides of the fabric together, and apply the liquid adhesive along the tear to seal the two sides together. Allow the adhesive to dry according to manufacturer instructions.
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Sep 8 How To Fill In A Business Model Canvas
The Business Model Canvas is a great way of mapping out an idea, allowing it to be understood, tested and improved.
The tool is a single page with nine connected boxes, which show how all parts of your business work together for success. It can be sketched anywhere – on a whiteboard, napkin or notepad. Filling one in can take between 15 and 30 minutes, and this guide will make the process clear and straightforward.
We’ll look at some entrepreneurs as they fill in their own canvases – it’s much easier if you get to watch somebody else.
They are: Josh – creating a bamboo toothbrush that’s both stylish and environmentally beneficial. Kylie and Dan – running Indigenous cultural experience programs for schools and families. Anna – selling a range of chilli sauces that are made in Fiji.
Business Model Canvas, strategyzer.com
Step 1: Naming the purpose of the business Without a clear purpose, how will we know if a model is good or not? This can be whatever you like, such as: To earn a passive income from home To prevent the destruction of Indonesian rainforests To improve the financial stability of our parent organisation To provide stable livelihoods for young people at risk of being homeless To improve the job hunting process
The great thing about this is that we now have a criteria for assessing our ideas, and have some inspiration for creative ways to reach this purpose.
Josh – “To reduce the amount of plastic that goes to landfill” Kylie and Dan – “To preserve and celebrate Indigenous culture, and explain its relevance in our daily lives” Anna – “To create meaningful employment in Fiji”
Step 2: Customers and Value Propositions There’s no particular order you have to follow on a canvas, although I’ve found this to be the best place to start. Your business is centred around your customers, the people who you believe will be motivated enough to try your new product/service in order to receive some sort of compelling benefit.
This is a real person, someone who is walking around right now. They’re looking for solutions to their current problems, and like finding ways to make their lives easier. Our job is to get a good understanding of this person: What are their jobs, tasks and obligations? What are their hopes, dreams and aspirations? What are their core beliefs and worldviews? Do they have a good understanding of how they might get what they want? This is what we list in the Customer Segments box .
Firstly, we group our customers into clusters, describing each of them by their common characteristics, i.e. small business owners, students, parents, etc. Secondly we write helpful descriptors of each customer segment. These might be Demographics like age, race, gender, height, income or postcode. These might be Psychographics like their political views, altruism, biases or preferences.
Keep in mind that our customers are the people who make decisions and pay for our products/services (not to be confused with the End User or the Beneficiary).
In the Value Propositions box, we describe what the customer is really looking for. This isn’t about what we sell them, but rather why it matters . These might be Gain Creators like increased social status, wellness, professional credibility or indulging our guilty pleasures. These might be Pain Relievers like fear of exclusion, social shame, regaining wasted time, or reduced anxiety.
We want to understand how our products/services make their lives better, to the point that customers will happily pay us for this Value Proposition.
Josh – We have two customers: 1. Young professionals who want to buy cool, environmentally friendly gifts for themselves and their friends. They love the aesthetics of the brushes and the story of the movement. It’s a simple way of doing something cool. 2. Mothers with young children, who want to create a mindset of environmental responsibility in their daily decisions. They like the personalised colours of each brush, and by making teeth brushing fun they get fewer objections from their kids twice a day.
Kylie and Dan – We have two customers: 1. Schools who want workshops and incursions for their primary students. They love how engaged the students are, and that it’s a great way to incorporate NAIDOC week each year.
2. Couples and families who want to learn more about Indigenous culture. They love learning about the rituals, connecting with nature and with the land, and the feeling they get from having a weekend away from hollow distractions.
Anna – We have three customers: 1. Supermarkets who stock our sauce. They love interesting products with good margins and high turnover.
2. Cafes and burger shops. They love having interesting brands of sauce that engage their customers, and hot sauces that are spicy without sacrificing flavour.
3. Home cooks, people who like chilli sauce. They love the brand and its cheeky packaging, and the unique heat/flavour of the sauce.
Step 3: Channels and Customer Relationships Now that we have a clear picture of who we’re serving and how we’ll delight them, we get to design three things: how we acquire them, how we keep them, and how we interact with them.
The Channels box is our chance to explain how we first encounter our customers, as well as how we deliver our Value Proposition. For example, your business might find customers through Google Ads or Facebook, then serve customers through face-to-face workshops or drop-shipped packages. We list both of these methods here.
The Customer Relationships box outlines how our interactions will unfold. Are we hoping for a long term relationship, or a short term relationship? Does each customer need to speak to a person, or use technology? If so, does it need to be a particular person, or the same one each time they come back? Will we need to work harder to acquire our customers or to retain our customers? Does one tend to happen more naturally than the other?
These two boxes tend to pair neatly together. By understanding our customer, their desires and their preferences, we can identify the best methods for recruiting and keeping them for years to come.
Josh – Our acquisition channels are Instagram and word of mouth, whereas our main delivery channel is through mail orders. Our customers are tough to acquire but are then quite loyal, and our transactions are highly automated. Once we find a way to tell the story and show them how great the product looks, it’s easy to get an order.
Kylie and Dan – Personal referrals are our best acquisition channel, but we’re keen to find new ways of reaching decision makers within primary schools, who usually make decisions six months in advance. Our online presence will need to improve, and we’re about to start testing keywords. Most of our customers come back each year, so our focus is on acquiring new customers, especially in off-peak times.
Anna – Supermarkets and cafes need an in-person pitch meeting, to hear the story and see the product for themselves. We have a hard time with retention, so there needs to be a long term personal relationship with each manager. Our direct customers come through our online channels, but tend to only order once.
Step 4: Key Resources, Key Activities and Key Partners These three boxes describe how the business will work “behind the scenes” – all of the operational components that make the Value Propositions a reality. We want to list all of the vital ingredients, important processes and invaluable allies that enable our business to exist. Key Resources are the people, places, machines, patents and intangible assets that are used every week. This is not a complete inventory, but a list of the resources that, if lost, would prevent the business from functioning.
Key Activities are the processes and tasks that must be completed in order for our customers to be served. e.g. If you were to go on Holiday, what would your replacement need to do in order for things to continue to run smoothly? These might include sales calls, workshop delivery, meal preparation or writing reports. In particular, these are the activities that you do particularly well. Since every business does a little bookkeeping, that’s probably not your Key Activity…unless you’re an accounting firm.
Key Partners are the people and organisations that take some of the responsibility off your shoulders. They might supply raw materials or finished goods, send customers your way, or act as a sponsor/enabler. Which external supporters are essential to the model? Who could make life difficult if they were to leave?
There’s some flexibility in these three boxes, it’s worth thinking about how you could outsource the tasks that aren’t your core skills to a partner, or how you could take things in-house to either save money or improve quality.
Josh – Most resources and activities have been better performed by partners, who grow the bamboo and manufacture the brushes. The essential resources are the brand, website, sales channels and the founder. The essential activities are advertising, fulfilling orders and meeting with stockists.
Kylie and Dan – The most essential resources are Kylie and Dan, as their knowledge and credibility are what make the entire operation possible. The essential activities are the promotion and sales of their events. They are currently looking for partners who can take the administration functions away from the founders, and who can introduce them to new schools.
Anna – Chilli farming and sauce manufacturing are performed by partners. The essential resources are the brand, the recipe/intellectual property, and the sales team. The essential activities are pitching to new supermarkets and cafes, maintaining existing relationships, and fulfilling the orders that come through the website.
Step 5: Cost Structure and Revenue Streams The bottom line of the canvas represents the bottom line of your business: Money in, money out, hopefully some money left over. We want to understand the ways in which money moves through the business. That means understanding the quantities (how our costs/prices are set) and frequencies (how often we get repeat customers/bills).
Cost Structures are the 7-8 biggest expenses – how much we spend, how frequently we spend it, and whether it changes as sales go up and down. These might include rent, wages, raw materials, advertising, fitting out the store, or paying commissions to other parties.
Revenue Streams are the prices each type of customer typically pays, as well as how frequently they come back. This helps us differentiate the big spenders from the one time shoppers, and highlights which offerings are purchased upfront versus those that are purchased over the following months and years.
Whilst these boxes aren’t a replacement for a proper financial model, they at least give us the ability to make basic forecasts, such as contribution margins and breakeven points. It also gives us a chance to think about our pricing strategy – clever pricing can massively increase the profitability of your new business.
Josh – The main costs within the business are the purchase of brushes (recurring costs that will decrease as the orders get larger), the cost of acquiring customers (ads and content creation) and the costs of fulfilling orders (packaging, postage and staff time). Revenue comes through one main product; 4-packs of brushes. This will need to be diversified, either through complementary offerings like floss or mouthwash, selling larger orders to different customers, or selling individual brushes.
Kylie and Dan – Kylie and Dan themselves are the main costs, with administration, travel and cost of sales (ticketing, materials, etc) the next largest.
Revenues are varied; schools pay a per-student rate of $15 that will increase in the future. Weekend camps are capped at 18 places at $375 each, so the amount of revenue comes down to the number of camps run each year.
Anna – There are a long list of costs, from the bottles to the sauce to the shipping and labelling, as well as the administration and sales staff wages.
Revenues all stem from the same product – 450ml bottles of sauce, but in different quantities and prices points. Supermarkets pay $6 per bottle, whereas cafes pay $8 and consumers pay the RRP of $12.95. That said, one supermarket buy more sauce than ten cafes.
Step 6: Linking The Boxes +Tidying Up Our boxes aren’t nine independent checklists, that wouldn’t help your idea. Instead the canvas keeps our ideas accountable; if we make a promise somewhere on the right, it will also need to be listed in one of the boxes on the left.
If we make claims about our happy customers, that should shine through in our Revenue Streams. If we expect to keep personal relationships with each customer, that will become a part of our Key Activities and Cost Structure.
This does two things: highlights the potentially overlooked activities and resources that are crucial for success, and makes us reconsider the expenses that don’t directly contribute to the Value Proposition. Long story short, you stop making big sweeping assumptions and waste less money.
We want the canvas to be as clear as possible, both for our benefit and for explaining the idea to other people. One way of making sense of the right hand side is to colour code each customer segment; this highlights which value proposition best delights each customer, and which revenue streams they each provide.
Step 7: Telling The Story Presenting a full canvas to a new person is not a good idea – there’s too much to take in. Instead, it’s best to fill in each box as you explain the idea. This makes the business much easier to understand, and creates a much richer appreciation of the model at the end. Even if you just list a few words in each box, this will take about 6-8 minutes to explain the full concept, and will remove a lot of misconceptions.
Step 8: Assumptions Testing Just because you wrote something clever on a canvas doesn’t make it a reality. For this reason, we start by assuming that all of the words on the page are assumptions, and our next job is to verify them – starting with the most crucial.
I find this is made easier with a simple Test Card, which asks you to name the big assumptions, pick a way of measuring the truth, and setting pass/fail criteria.
Research should be conducted with real people, and they need to be people who are in your customer segments. Just because your friends think it’s a cool idea doesn’t mean that the market will too. When you talk with your customers, don’t show them the canvas – it’s better to ask natural questions that help you fill in each box, rather than using all of the same terminology.
Step 9: Designing New Versions Good ideas survive competition, so it’s important that we don’t fall in love with the first idea. After your testing, you’ll start thinking up new adjustments that are worth exploring. Here are some suggestions to spark your creativity:
· New Customer Segments · New Value Propositions (for the same Customer Segments) · New Products/Services (for the same or new Customer Segments) · Turning Services into Products · Turning Products into Services · New Partnerships · Franchise models (that aren’t reliant on a rare resource) · New delivery formats
Josh wants to test some new products with his current customers, whilst also looking at business class airlines and high end hotels, as they both want to provide toothbrushes to their customers whilst appearing environmentally responsible.
Kylie and Dan are going to test new styles of workshop that appeal to their school groups at different times of the year. They also want to bring on some trainees to learn how to run camps and workshops, so that the model is not as dependent on the two of them (which is a risk to their finances and their cultural intent).
Anna has heard that her supermarket customers want to see a wider range of products, so she’s going to test feasibility with her manufacturing partners and desirability with her customers.
What’s Next? Now that you have 3-4 interesting Business Model Canvases, some additional tools will make the future even clearer.
Customer Journey Mapping will give you insights into how you can better attract/serve/retain your customers.
Financial Models will reveal what makes the business financially viable, and highlight the sensitivities that will make or break the idea.
Value Proposition Canvases will dive deeper into your customers and their hidden motivations, creating more persuasive messages that will lure them in.
Sep 13 Social Enterprise University Assignments
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Related posts.
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The 9-Step Business Model Canvas Explained (2023 Update)
Written by Raquel Alberdi
Business | entrepreneurship, 0 comments(s).
Blog » The 9-Step Business Model Canvas Explained (2023 Update)
“A major mistake made by many start-ups around the world is focusing on the technology, the software, the product, and the design, but neglecting to ever figure out the business . And by “business” we simply mean how the company makes money by acquiring and serving its customers”.
-Reid Hoffman
After meeting with hundreds of entrepreneurs and business owners over the years I believe the LinkedIn co-founder and Blitzscaling author Reid Hoffman’s got it spot on.
People tend to focus on specific parts of their business, such as which software packages are being used, which is the cheapest supplier, how to optimize internal processes…?
They get so bogged down in the details of the day-to-day running that they lose the overall vision of their business.
Without this vision they are unable to scale, they make marginal profits, miss opportunities, struggle to innovate, and end up running “just another” business.
Another handy metaphor in understanding this common mistake is the soldier in the trenches .
Every meter of ground gained comes at a heavy cost, mistakes are made, and progress is hard-fought and slow…a day-to-day experience for 99% of entrepreneurs and businessmen.
But when you do have that 360 vision you see the entire battlefield. Decisions are much clearer, fewer mistakes are made, and progress is fast and methodical.
Fortunately, a business model framework exists that gives you both vision and clarity .
The Business Model Canvas provides entrepreneurs, business owners, and strategists with a tool to analyze, structure, and evolve a business while always keeping the bigger picture front of mind.
So let’s take a closer look at how it works.
Table of Content
What is the Business Model Canvas?
Customer segments, value propositions, customer relationships, revenue streams, key resources, key activities, key partners, customer segments, value proposition, strategyzer, business model canvas tool, would you like to learn more about business models.
Created by Swiss entrepreneur and Strategyzer co-founder, Alexander Osterwalder, the Business Model Canvas is a visual representation of the 9 key building blocks that form the foundations of every successful business. It’s a blueprint to help entrepreneurs invent, design, and build models with a more systematic approach.
Why is it so popular within the business community?
Its simplicity. The business model canvas allows us to carry out a high-level analysis without drilling down and getting lost in the details. You just draw out the 9 building blocks on a blank canvas, fill them in as each concept relates to your business, and hang it somewhere everybody can see.
It’s a visual overview of your entire business on a single canvas.
While the Business Model Canvas is an extremely fluid concept and hyper-specific to individual companies, each canvas is still broken down into these 9 key building blocks:
When laid out on the canvas the model will look something like this:
While you’ve probably come across each of the 9 building blocks before, the attractiveness of the Business Model Canvas is that it confines them to a single page , not a traditional 42-page document.
This makes it a lot easier to digest, as well as assess existing business models or map out new ideas.
How do I fill out the Business Model Canvas?
To start your Business Model Canvas you will need to breakdown and analyze each of the 9 building blocks.
A good way to approach this is to gather the heads from marketing, sales, operations, finance, and manufacturing (if product-based) and pencil-in a morning where you can all meet together.
Then, after drawing a mock canvas onto a whiteboard, proceed to dissect and discuss each of the 9 building blocks as they relate to your business. You can use sticky notes to better organize your thoughts around the canvas.
If you are an entrepreneur or new business owner working alone and don’t have a team to bounce your ideas off, not to worry. You can still carry out your analysis before sharing it with a like-minded entrepreneurial community or forum, like those found on ThePowerMBA , to get useful, insightful feedback.
Whichever way you decide to approach it, I recommend you complete each block in the following order:
- Cost structure
For continuity, I’m going to use the fashion retail giant Zara when analyzing each of the 9 key building blocks.
If you’d like to skip to another case study similar to your own business, navigate to the table of contents at the top of the page and select one of the other business model canvas examples.
The first block of the Business Canvas Model is about understanding who is the most important customer(s) you’re delivering value to. Or, in other words, who are they? What do they do? And why would they buy your product or service?
Not a single company exists without its clients, making customer segments the best block to start with while drawing out your business model canvas.
A great exercise to define your customer segments is to brainstorm and create your company’s buyer persona (s) .
Buyer personas are fictional depictions of an ideal or hypothetical client. Typically when brainstorming a buyer persona you’d want to define certain characteristics (age, demographic, gender, income, industry, pain points, goals, etc.)
However, remember at this stage we want a snapshot of our customer segment. There’s no need to jump into great detail just yet.
In the case of Zara, there are three distinct customer segments to whom they offer different products.
The products created for each of these customer segments (clothing, shoes, and accessories) are not trans-consumable. That is to say, a woman’s dress is highly unlikely to be worn by a 7-year-old child.
Once we know exactly who it is we are targeting, it’s time to look at what we as a company have to offer.
The second phase is about figuring out your company’s value propositions , and importantly, your UVP (unique value proposition). The “what” that makes customers turn to you, over your competitors? Which of their problems are you best at solving?
Each value proposition consists of a bundle of products or services that fulfill the needs of a buyer persona from your customer segment. It’s the intersection between what your company offers, and the reason or impulse customers have for purchasing.
Some popular questions to ask while determining your UVP are:
- Which specific customer pain point are you trying to solve?
- What job are you helping customers get done?
- How does your UVP eliminate customer pain points?
- What products or services do you provide that answer this specific pain point?
So let’s try and apply this to Zara. Why do people choose to purchase from them, over their competitors?
Zara’s principal value propositions are fairly clear. They offer various ranges of stylish men’s, women’s, and children’s clothing and accessories at an affordable price.
But there’s more to it than that.
If we dive a little deeper we see Zara’s value propositions are more complex, which are behind the success of the brand:
Fast fashion
Zara adds new clothes and designs to its collections every 2-3 weeks, both in its stores and online. It keeps the brand updated, fresh, and modern while maintaining its all-important medium price point
Great eCommerce experience
Once you enter Zara’s online store you’re presented with a clean, easy-to-navigate, and high-end feel. The customer segments are visible on the left navigation bar with a search tab to further aid customers with their online experience.
Localized stores
You can find a store in nearly all major retail locations (shopping malls, retail outlets, airports, etc.) meaning accessibility is not an issue for the majority of consumers.
Flagship stores
Zara demonstrates its aesthetic evolution to customers through its flagship stores. The recent opening of their Hudson Yards , New York City flagship is a great example of this. Customers shop around its vivid, minimalist layout offering them an experience aligned with the brand’s deeper, eco-friendly values.
Zara Hudson Yards, New York
The next step is to ask yourself how you are reaching your customers, and through which channels ?
This includes both the channels that customers want to communicate with you as well as how they’ll receive your products or services.
Is it going to be a physical channel? (store, field sales representatives, etc.) Or is it a digital channel? (mobile, web, cloud, etc.).
Zara has 3 primary channels in which they communicate and deliver products to its customers:
- Direct sales through their stores
- Online (both app and website)
- Social media
Customers can go to a traditional “bricks and mortar” store to browse, model, and purchase different items of clothing at one of their retail stores.
Alternatively, they can shop online or through their mobile application and have the product delivered straight to their door or nearest store. The choice is completely up to them!
So that covers Zara’s commercial channels, but what about how they communicate with customers?
While they do communicate through their mobile app, their predominant channel is social media.
What’s more, they’re really, really good at it.
For example, did you know that Zara invests less than 0.3% of its sales revenue into advertising?
This is only possible due to an A-rated social media presence . Customer queries are not only dealt with quickly, but recommended re-works are sent back to HQ, forwarded onto in-house designers who then apply the feedback to future collections.
This customer-first approach through fluid communication channels has saved them thousands of dollars in marketing, strengthened their brand, and created a loyal customer base.
You should only step away from this building block once you’ve decided how each of your customer segments want to be reached.
Once you have acquired customers, you will need to think about how you can build , nurture, and grow those relationships.
Now, this can be automated and transactional like large eCommerce brands Amazon or Alibaba. Or, it could be at the complete opposite end of the scale and require a more personal relationship you’d typically have with a bank or your local bike shop.
Zara’s relationship with its customers is threefold, and lies somewhere in the middle of transactional and personal:
- Salesperson at store
- Brand through social media
- Sentimental attachment to a product
Yes, you have the initial transactional touchpoint at the store or online, something relatively impersonal and for many the only interaction they’ll have with the brand.
However, customers (especially in the fashion industry) are encouraged to continue to interact with a brand through social media platforms.
As we mentioned before when discussing channels, Zara has a very effective communication system in place. Not only can people instantly get in touch with the brand, but also engage with new posts, images, and collections uploaded to social media.
This personal approach to customer relationship building can, in some cases, lead to the natural growth of brand ambassadors and communities .
An attachment can also develop between customers and particular garments or accessories from one of their collections. The sentimental attachment to these products also creates another potential form of brand loyalty.
Now that you’ve described how you are going to create real value for your customers, it’s time to look at how you plan to capture that value.
What are your revenue streams? Is it going to be a transactional, direct sales strategy ? Are you going to consider a freemium mode l, where you give a portion of your product or service away for free with the idea of converting later on down the line?
If you’re a SaaS company such as SalesForce or Strava , then it’s likely that a licensing or subscription revenue model will be more appropriate.
At Zara, it’s extremely simple. They make their money by selling clothes and accessories either at a store or online.
As you can see, we’ve filled in the entire right-hand side of our business model canvas. We touched upon:
- Value propositions
- Revenue streams
- Distribution channels
Now it’s time to move over to the left side of the business canvas model and look at what we need, internally , to deliver our value propositions.
To start with, let’s take a look at key resources.
The key resources are all things you need to have, or the assets required to create that value for customers.
This could be anything from intellectual property (patents, trademarks, copyrights, etc.) to physical holdings (factories, offices, delivery vans, etc.) right down to finances (the initial cash flow perhaps needed to start your brand).
Another key resource every company needs to consider is its human capital . Are you going to need highly specialized software engineers? Or field-based sales teams?
They are relatively capital-heavy resources that need to be factored into your business model.
In the case of Zara, they are going to need a number of key resources if they hope to deliver their propositions:
- Stock management
- A large, interconnected network of physical stores
- A strong brand
- Logistics and supply chain infrastructure
Stock is vital for both online and offline customers.
If they are unable to supply their range of products and meet customer demands, satisfaction levels fall and they have a serious problem on their hands.
A large distribution network of brick and mortar stores combined with a strong brand name help mitigate these factors, as well as reinforce any ongoing marketing activities and communication efforts.
Finally, an efficient logistics process within Zara is critical, especially when you consider the complexities involved with such a large-scale operation.
They will require the necessary technology to analyze data on inventory, storage, materials, production, and packaging, with the staff to execute each of these stages and manage the delivery of the final products.
The next step is to define the key activities – the areas you need to be good at to create value for your customers.
To mix it up a little let’s take a look at a slightly different business in Uber .
Their key activities can be broken down into:
- Web and mobile app development
- Driver recruitment
- Marketing: customer acquisition
- Customer service activities : drivers’ ratings, incidents, etc.
They need a fast, clean UX for their customers using the app, drivers to carry out their service, and the ability to both market the product and deal with any customer queries.
Zara’s key activities will differ to those of Uber. Some of the things they need to consider would be:
- Manufacturing
- Retail process (point of sale and 3rd party management)
- Distribution channel / logistics
Design is a key activity as Zara’s value proposition is to provide stylish garments at an affordable price. Their collections need to be constantly updated to follow the latest fashion trends at the time.
To produce their collections Zara will also require manufacturing capabilities. Now Zara doesn’t own their own factories (we will get to that in the Key Partners section) but they still need to be involved in the garment manufacturing process.
Everything from fabric selection to pattern making, to detailing and dyeing affects the outcome of the final product which of course they have to then go on and sell.
The effective management of the retail and distribution channels (online, offline, shipping, and communication with providers) is also key. A breakdown in either of these activities, such as a poor relationship with an important provider will have serious consequences for the business.
Most modern business models now require brands to build out and work with various key partners to fully leverage their business model.
This includes partnerships such as joint ventures and non-equity strategic alliances as well as typical relationships with buyers, suppliers, and producers.
A great example of a strategic partnership would be between ThePowerMBA and Forbes . In exchange for exposure of our brand to the magazine’s global audience, we provide expertise and content on high-level business education programs.
As we touched upon when discussing key activities , Zara requires strategic partnerships with many different providers if they are to design and produce their collections.
Another key partner is their major holding company, Inditex .
Inditex has several subsidiaries including Massimo Dutti , Pull & Bear , and Oysho . Being a subsidiary of Inditex means they share a consolidated balance sheet, stakeholders, management and control, and various legal responsibilities.
While as a subsidiary Zara is afforded certain freedoms when it comes to design, delivery, and the general running of the company, the overall strategy will need to be aligned with Inditex and its other subsidiaries.
The final step of the Business Model Canvas is to ask yourself, how much is it going to cost to run this model?
This includes some of the more obvious needs such as manufacturing costs, physical space, rent, payroll, but also areas such as marketing activities.
If you are unsure of exactly what to include in your cost structure take a look at a Profit and Loss statement ( P&L ) from a competitor or company in a similar industry to yours. You’ll find many items overlap such as research and development ( R&D ), cost of goods sold, admin expenses, operating costs, etc.
Once that’s done you should prioritize your key activities and resources and find out if they are fixed or variable costs .
As Zara is such a large, corporate business they are going to have both fixed costs (rent, payroll, point of sales personnel) and variables, such as costs associated with the fluctuating sale of goods, purchase of materials and, manufacturing costs.
Once you’ve completed these 9 steps, your Business Canvas Model should look something like this:
Business Model Canvas Examples
Hopefully, you were able to get a good feel for the effectiveness of the business model canvas with our run-through of Zara.
However, if you found it difficult to follow due to the stark difference between your industries, I’m going to quickly go through 3 more companies to demonstrate the tool’s flexibility:
- Netflix (Media service/production)
- Vintae (Vineyard)
Even if these business model canvas examples don’t align exactly with your industry, I honestly believe that studying different models gives you a competitive advantage in your professional career regardless.
If you’re currently employed by a company, you’ll better understand how your specific role helps the company achieve some of its “long-term” goals.
Alternatively, if you are a business owner yourself (or perhaps thinking of starting your own business) you’ll have a better understanding of your business and where potential opportunities lay.
I’m sure you’re familiar with our next business model canvas example candidate, Netflix .
The global media company offers an online streaming service of various movies, documentaries, and TV programs produced in-house or licensed 3rd-party content. Their success sparked a revolution in the online media world with the likes of Amazon, Apple, Disney, HBO, and Hulu all rushing to launch their own online video streaming platforms.
Netflix started life as an online DVD rental company, basically a web version of the more popular (at least at that time) “bricks and mortar” Blockbuster.
Co-founder Reed Hastings predicted as far back as 1999 that the future of media was in online streaming, saying “postage rates were going to keep going up and the internet was going to get twice as fast at half the price every 18 months.”
It wouldn’t be until 2007 that Hasting’s prediction would become true when Netflix, as we now know it, was born.
So let’s take a current look at their business model canvas:
As you probably know, there are very few people out there who haven’t subscribed, watched, or at least heard of Netflix. There is content for everybody: wildlife documentaries, sci-fi movies, rom coms, action-thrillers, you name it – it’s there.
That’s why their customer segment can be classified as a “ mass market ” as the base is just so diverse.
All people require is a computer, TV, internet, and/or smartphone and they’re good to go. For most developed markets, that covers just about everybody.
Whether on the train to work, sitting in the car (if you’re not driving!), or relaxing at home in front of the TV, you can consume their online, on-demand video streaming service.
They also have a huge library of content for consumers to choose from, ensuring that people keep coming back, as well as increasing their mass-market appeal.
They also produce high-quality, original content to differentiate themselves from their competitors.
Most people access Netflix either through their website or mobile/TV App . Another popular channel that you may have picked up on is their affiliate partners .
You’ve perhaps signed up for a mobile, TV, and internet package where the provider offers Netflix as an extra to sweeten the deal, so to speak.
That would be an example of an affiliate partnership between Netflix and mobile service providers.
I doubt many consumers have had direct contact with Netflix unless it’s to resolve a subscription issue or general query. It’s very much a self-automated service – you download the app, select the program you wish to watch, and hit play.
Very simple, very effective.
Again, this doesn’t need much embellishment. Netflix generates money from the different tiers and packages put together in their subscription services.
This varies depending on the region to account for local markets, but on the whole, it’s sold at a low price point.
Originally, Netflix’s Key Resources would have been their unrivaled DVD collection combined with a cost-effective mail-order system.
Nowadays it’s undoubtedly the rights to stream online video content. Netflix has brokered deals with some of the biggest production studios worldwide.
Combined with their huge library of in-house productions , it’s more than enough to encourage customers to renew their subscriptions.
To help sustain interest in their product, Netflix understands they need to serve-up relevant content for each sub-sector of their mass audience. Therefore their machine learning algorithm selects content for consumers based on streaming habits (what they watched, at what time, etc,.) to personalize the customer experience.
This explains why over 80% of all content streamed on Netflix was cherry-picked by this algorithm, making it a Key Resource for their business model.
Also, Netflix accounts for a whopping 12.6% of global bandwidth usage . The literal capacity to stream their services must be met meaning bandwidth must also be included here.
Content procurement is arguably their biggest Key Activity. They need to find people to produce and deliver their original content, including actors, studios, writers, etc. as well as secure the licensing and streaming rights from 3rd party producers such as Sony, Warner Bros, and Disney.
Finally, they need a fast, easy-to-use application to host their online streaming service. This needs to be available for both TV and mobile devices if they are to deliver their “on-demand” value proposition.
K ey Partners
Seeing as Netflix’s entire business model is largely based around streaming 3rd party content, key partnerships need to be built with production studios . No content, no Netflix!
Also, as we touched upon earlier Netflix is one of the largest consumers of bandwidth worldwide. If the speed and delivery of their streaming service are to be continued then deals will also need to be made with internet service providers (ISPs).
Netflix’s biggest expenditures come from both their in-house content procurement and 3rd party licensing agreements . The high-quality standard of video streamed on Netflix is only possible due to the speed and performance of its online platform and application , which has additional costs of staff, software, etc.
To show you just how flexible the business model canvas can be, I wanted to throw in a slightly leftfield example. Vintae is a Spanish wine producer who, after a detailed analysis of the business model canvas, was able to innovate and disrupt one of the world’s most competitive industries.
As some of you may know, the wine industry is extremely competitive. It’s also steeped in history and tradition , making it very challenging for newcomers to grab market share, let alone think about year-on-year growth and revenue.
However, CEO “Richi” Arambarri looked at the traditional “ bodega ” business model and saw a chink in its armor.
A “small” innovation in the business canvas model helped them to become one of the region’s most important winery groups, with over 10 installations and a presence across all regional denominations (Rioja, Priorat, Rias Baixas, etc.) with year on year growth of 30% – practically unheard of in such a competitive industry.
So how did Vintae analyze the business model canvas to find a niche in their market?
To answer that question, we must first look at the traditional winery business model .
As you can see, the wine industry has historically been patrimonial. Vineyards and estates are passed down through generations with the winery responsible for all phases of production, clarification, and distribution.
The traditional winery business canvas model suggests you must be the owner of the winery/vineyard where the wine is “manufactured”, meaning physical assets are a key resource of the business model.
So, if you wanted to start producing a Rioja, for example, you’d have to set up your vineyard in the region.
This is monumentally expensive as you need to:
- Purchase the land
- Plant a vineyard
- Absorb set-up and installation costs
- Deal with maintenance costs
It’s here where Vintae saw their opportunity.
What if we move vineyard ownership across the business model canvas from key resources to key partners ?
By leasing the equipment and space of large wineries (of which there was plenty), they could still produce their wine but reduce the cost and exposure associated with land purchase, crushing equipment, huge storage tanks, vineyard maintenance, and their bottling line.
This enabled them to focus on their sales, marketing, and distribution channels to create a better brand experience for their customers.
Also, it afforded them more flexibility when creating new wines as they were no longer confined to the limitations of grapes grown on their vineyard.
The lightness of this new business model eliminates maintenance overheads, channels energy into personalizing the customer experience, and allows for unprecedented levels of growth in one of the world’s most competitive industries.
Business Model Canvas Software
Although I did mention starting with a large whiteboard, sticky notes, and a pack of colorful sharpies there are several options in which you can digitize the business canvas model production process.
While I still believe the aforementioned process is extremely valuable (it gets your entire team’s input in a single hour-long session) you may decide it more viable for each member of management to pool their ideas digitally before sharing with the rest of the group.
If that’s the case, then take a look at some of the following software tools for creating your business model canvas.
Created by the founders of the business model canvas Alex Osterwalder and Yves Pigneur , Strategyzer offers a range of business model canvas templates for you to get started with.
If you opt for the paid model (there is a 30-day free trial period) they offer a series of various classes that teach you how to build and test different value propositions and business models.
A real-time built-in cost estimator analyzes the financial viability of some of your business ideas, identifying alternative areas you may wish to explore with your model.
All-in-all, it’s a great resource to play around with and test some of your business ideas, with the option to dive into further detail if you see fit.
Canvanizer is a free, easy-to-use web tool that allows you to share links between team members who are brainstorming ideas for a business model canvas, but working remotely.
Like Strategyzer, there are several business model canvas templates provided to help you get started with your analysis. The strength of this platform is its accessibility. Much like a Google Doc., several people can brainstorm on the same canvas simultaneously with changes being synchronized automatically.
A ThePowerMBA alumni, impressed by the simplicity and effectiveness of the tool, went ahead and created the free application Business Model Canvas Tool .
It’s an incredibly intuitive, and easy-to-use tool that allows you to create templates simply by clicking the + button in each building block.
Each business model canvas created can be downloaded and shared as a pdf. with the rest of the team.
If, after going through our 9-step guide on how to use the Business Model Canvas you’d like to learn more about different business model analysis tools , take a look at our alternative MBA business program .
As you’ll see, the course gives students a 360-degree view of business and management practices – such as engines of growth, segmentation and targeting, and value propositions.
I highly recommend you go check it out.
Regardless, I’d love to hear what you thought about this guide. Was it helpful? Would you like to see additional business cases analyzed from your industry?
Let us know in the comments below.
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HDD & More from Me
The 20 Minute Business Plan: Business Model Canvas Made Easy
Table of Contents
What’s the Business Model Canvas?
How do you get started, why use the business model canvas, when should you use the business model canvas, how do you use the canvas to facilitate alignment and focus, step 1 (of 10): customer segments, step 2 (of 10): value propositions, step 3 (of 10): channels, step 4 (of 10): customer relationships, step 5 (of 10): revenue streams, step 6 (of 10): key activities, step 7 (of 10): key resources, step 8 (of 10): key partnerships, step 9 (of 10): cost structure, step 10 (of 10): applications, analysis & next steps, example a: enable quiz (startup), example b: hvac in a hurry (enterprise), using the google doc’s/powerpoint template.
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If you’re already familiar, you can skip to the next section, ‘ How do I get started ?’.
The Business Model Canvas (BMC) gives you the structure of a business plan without the overhead and the improvisation of a ‘back of the napkin’ sketch without the fuzziness (and coffee rings).
Together these elements provide a pretty coherent view of a business’ key drivers–
- Customer Segments : Who are the customers? What do they think? See? Feel? Do?
- Value Propositions : What’s compelling about the proposition? Why do customers buy, use?
- Channels : How are these propositions promoted, sold and delivered? Why? Is it working?
- Customer Relationships : How do you interact with the customer through their ‘journey’?
- Revenue Streams : How does the business earn revenue from the value propositions?
- Key Activities : What uniquely strategic things does the business do to deliver its proposition?
- Key Resources : What unique strategic assets must the business have to compete?
- Key Partnerships : What can the company not do so it can focus on its Key Activities?
- Cost Structure : What are the business’ major cost drivers? How are they linked to revenue?
The Canvas is popular with entrepreneurs and intrapreneurs for business model innovation. Fundamentally, it delivers three things:
- Focus : Stripping away the 40+ pages of ‘stuff’ in a traditional business plan, I’ve seen users of the BMC improve their clarify and focus on what’s driving the business (and what’s non-core and getting in the way).
- Flexibility : It’s easier to facilitate alignment by tweaking the model and trying things (from a planning perspective) with something that’s sitting on a single page.
- Transparency: Your team will have a much easier time understanding your business model and be much more likely to buy in to your vision when it’s laid out on a single page.
The first time you engage with the canvas, I recommend printing it out or projecting it on a whiteboard and going to town (see below for a PDF). However, if you’re ready to put together something a little more formal (for distribution, presentation, etc.) here’s a Google App’s template you can copy or download as MSFT PowerPoint:
*Omnigraffle a popular diagramming program for the Mac. It has a fairly easy to use layering environment which you may find handy as you want to tinker with and produce different views of the canvas. You can try Omnigraffle for free (the basic paid version is $99).
The short answer is this: because it’s simple yet focused and that means more of your audience is likely to pay attention to it. Also, it’s highly amenable to change on the margins.
This matters a lot- more than most people think. A company that wants to innovate has to be ready to be wrong . A good VC in early stage investments succeeds with a prevalence of something like a 1/10. If you think you’re doing a lot better than that with substantial new innovation investments (a startup or a new line of business inside an enterprise) you’re probably throwing good money after bad.
Transparency, simplicity, and focus are great facilitators of the ‘creative destruction’ a good innovation program needs, and the Canvas does a nice job of delivering that across lines of business. For a large corporation with multiple lines of business at various levels of maturity, I actually prefer the Corporate Innovation Canvas as a starting point. However, from there, the Business Model Canvas does an excellent job of bringing clarity to the questions of how, for example, a given line of business creates focus and then implements it in an innovation-friendly way with, for example, ‘objectives and key results’ OKR’s . It’s a central element in the ‘innovation stack’ where an enterprise is able to go from priority innovation areas (with the Corporate Innovation Canvas) to testable business model designs (with the Business Model Canvas) to product charters (with an agile team charter ) to individual learning pathways to cultivate the talent they need to execute.
Even more important than the top down cascading of objectives with testable results and KPI’s is the improvement in the feedback in outcomes that helps the overall innovation program learn and adapt quickly. With layer appropriate innovation metrics, it’s much easier for the achievements of individuals to cohere (or not) to the job of teams and in turn from there to lines of business back up to corporate objectives. This helps both help the company’s talent understand where they might benefit from more practice and learning as well as what constitutes success in their individual roles and collaborations.
Anytime you want to have a focused discussion about what matters to a given line of business, the Business Model Canvas is a good place to start. The Canvas has received a lot of attention as a tool for startup entrepreneurship. While this may be one of the ‘sexier’ and more ostensibly simple applications of the Canvas, I actually think it’s one of the least compelling. For a startup, the only thing that matters is product/market fit, which the Canvas represents as a set of relationships between Customer Segments and Value Propositions. The Canvas doesn’t do a bad job of describing this, but it’s kind of overkill- the whole left side of the Canvas which describes the delivery infrastructure is mostly irrelevant for startups that are still finding product market fit, since all that’s provisional about where (and whether) they arrive at product/market fit.
Where the Canvas really shines is describing an existing line of business to answer questions like: a) What does product/market fit mean for this business? b) Where have we focused our company building and is it still relevant to ‘a’? c) What are our key revenue, cost, and profit drivers, and how do we improve those?
Now we’re taking! Whether you’re an ‘intrapreneur’ exploring a new extension to the business or a ‘digital transformation’/IT consultant trying to facilitate a discussion about what ‘strategic IT’ means and how you’ll know if you achieve it, the Canvas is a quick and productive place to anchor such a discussion.
First and foremost, I’d try it out for yourself. Fill out the elements the business you’re working on and then ask yourself ‘Does this make sense?’ ‘What are the most important linkages and components of the model?’
From there, you may just want to use the Canvas you sketch to facilitate alignment on some other topic. However, if you’re working with a team on a new venture or with a client on a new project, you may then want to take it from the top and facilitate a workshop where you facilitate a fresh take on the Canvas, levering your experience thinking through it once. The link below will take you to a related curriculum item that has workshop slides, prep. items, and agenda.
LINK TO WORKSHOP PAGE
Otherwise, the next sections (10 steps) offer a tutorial on how to think through a business model design with the Canvas. The closing sections offer notes on how to use the Google Doc’s/PowerPoint and Omnigraffle templates.
Output : a list of Personas, organized by Customer Segment if you have more than one segment. I recommend trying to prioritize them- Who would you pitch first if you could only pitch one? Who next? And so forth…
Notes : If you’re spending a lot of time on this first item, that’s OK (and it’s probably good). The Canvas is a tool, not a strategy and not all the nine blocks are equal. The pairing of Customer Segments and Value Propositions is really the ‘independent variable’ that should be driving everything else in your business model. When I use the Canvas in my Venture Design classes, we usually spend all of the first session (plus time for field research) on Customer Segments and Value Propositions.
For example, at Leonid, an enterprise software company I founded, we thought our largest customers worked with us because of the cost savings we offered and our knowledge about best practices. It turned out that was mostly wrong- reducing their time and risk to get new services to market was the most important. It’s not that the other things weren’t important, but they weren’t the top Value Proposition. That made a difference on how we sold the product and how we focused on operationalizing it for customers.
This mapping says ‘We have 3 personas. Persona 1 cares about VP 1 & 2. Persona 2 cares about VP 2; Persona 3 cares about VP3. (One segment only so segments not noted)’.
Output : a prioritized list of Value Propositions and linkages from each Personas to the VP’s relevant to them.
Notes: Again, this pairing is the key driver for most business models and if you want more on how to describe and discovery what to put in this part of the canvas, I recommend this: Tutorial- Personas .
Maybe you feel like you’re in good shape on understanding the customer’s world but you don’t have any validation on whether the Value Propositions are clicking because this is a new venture? If you’re not sure, that’s OK and good for you for acknowledging the uncertainty! It’s the responsible thing to do. The key is to write down those assumptions, prioritize them, and figure out the quickest and cheapest way to prove or disprove them. That’s what Lean/Startup is about and there are resources here to help you with that, if you’d like- Tutorial: Lean Startup .
Channels includes entities you use to communicate your proposition to your segments, as well as entities through which you sell product and later service customers (see AIDAOR journey below). For example, if you sell bulbs for light houses and there’s a website all light house attendants purchase equipment, that site is a sales Channel. If you use Google AdWords, that’s a Channel, too (for getting attention). If you use a third party company to service the bulbs when they break, that’s also a Channel.
Output : a list of important Channels, linked to Personas or Segments if they differ substantially. Make notes on what steps are relevant for each- promotion, sales, service, etc. See Note this section for more structure on this.
Notes: Channels and the next item, Customer Relationships, define your interface with the Customer. It’s important to think all the way through the customer ‘journey’ in specific terms. For most businesses, the way they get a customer’s attention is different than the way they onboard them or support them over the long term. For this, I recommend the AIDA.OR framework (attention-interest-desire-action-onboarding-retention) and storyboarding your way through it. Here’s a post explaining all that- Storyboarding AIDA(OR) . If you don’t want to do the storyboards, I recommend at least making notes about your customer journey through the AIDA(OR) steps.
Another consideration is whether your channels will give you enough visibility into the user, including, for example, a way to follow up with users. Not sure? Document your assumptions Lean Startup style and figure out how you’ll quickly prove or disprove them.
Output : a description of Customer Relationships, with notes if they differ across Customers (between Segments or among Personas within a Segment) or across the customer journey.
Notes: If you’re a startup, be sure to document and review critical assumptions here. Also, the focal items are in a kind of specific order- you should validate your Segments and their relationship to the Propositions above all else. If this means you provide personal support in the early days (a ‘concierge test’ in Lean Startup terms) to do discovery and validation of Segments and Propositions, that’s OK. You can subsequently test the Customer Relationship models. (Here’s a post on using consulting as a concierge vehicle in B2B if you want more detail: Consulting as B2B Concierge Vehicle ).
Notes : If you have a startup or are re-engineering the business, this is a time to look at where you’re driving revenue and whether it aligns with the rest of your focal points. Are you charging on value? Perceived value? They say everyone loves their banker; hates their lawyer. Why is that? Is there an actionable analog in your business?
For a product-driven business, this probably includes ongoing learning about users and new techniques to build better product. If you’re focused on doing a bunch of things for a particular set of customers (ex: comprehensive IT for law offices), this probably includes maintaining superior expertise on the segment(s) and creating or acquiring products and services that are a good fit, whatever that entails. For an infrastructure business (ex: electric utility), it probably includes keeping the infrastructure working reliably and making it more efficient.
Outputs : a list of Key Activities linked to your business’ Value Propositions.
Notes : One question this analysis should raise for you is whether or not certain Activities and Resources are actually core, actually focal to your business, something you’ll want to think through .
Outputs : a list of Key Resources linked to your business’ Key Activities.
Notes : Product-driven businesses have a differentiated product of some sort. Rovio, the company that makes the popular app Angry Birds, is such a company. Key Resources in product-driven businesses are typically key talent in critical areas of expertise and accumulated intellectual property related to their offering.
Scope-driven businesses create some synergy around a particular Customer Segment. For example, if you started a business that would take care of all the IT needs for law firms, that would be a scope-driven business. These businesses typically have key knowledge about their segment, a repeatable set of processes, and sometimes infrastructure, like service centers.
Infrastructure-driven businesses achieve economies of scale in a specific, highly repeatable area. Telecommunications is traditionally an infrastructure business. Retailers focused on retail, like Walgreens or Costco, are primarily infrastructure-driven businesses. The Key Resources for this type of business are, you guessed it, various types of physical or virtual infrastructure.
Let’s take a single product category: diapers. The Honest Company or another innovating around compostable or otherwise more environmentally friendly diapers would be a product-driven take on the category. Procter & Gamble which has a cradle-to-grave strategy for providing consumer products is a scope-based take; so are various baby-focused retailers. Kimberly-Clark (wood pulp) or DuPont (chemicals and polymers) are both infrastructure-based takes: diapers is just another way to sell something they produce at scale with relatively little differentiation.
If there are major cost components that don’t map to a Key Activity, I’d take a closer look at those costs.
Output : a list of Cost Structure elements with notes on their relationship to Key Activities.
Congratulations- you have a working canvas! The section below offers a few analytical ideas and suggestions for next steps.
Core Applications The most core and obvious applications of the Canvas are to ask: – Does it make sense? – Could it be better? – Does the rest of my team understand and agree? Have additional ideas? – (rinse and repeat at least quarterly)
Competitiveness The canvas does a good job of helping you figure out your business, which is a good place to start. You also want to look at the competitive environment and think about if and how you have/maintain a long term competitive advantage.
For this, I like Michael Porter’s Five Forces framework ( Wikipedia Page ; see also Chapter 2 of ‘ Starting a Tech Business ‘). Try walking through the Five Forces for your company and then bounce back to your canvas. How does it all hang together?
Next Steps Every business is a work in progress (sorry, I try to avoid saying things like that but it seemed to fit here). As you go through the canvas, you may encounter areas that give you trouble. The table below summarizes a few of the most common that I see in my work as a mentor and coach:
Want to make innovation an everyday thing?
What is Enable Quiz?
Enable Quiz is a (fictional) startup that’s building a lightweight quizzing application for companies that hire a lot of technical talent (engineers). Their take is:
For hiring managers who need to evaluate technical talent, Enable Quiz is a talent assessment system that allows for quick and easy assessment of topical understanding in key engineering topics. Unlike formal certifications or ad hoc questions, our product allows for lightweight but consistent assessments of technical talent.
Why and how would Enable Quiz use the Business Model Canvas?
They have a small team, but arriving at a clear, shared understanding of what they’re after is still important. That said, it’s important that the way they talk about this is both highly visible and amenable to change. Given that, the Canvas is a good fit.
The Business Model Canvas at Enable Quiz
This page shows Enable Quiz’s current working view of product/market fit:
What is HVAC in a Hurry?
HVAC in a Hurry is a mid-sized enterprise that services commercial HVAC (heating, ventilation, and air conditioning) systems. Their take on the business is:
For facilities managers & business owners who need their heating & cooling systems managed and repaired, HVAC in a Hurry is a full service provider that allows for easy and responsible management of a business’ HVAC systems. Unlike smaller firms, our commitment to best practices and training allows customers to worry less and realize superior total cost of ownership for their HVAC systems.
Why and how would HVAC in a Hurry use the Business Model Canvas?
HVAC in a Hurry has a working version of product/market fit. However, their industry is competitive and successful firms increasingly use technology to improve customer experience (CX) and reduce cost (overhead) in their operations. HVAC in a Hurry has a small ‘digital transformation’ team that’s working on digital applications to improve the company’s performance. This team decided to use the Canvas to ‘manage upwards’ in order to facilitate better discussions about where they should focus, how that aligns with the business as a whole, and what success definition makes sense for them.
The Business Model Canvas at HVAC in a Hurry
Here’s their current view of product/market fit:
If you’re not familiar with it, Google Doc’s is a web-based office suite, similar to MS Office. If you have a gmail account, you can access it (no guarantees- that was the case last time I checked).
First, you’ll want to link to the template file: BUSINESS MODEL CANVAS TEMPLATE IN GOOGLE DOC’S .
Once you’re accessed the file, you can make make it your own by going to the File menu and either ‘Make a copy…’, creating a copy in your own Google App’s domain or you can use the ‘Download as…’ option to download it as PowerPoint (and a few other formats).
What’s your experience with the Canvas? How have you used it? What worked? What didn’t? Please consider posting a comment!
Copyright © 2022 Alex Cowan · All rights reserved.
The Easy Guide to the Business Model Canvas
Got a new business idea, but don’t know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan? There is a one-page technique that can provide you the solution you are looking for, and that’s the business model canvas.
In this guide, you’ll have the Business Model Canvas explained, along with steps on how to create one. All business model canvas examples in the post can be edited online.
What is a Business Model Canvas
A business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page.
The Business Model Canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It’s a one-page document containing nine boxes that represent different fundamental elements of a business.
The business model canvas beats the traditional business plan that spans across several pages, by offering a much easier way to understand the different core elements of a business.
The right side of the canvas focuses on the customer or the market (external factors that are not under your control) while the left side of the canvas focuses on the business (internal factors that are mostly under your control). In the middle, you get the value propositions that represent the exchange of value between your business and your customers.
The business model canvas was originally developed by Alex Osterwalder and Yves Pigneur and introduced in their book ‘ Business Model Generation ’ as a visual framework for planning, developing and testing the business model(s) of an organization.
Why You Need a Business Model Canvas
- The BMC provides a quick overview of the business model and is devoid of the unnecessary details compared to the traditional business plan.
- The visual nature of the business model canvas makes it easier to refer to and understand by anyone.
- It’s easier to edit and it can be easily shared with employees and stakeholders.
- The business model canvas can be used by large corporations as well as startups with just a few employees.
- It clarifies how different aspects of the business are related to each other.
- You can use a BMC template to guide a brainstorming session on defining your business model effectively.
How to Make a Business Model Canvas
There are nine building blocks in the business model canvas and they are customer value proposition, customer segments, channels, customer relationships, revenue streams, key resources, key partners, key activities, and cost structure.
When filling out a Business Model Canvas, you will brainstorm and conduct research on each of these elements. The data you collect can be placed in each relevant section of the canvas. So have a business model canvas ready when you start the exercise.
What are the 9 Components of the Business Model Canvas?
- Customer Segments
- Customer Relationships
- Revenue Streams
Key Activities
Key resources, key partners.
- Cost Structure
- Value Proposition
Let’s look into what the 9 components of the BMC are in more detail.
Customer segments
These are the groups of people or companies that you are trying to target and sell your product or service to.
Segmenting your customers based on similarities such as geographical area, gender, age, behaviors, interests, etc. gives you the opportunity to better serve their needs, specifically by customizing the solution you are providing them.
After a thorough analysis of your customer segments, you can determine who you should serve and ignore. Then create customer personas for each of the selected customer segments.
There are different customer segments a business model can target and they are;
- Mass market: A business model that focuses on mass markets doesn’t group its customers into segments. Instead, it focuses on the general population or a large group of people with similar needs. For example, a product like a phone.
- Niche market: Here the focus is centered on a specific group of people with unique needs and traits. Here the value propositions, distribution channels, and customer relationships should be customized to meet their specific requirements. An example would be buyers of sports shoes.
- Segmented: Based on slightly different needs, there could be different groups within the main customer segment. Accordingly, you can create different value propositions, distribution channels, etc. to meet the different needs of these segments.
- Diversified: A diversified market segment includes customers with very different needs.
- Multi-sided markets: this includes interdependent customer segments. For example, a credit card company caters to both their credit card holders as well as merchants who accept those cards.
Use STP Model templates for segmenting your market and developing ideal marketing campaigns
Visualize, assess, and update your business model. Collaborate on brainstorming with your team on your next business model innovation.
Customer relationships
In this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company.
There are several types of customer relationships
- Personal assistance: you interact with the customer in person or by email, through phone call or other means.
- Dedicated personal assistance: you assign a dedicated customer representative to an individual customer.
- Self-service: here you maintain no relationship with the customer, but provides what the customer needs to help themselves.
- Automated services: this includes automated processes or machinery that helps customers perform services themselves.
- Communities: these include online communities where customers can help each other solve their own problems with regard to the product or service.
- Co-creation: here the company allows the customer to get involved in the designing or development of the product. For example, YouTube has given its users the opportunity to create content for its audience.
You can understand the kind of relationship your customer has with your company through a customer journey map . It will help you identify the different stages your customers go through when interacting with your company. And it will help you make sense of how to acquire, retain and grow your customers.
This block is to describe how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company.
Channels play a role in raising awareness of your product or service among customers and delivering your value propositions to them. Channels can also be used to allow customers the avenue to buy products or services and offer post-purchase support.
There are two types of channels
- Owned channels: company website, social media sites, in-house sales, etc.
- Partner channels: partner-owned websites, wholesale distribution, retail, etc.
Revenue streams
Revenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions.
A revenue stream can belong to one of the following revenue models,
- Transaction-based revenue: made from customers who make a one-time payment
- Recurring revenue: made from ongoing payments for continuing services or post-sale services
There are several ways you can generate revenue from
- Asset sales: by selling the rights of ownership for a product to a buyer
- Usage fee: by charging the customer for the use of its product or service
- Subscription fee: by charging the customer for using its product regularly and consistently
- Lending/ leasing/ renting: the customer pays to get exclusive rights to use an asset for a fixed period of time
- Licensing: customer pays to get permission to use the company’s intellectual property
- Brokerage fees: revenue generated by acting as an intermediary between two or more parties
- Advertising: by charging the customer to advertise a product, service or brand using company platforms
What are the activities/ tasks that need to be completed to fulfill your business purpose? In this section, you should list down all the key activities you need to do to make your business model work.
These key activities should focus on fulfilling its value proposition, reaching customer segments and maintaining customer relationships, and generating revenue.
There are 3 categories of key activities;
- Production: designing, manufacturing and delivering a product in significant quantities and/ or of superior quality.
- Problem-solving: finding new solutions to individual problems faced by customers.
- Platform/ network: Creating and maintaining platforms. For example, Microsoft provides a reliable operating system to support third-party software products.
This is where you list down which key resources or the main inputs you need to carry out your key activities in order to create your value proposition.
There are several types of key resources and they are
- Human (employees)
- Financial (cash, lines of credit, etc.)
- Intellectual (brand, patents, IP, copyright)
- Physical (equipment, inventory, buildings)
Key partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged in oder to reduce risks and acquire resources.
Types of partnerships are
- Strategic alliance: partnership between non-competitors
- Coopetition: strategic partnership between partners
- Joint ventures: partners developing a new business
- Buyer-supplier relationships: ensure reliable supplies
Cost structure
In this block, you identify all the costs associated with operating your business model.
You’ll need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners.
Businesses can either be cost-driven (focuses on minimizing costs whenever possible) and value-driven (focuses on providing maximum value to the customer).
Value propositions
This is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment.
A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes.
Value propositions can be either quantitative (price and speed of service) or qualitative (customer experience or design).
What Are Your Thoughts on the Business Model Canvas?
Once you have completed your business model canvas, you can share it with your organization and stakeholders and get their feedback as well. The business model canvas is a living document, therefore after completing it you need to revisit and ensure that it is relevant, updated and accurate.
What best practices do you follow when creating a business model canvas? Do share your tips with us in the comments section below.
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Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.
How to create and use a business model canvas
Reading time: about 8 min
We’ve all had those flashes of entrepreneurial inspiration. You know, that brief moment when you think, “Hey, that would make a great business.” Most of the time, that’s as far as it goes. But say you want to take it a step further. (After all, every business, from tech giants to the lemonade stand down the street, started with a similar thought!) What’s your next step?
Before you pour hours into a fifty-page business plan, you’ll want to determine if your business model is viable. This is where the business model canvas comes in.
The business model canvas is essentially a framework for trimmed down business plans—and when we say trimmed down, we mean really trimmed down. As you use the business model canvas, you’ll take the crucial elements of your business model and put them into a single-page template.
Unsure what those crucial elements are? Don’t worry—we’ll break down the whole process for you.
What is a business model canvas?
The business model canvas is a template—think of it as a framework for organizing information about a business model. Alexander Osterwalder of Strategyzer came up with the method in the mid-2000s and it has been a staple of the Lean startup methodology ever since.
At the center of the business model canvas is your value proposition: What do customers get from your product? That’s your starting point. From there, you’ll fill in the canvas with additional information about your company and your customers. The information in a business model canvas should be treated like a hypothesis: Under the conditions presented, could your business survive? It’s a quick and easy way to determine the viability of your model.
Elements of the business model canvas
As mentioned above, the business model canvas is a template. No matter who is using the template, every business model canvas will look more or less the same. And they all consist of the same nine elements:
- Value proposition
- Key partners
- Key activities
- Key resources
- Customer segments
- Customer relationships
- Cost structure
- Revenue streams
Each of these elements is represented by a box on the page and these boxes are always organized in the same way. Everything related to business infrastructure (partners, activities, and resources) falls on the left side of the page. Customer-related elements (segments, relationships, and channels) go on the right. Finance-related elements go on the bottom. In the center of the page, the value proposition ties everything together.
Layout is the easy part—it’s already been done for you. So let’s talk a little bit more about content: What do you actually include in each piece of your business model canvas?
Value proposition
What are you offering customers? What problem or pain point are you solving? How are you going to do it? Answer those questions as succinctly as possible (one sentence is best!) and there’s your value proposition.
Treat your value proposition like a guiding star: It should inform every other aspect of your business plan.
Key partners
It’s unlikely that you’ll be able to provide your product or service all your own. Whether it’s suppliers or distributors, a parent company, or other partners, someone else is going to be involved.
Think about a neighborhood lemonade stand: The kids running the stand aren’t growing their own lemons—they rely on a grocery store. Similarly, they probably get the table and pitchers from a parent. Both would be key partners.
To determine if a partner is a key partner, ask this simple question: Could the business model function without them? If things would fall apart without them, they’re a key partner.
Key activities
Activities are the actions required to actualize your value proposition.
Remember the lemonade stand from the last section? (It’s going to come up a lot.) What activities go into producing the product and bringing it to customers? Someone needs to make the lemonade, pour it, and take money from customers. These are all key activities.
To determine if an activity is “key,” ask the same question as before: Could the business model function without that action being performed?
Key resources
As you list your resources, be sure to consider more than just physical resources. You’ll likely also require human resources (employees), intellectual resources (know-how), and financial resources.
Customer segments
Who is your solution for? A lemonade stand employee doesn’t have any need for a product developed for software engineers. (At least not your average lemonade stand employee.)
Your customer segments are the people and companies who would receive value from your product. As you list your customer segments, it might be helpful to think in terms of buyer personas.
Customer relationships
Now that you’ve established who your customers are, you need to establish how you will communicate and interact with them. Will customers require support after the sale? For the best results, use a customer journey map to document the buyer’s experience. This will help you identify points of contact and track how those relationships develop.
Think about how you are first reaching potential buyers: Is it through social media? SEO? Conferences? These methods of contact are your channels. Whereas sales teams are typically responsible for building and maintaining customer relationships, channels are, for the most part, the responsibility of the marketing teams.
Cost structure
As you operate your business, you’ll have to spend money—probably more than you’d like. To maintain your key activities, resources, and partners, you will need to pay employees, cover material costs, etc. These expenses make up your cost structure.
Revenue Streams
Hopefully you’re not just spending money, though. For your business to be successful, you have to generate revenue. Your revenue streams refer to the ways in which you bring money in: How are you converting your value proposition into revenue? Perhaps you offer a subscription based service, or maybe customers pay a one time fee. Whatever model you use, be sure to list all of your revenue streams—when it comes to planning out finances, you want to be especially thorough.
How to create a business model canvas
Now you’re ready to learn how to fill out a business model canvas for yourself. Understanding each element of the business model canvas is the hardest part, and that’s behind you: All that’s left is to fill out the canvas with your specific business plan.
1. Gather stakeholders and materials
Whether you’re creating a digital or physical business model canvas, you’ll need to be able to fill in the boxes on the template. This could mean typing your info into a digital template or drawing the business model canvas on a whiteboard or paper. (You should really just stick to a digital template—it’s 2020 after all. And a digital business model canvas means more collaboration, easier sharing, and cloud-based storage!)
As you fill in the business model canvas, you’ll likely need input from marketing, sales, and other teams. Schedule a meeting with the necessary individuals and fill out the template together. It’s a quick process—this meeting should only take between thirty minutes to an hour!
2. Fill out the canvas
Do you have your blank template and representatives from necessary teams? Good. You’re ready to start filling out the canvas. Remember: Your goal is not to create an exhaustive business plan. You’re trying to clarify the essential aspects of your business model and make any adjustments you feel necessary.
Start with your value proposition and work from there. If you need a refresher on any specific element, review the list above!
3. Test your assumptions
Your filled out business model canvas is a plan, but it’s not set in stone. As your team gathers information and offers insights, you may realize certain aspects of your model need to be changed. Perhaps you’ve listed a supplier as a key partner, only to find a different supplier with more competitive pricing. Or maybe you decided that a subscription model wasn’t the best payment plan after all. The business model canvas is meant to help you identify such adjustments—don’t hesitate to change things around!
4. Adapt and maintain
The business model canvas is often thought of as a planning tool—and it is a great one!—but its uses extend beyond the planning stages. As you adapt your business model based on insights from your business model canvas, update the canvas to reflect those changes. If you make drastic adjustments, you might even want to create a whole new business model canvas.
An up-to-date business model canvas is a valuable asset to have, regardless of where you are in your business plan. Whether it’s to show stakeholders your business model to gain buy-in or to onboard new employees, the simple format of the business model canvas makes it a flexible and versatile resource.
Now it’s your turn to create a business model canvas in Lucidspark.
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How to Create a Business Model Canvas (With Template)
Do you want to create a simple business plan? Something comprehensive, flexible, and easy to scribble on a napkin? You can do that with a business model canvas.
Every business has ever-changing, diverse interests. Illustrating all of this on a single sheet of paper may sound challenging — but by using a business model canvas template, your team can focus on the key elements of your business to ensure nothing slips through the cracks.
Business model canvas explained
"Lengthy business plans often increase the risk of failure," wrote Alex Osterwalder in his 2008 book “Business Model Generation.”
The business model canvas offers a way to avoid this, providing a simplified version of a business plan. A business model canvas is a simple, visual framework that helps teams outline the most fundamental elements of a business.
As a handy business tool, teams can use a business model canvas to map the nine core areas of a business, such as customer needs, value proposition, and platforms for customer acquisition.
This article will explain the business model canvas, its benefits, and how it can help your team develop a successful high-level business strategy and actionable roadmap .
How can a business model canvas help your business?
Many teams are so overwhelmed with operational issues that they don’t have time to focus on the core business strategy .
Utilizing the business model canvas helps create a unified framework that depicts this strategy alongside an action plan that teams can follow.
But how do you know if you need a business model canvas? If you are starting a business or even toying with an idea, a BMC can create a powerful visual representation of your concept. A business model canvas can also be a handy reference for your team as they move towards successful business outcomes. Here are five more ways in which a business model canvas can help your company.
It’s simple and easy to follow
Whether you have a business idea or are managing a large enterprise, having an easy-to-follow business plan can be immensely helpful. As a precise one-page document, teams can modify specific business model canvas elements as they go along without completely redoing a 50- or 100-page document.
Focused on being actionable
Every business plan needs to be actionable. Using a business model canvas helps you accurately define your organization’s core value proposition and keep it aligned to your business strategy.
Your focus could be to achieve profitability in the first year or gain a large market share. Stay competitive by defining actionable steps for your team within the business model canvas.
Flexible and scalable as the business evolves
No business stays the same forever but evolves as it interacts with diverse market dynamics, competitors, product innovations, and changing consumer needs.
To take your idea to market, you need a tool that connects the dots between what your customers want, your business's unique offering, and the desired profitability streams.
By creating a business model canvas template, you instantly get an edge over other market players engrossed in lengthy business plan documents.
Puts the customer first
Ignoring customers sets businesses up for failure . Companies flounder if they direct their energies solely towards making a great product or service. With a business model canvas template, your focus stays on the ultimate end-users of your product.
Having a business blueprint will force team members to think about what customers want, the primary issues they need help with, and how your product or service can do that.
Helps get team and executive buy-in
23% of businesses fail without the right team on their side. Every company needs team members with a diverse mix of skills, experiences, and talents.
Companies require a solid business blueprint for hiring team members or bringing in investors. Having a business model canvas can help get everyone on board with your organization’s core vision. Potential employees and investors can visualize how the different organizational parts interact and see how they can become an integral part of the company.
Promotes focus on the unique value proposition of your business
19% of companies fail due to being outperformed by their competitors. If there's no difference between your product and one from another firm, why should customers come to your company? Every business needs a clear value proposition that helps them stand out — that's where a business model canvas template comes in.
When you look at the nine core elements of a business model canvas (explained below), you'll quickly notice some factors are controllable to a certain extent, while others are more fractious.
Your company's core value proposition sits right in the middle. It acts as the central pillar around which all other elements exist, defining the fundamental nature of the business.
What goes into each segment?
To fill out a business model canvas, you should know what goes into each of the nine fundamental segments.
Have a business model canvas template ready before you and your team start brainstorming on each of these elements (you'll find one below) and then add the research and data into the relevant sections.
Customer segments In this fundamental business area, teams identify the core individuals they will help with their product or service. To do this, they create two to three buyer personas — potential customers that a business seeks to serve.
A buyer persona is a simple but detailed description of a prospective business customer. It assists with capturing the customer’s real-life problems and motivations, helping the business deliver what they want.
Value proposition The value proposition is the ultimate value that a customer will get from your product or service. It seeks to answer the question, “Why will a customer buy?” Here are a few popular value propositions for any organization:
- Customization ability
- Unique product design
- Innovation in product or service
- Exceptional service or product status
- Affordable pricing and clear pricing model definition
Channels In a business model canvas, channels are the platforms through which a company sells its product or service to end-users. To identify the best channel for your business, look at how you plan to connect with your customers.
A few possible channels can be:
- A self-owned retail store
- Direct sales staff
- Affiliate marketing platforms
- Google Adsense
A business can either own its channels or partner with other companies that have their own channels.
Customer relationships Customer relationships in a business model canvas define how the company will obtain, retain, and increase new customers. Let's take a look at how customer relationships are built:
- Identify how to obtain customers and from which platforms (e.g., Google, Facebook ads)
- Gain clarity on how to retain existing customers using different techniques (e.g., exceptional customer service)
- Discover how to increase the customer base of the business (e.g., sending text or email notifications to prompt website visits)
Revenue streams Revenue streams help the business owner decide how to generate revenue and achieve their predefined organizational goals . Key decisions with revenue streams include:
- Choosing from a one-time payment model or monthly subscriptions
- Keeping a free plus paid model or a wholly paid product or service with a free trial
- How payment from customers will be received — website payments, PayPal, or in-store
Key resources Key resources in your business model canvas represent the assets that are vital to your company’s operation. Business assets can include anything from the below categories:
- Physical assets , including machines, buildings, IT hardware, and vehicles
- Intellectual assets , including patents, copyrights, partnerships, brands, and employee skills
- Human assets , including talented employees in knowledge industries such as IT, law, and content marketing
- Financial assets , like cash balances in the bank or lines of credit
Key activities Want to make your business canvas model work? Make sure to list the key activities that will help expand the business's core value proposition. Key activities can come from any of the below categories:
- Production: How you will deliver your end product to the customers. You may need to order more stock or upgrade materials
- Platform: For example, the software used to sell your product, which may require upgrades or maintenance
- Problem-solving: For example, designing innovative solutions for issues that your customers face
Key partners Every business has some non-core activities that should preferably be outsourced. Key partners are the companies or individuals that complete these non-core activities.
Take a company like Facebook, for example — its key activity is to upgrade and maintain its platform. It doesn't create its own ads, so it also needs to strike deals with companies that wish to advertise on its platform.
Similarly, it doesn’t create its content — the users do. The primary reasons for choosing key partners can be:
- Achieving economies of scale
- Mitigating risk and unpredictability in business
- Acquiring resources and advertisements for its business (e.g., ads for Facebook)
Cost structure Once the key activities are outlined on the business model canvas, it's time to assign cost structures. Be clear and precise with the estimated business costs of the planned activities to ensure you reach your profitability goal.
Business model canvas example and template
- Customer segments: Facebook's customers can be divided into two distinct categories — advertisers and platform users
- Value proposition: The primary reasons platform users come to Facebook. Users feel connected to friends and families, while companies get more leads through advertising on the platform
- Channels: The website where all data is stored
- Customer relationships: Facebook incentivizes users to stay on the platform through notifications and new features, leading more companies to advertise on it
- Revenue streams: Facebook earns money through advertising, while companies gain new customers from Facebook ads
- Key resources: Facebook's key resources are its platforms — Facebook.com, the Messenger application, and Facebook Ads Manager for advertisers
- Key activities: Maintaining the website and its infrastructure are two of Facebook’s key strategic activities
- Key partnerships: Facebook's key partners are its users and advertisers
- Cost structures: Major costs incurred by Facebook include managing the software, backend engineering operations, product development, regular operations, and staff salaries
How to create a business model canvas (with template)
Ready to create your business model canvas? Before you begin, take some time to brainstorm answers to these questions related to the nine core fundamental areas of the canvas. Here's a simple business model canvas template exercise that can help your team get started.
- Customer segments: Can you identify your potential customers?
- Channels: Once the product or service is ready, how will customers discover it?
- Key partnerships: Can any non-core business activities be outsourced?
- Customer relationships: How will your business generate leads and retain and increase your customer base?
- Cost structures: Can the business classify its main costs and expenses into fixed and variable? Is there a way to align costs with the core value proposition and planned revenues?
- Revenue streams: Has the business decided on a profit margin? How will it make money?
- Key resources: Which core resources are critical for the business to succeed?
- Value proposition: Why will customers choose your business? Does the company satisfy any particular need with its product or service?
- Key activities: Are there any activities that help your business deliver its unique value proposition to customers?
Do I need a lean model canvas?
If your business is still an idea or in its infancy, choosing a lean model canvas makes more sense.
Inspired by the business model canvas, the lean model canvas was created by Ash Maurya . It is a one-page business plan template that distills the lean startup methodology into the original business model canvas.
Lean model canvas assimilates multiple essential data points to develop a simpler, start-up optimized version of a business model canvas. It adds four more building blocks to the business model canvas, namely:
- Problem: Identify the problem faced by the customer and focus on solving it
- Solution: Start with a minimum viable product that helps solve the customer problem effectively
- Unfair advantage: List the barriers to entry in a specific sector and your company’s competitive advantages
- Key metrics: Focus on one goal at one time to ensure you’re doing a good job
Lean model canvas drops four elements from the original business model canvas — key partners, key activities, key resources, and customer relationships.
While the original illustrates a more comprehensive business approach, the lean model canvas has a sharper customer orientation. Many start-ups prefer the lean model canvas to a traditional business plan for building an actionable roadmap.
The lean model canvas is a great fit for younger companies or those working with a tight time frame or budget to market with a more targeted problem resolution approach.
Why you should use Wrike to build a business model canvas
The business model canvas’ nine building blocks clearly illustrate the core business areas and their interrelationships. Whether you're trying to figure out the model for a company with three employees or 50,000, a business model canvas can be very useful.
Begin by mapping out the most crucial information about your business, then link the blocks to ensure every value proposition is linked to a revenue stream and a specific customer segment.
Using Wrike to build your business model canvas template, you can iterate faster, communicate with ease, and enable organization-wide success . With a centralized hub, your teams can configure custom dashboards easily and produce better quality work using premade templates . Implement what you've learned about the business model canvas by trying out a free two-week trial of Wrike today.
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How To Use The Business Model Canvas – A Step by Step Guide
This is a complete guide on how to use the Business Model Canvas. I have also included some downloads for high-quality pdf versions of the Business Model Canvas, the popular canvas created by Osterwalder and Pigneur .
Table of Contents
What Is A Business Model Canvas?
A business model contains nine separate components. With the result that the nine parts together combine to create value. Business modelling now is one critical part of assessing a digital strategy.
A model is easy to understand and analyze. Moreover, it provides a common framework that managers can use to develop new models. Most companies need to be more innovative. As a result, modelling is a creative way to explore new business opportunities.
Today there is a larger variety of how companies can make money. Much is due to new technologies. As an example the Blockchain.
How To Map A Business Model
To develop a visual map of a business model you put the nine blocks together. Redesign the blocks and you create new forms of value. A mistake often made is to ignore the customer in the design. Increasingly with services taking centre stage, business modelling defines the customer experience.
In comparison to other methods, the visual mapping process is a useful team process. Besides exploring new opportunities, it creates a shared understanding between team members.
Why Use The Business Model Canvas?
The Business Model Canvas is popular with entrepreneurs and intrapreneurs for business model innovation. Fundamentally, it delivers three things:
- Focus : It focuses on what’s important the fundamental business logic – what I mean does it all fit together. It quickly clarifies and demonstrates whether the pieces fit together to make a business worth investment.
- Flexibility : Often I find that the original ideas get tweaked as the Business Model develops. This is particularly true when working in organizations and across different skill sets.
- Transparency : Team can refer to it easily. It is an ongoing tool that facilitates discussion, debate and also requires further research. Further research can be around financials, segments, and partners. Often, once the business model is created there needs to be some initial validation.
DOWNLOAD FREE HIGH-QUALITY PRINTABLE PDF’s
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Strengths And Weaknesses Of The Business Model Canvas
- Focus on the problem-solution fit.
- Defines the main business components and their relationships.
- Develops clarity of thought for business logic.
- Tool for facilitating discussion, debate and further research.
- Easy to understand.
- The Business Model Canvas is NOT a strategy. You still need a strategy .
- Doesn’t take into account the competitive arena.
- Often when used is based on assumptions rather than facts.
- Doesn’t take into account sustainability – missing the broader view of economy, society and environment.
- Doesn’t show the different stakeholders involved in the business model.
- Lacks components that are available
- If you’re a startup then you might want to use the Lean Business Model Canvas instead.
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Business Model Canvas Sections
The following elements provide an overview of the main business drivers:
- Customer Segments : Who are the customers? What do they think? See? Feel? Do?
- Value Propositions : What’s compelling about the proposition? Why do customers buy, use?
- Channels : How are these propositions promoted, sold and delivered? Why? Is it working?
- Customer Relationships : How do you interact with the customer through their journey?
- Revenue Streams : How does the business earn revenue from the value propositions?
- Key Activities : What uniquely strategic things does the business do to deliver its proposition?
- Key Resources : What unique strategic assets must the business have to compete?
- Key Partnerships : What can the company not do so it can focus on its Key Activities?
- Cost Structure : What are the business major cost drivers? How are they linked to revenue?
STEP BY STEP GUIDE
What’s the Business Model Canvas? How do I get started? Different ways of using the business model canvas? Step 1 (of 10): Customer Segments Step 2 (of 10): Value Propositions Step 3 (of 10): Channels Step 4 (of 10): Customer Relationships Step 5 (of 10): Revenue Streams Step 6 (of 10): Key Activities Step 7 (of 10): Key Resources Step 8 (of 10): Key Partnerships Step 9 (of 10): Cost Structure Step 10 (of 10): Applications, Review & Next Steps
The Business Model Canvas (BMC)
The Business Model Canvas (BMC) gives you a structured way to design a business. The goal is to create a business model that is unique and compete in the market. It is an ideal way to check the business logic of why customers will buy your product or service. It also provides a way to understand how all the different elements come together to deliver your products or services, the cost structure, value proposition, customer segments and profits.
How To Get Started?
Identify the overarching purpose of the business
I suggest that to start with you print out several copies of the business model canvas (see above for high-quality PDF print versions). Fill out the elements and start to get a feel with how the different elements sit together and whether they make sense.
Keep copies of them and also mark on each the version (1.0, 1.1…) that way you can refer back to ideas and also see how your thoughts have progressed.
Different Ways Of Using The Business Model Canvas?
The business model canvas can be used to not only develop your business model but also analyze potential competitors. How do you know if your business model is unique and difficult to replicate if you don’t know the market?
I’m not suggesting mapping every competitor. Quite often you find many have similar, if not the same, business model, which makes it hard to differentiate them.
Remember that that sometimes different cost structures can make a huge difference in a market – Aldi vs Sainsbury’s. Needless to say, that using a business model canvas on a known company can help you build out your own ideas to compete.
Step 1 (of 10): Customer Segments
This sounds obvious, but when you get into the detail many people overly simply the customer and don’t create a clear picture of who they are. As a result, the tendency is to make generalizations.
1. Customers Segments
Understanding who you are aiming your business at is critical to success. As an example, HR directors – they are an identifiable group of people that use the label HR Directors to identify themselves and their role. You can find HR directors on Linkedin for instance as individuals and through Linkedin Groups.
2. Segment Composition
A Segment is the maco level of a potential customer base. Understanding the composition of the customers – how they vary, how many are there in different sub-segments helps you to determine the market potential and viability.
The traditional way of looking and understanding these sub-segments is to use Marketing Personas. This is where you should be able to visualize the people that are actually going to buy your product and how. It is the detail and depth of understanding here that counts. We are talking here about observations not just theory or statistics cleaned from a marketing report.
You need to understand what they think, see, feel, and do in your product area. Be sure to list both buyers and users of your product (many Personas will be both).
3. Problems, Needs, Behaviours & Current Alternatives
Many customers have hidden needs. In other words when you watch and observe them trying to do things they have to do workarounds or take a long route to accomplish their task. Understanding what customers are trying to achieve and observing how they achieve things provides valuable insights into why and how you can help them
Make sure that you identify their existing needs/problems and identify the alternatives that they currently use. If you’re not sure, go out and observe, talk to some people. You’ll want to be able to clearly link your Value Propositions back to these in the next section.
You should as a result of completing this section be able to clearly define your segment and have a number of personas for the different sub-segments that describe the profile of your customer, their behaviours, their problems, and current workarounds or alternatives
Step 2 (of 10): Value Propositions
The Problems or Needs that you identified earlier and used to build your Marketing Personas now come into play.
The Value Proposition Canvas describes the details of how the value proposition and customer segments interact.
In its simplest terms, a value proposition is a positioning statement that explains what benefits you provide for who and how you do it uniquely well. It describes your target customer, the pain point you solve, and why you’re distinctly better than the alternatives.
What is Value?
It means seem a bit odd asking this but there are many different dimensions to value? Equally, there are often hidden barriers people do not see the value the same as you
What is important at this stage to challenge yourself your Value Propositions and why does your customer might prefer them to their Current Alternatives?
Quite often you will have multiple value propositions. They are not the same benefits. Remember that value propositions are the sum of benefits you offer. A value proposition clearly aims at defining how it solves a problem and presents a new way of doing it compared to existing solutions.
Use a whiteboard or index cars for each value proposition. What things can you do that actually will make the biggest difference to the customer and be unique and better than the competition?
You should now have a clear link between value propositions and your personas. The value propositions should clearly tie in with the customer and why they will buy.
Step 3 (of 10): Channels
Channels include the methods that you are going to use to reach your customers. Are there clear customer communities, what labels or job titles refer to your customers, what interests groups do they have that can help you identify them?
Being able to reach your customers through marketing channels is crucial to being able to make them aware of your product and test your value propositions. Some typical channels are paid search (e.g. Google Adwords), social media ads (e.g. Facebook ads, Instagram ads), SEO (long term), PR…
Outcome For each Persona or Segments, if they differ substantially. Make a clear note of potential channels that can be used to reach to the customer. In the marketing growth blueprint, I cover in more detail how to design and develop a clear marketing strategy for your business model.
Step 4 (of 10): Customer Relationships
Some questions to help guide you on this block of the business model canvas:
- How do you develop a customer relationship?
- How will the customer interact with you through the sales and product lifecycle?
- What is the customer journey?
- What are the most critical elements of the customer journey?
- How much do you use automation and what do you make personal?
- Do you use outbound reach and calls?
The value proposition should link closely to the level of service and touchpoints you use to interact with customers?
The costs associated with how you deliver your communications, service the customer will be reflected in costs.
Use storyboard and customer journey maps to map the current customer journey. Then map how your value proposition will be delivered and make a note of the critical points in the journey and the overall lifecycle.
Outcome A description of the type of customer relationship for each segment/persona.
Step 5 (of 10): Revenue Streams
The most important thing is to map the number of each segment and potential revenue. Don’t overestimate this. Remember you have to often out early adopters vs. the mainstream of regular buyers who are often harder to convert. Try and be realistic – use a spreadsheet and calculate your variables.
Outcome A list of Revenue Streams, linked (mutually) to Personas (or Segments if the mappings are the same within a set of Personas) and Value Propositions.
Step 6 (of 10): Key Activities
These are the essential things the business needs to do to deliver on its propositions and make the rest of the business work.
For a product-driven business, this will involve learning about users and new techniques to build and test new products. Rarely does the first design go straight through to production? In particular, with products, you need to consider how much time is involved between new design sand prototypes to test. There are lots of new ways to get prototypes developed fast and therefore speed up the innovation process.
If you’re focused on doing a set of services for customers, then include maintaining superior expertise on the segment(s) and creating or acquiring products and services that are a good fit, whatever that entails.
A list of Key Activities linked to your business Value Propositions.
Step 7 (of 10): Key Resources
Key resources are the strategic assets you need in place, and you need in place to a greater or more targeted degree than your competitors. The Business Model Canvas proposes that there are three core business types: product, scope, and infrastructure. These tend to have similar types of Key Resources.
A list of Key Resources linked to your business’s Key Activities.
Step 8 (of 10): Key Partnerships
At this point, hopefully, the Canvas has helped you sharpen and articulate your business’s focal points. What Activities and Resources are important but not aligned with what’s a unique strategy for you? What’s outside of your business type? Could partners do some of those? Why? Which?
I recommend mapping Key Partners to Key Activities. If an activity is key, it’s still part of your business model. This is a way to denote which specific Partners are handling various Key Activities for you.
The left of the business model has blocks that logically support and fit together. Understanding costs associated with yoru activities is a key part of your business modelling. A list of Key Partnerships with notes on their relationship to Key Activities.
Step 9 (of 10): Cost Structure
You’ve worked to understand how your Key Activities drive your propositions and hence your revenue. The key questions to ask at this stage of the business model canvas are:
- How do they drive costs?
- Are those costs well aligned with the key Value Propositions?
- Are the costs more fixed or variable as you test different business models?
- Are they more linear with your scaling or more fixed?
You’ll want to have these in mind as you tweak your model.
If you’re a startup then knowing your costs and predicting a run rate for costs is critical. The business model canvas helps to focus on the resources and activities that are associated with your business design.
As an outcome, you should have a list of Cost Structure elements with notes on their relationship to Key Activities.
Step 10 (of 10): Applications, Review & Next Steps
Core applications.
The most core and obvious applications of the Canvas are to ask: – Does it make sense? – Could it be better? – Does the rest of my team understand and agree? Have additional ideas? – Rinse and repeat at least quarterly
Competitiveness
The business model canvas does a good job of helping you figure out your business, which is a good place to start. You also want to look at the competitive environment and think about whether you how you have and can maintain a long term competitive advantage.
Business Model Canvas Examples
Every business is a work in progress. As you go through the canvas, you may encounter areas that give you trouble. Reach out if you need any help with the business model canvas.
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More Business Model Canvas Resources
- Customer Journey Map Canvas
- Value Proposition Canvas
- Buyer Persona Canvas
- Customer Persona Canvas
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How to make a great Business Model Canvas
August 2, 2021
Most of us are familiar with business models, which are a company’s plan for making a profit. A typical business model identifies the products or services that the company intends to sell, the target market, and any possible expenses.
Since a business model is so high-level, it can be hard to visualize how it might work in practice. It can be even harder to connect an organization’s everyday roles, responsibilities, projects, and functions to the overall business model. That’s where the business model canvas comes in.
This blog will introduce you to the business model canvas, a strategic tool that allows you to visually develop and display your business model. By the end of the blog, you’ll have a deeper understanding of what makes a business model canvas so important and how to create your own.
Evan Ramzipoor
Contributing Writer at Miro
Evan Roxanna Ramzipoor is a writer based in California. She is the author of The Ventriloquists, and her writing has been featured in McSweeney’s, Salon, and others.
What is a Business Model Canvas?
The business model canvas was first developed by Alexander Osterwalder in his book Business Model Ontology . Osterwalder broke down the segments that form a basic business model into a one-page canvas.
A business model canvas is a strategic tool that enables you to look systematically at your business model, understand how it works, and keep everyone in your organization aligned. Think of it as a North Star that outlines everything that makes your business tick: key partners and activities, your value proposition, customer relationships and segments, resources, distribution channels, cost structures, and revenue streams.
The Business Model Canvas Explained
Whether you’re at a new business or an established one, a well-thought-out business model is crucial for success. Business models help developing businesses attract investors, recruit talent, onboard new hires, and align employees. They help established businesses stay ahead of trends and anticipate challenges. A good business model can compel investors or partners to work with a company they’re interested in supporting.
The problem, though, is that a business model is a lot to digest. That’s why the business model canvas is such a useful tool.
The business model canvas is a snapshot of all the key components of a business model. It enables you to take those key components and organize them into a format that’s easily digestible. A business model canvas zooms in on a particular product or service to break down how exactly the company expects to derive value from it.
Learn more about Miro
Business model canvas or lean canvas.
People often use “business model canvas” and “lean business model canvas” interchangeably, but there are a few differences. The business model canvas focuses on a specific product or service that generates revenue. A lean canvas focuses on a specific problem that the organization is looking to solve.
Lean canvases are popular with startups because they enable you to zoom in on a problem, iterate on potential solutions, and move quickly to the next challenge. Whereas the business model canvas defines the infrastructure, costs, and revenue streams that go into running a business, the lean canvas focuses on the channels that enable you to troubleshoot a specific problem. The broader business model canvas pays close attention to customer segments, channels, and relationships, while the lean canvas deemphasizes these elements.
What is Included in a Business Model Canvas?
Although you can adapt the business model canvas to your needs, they generally contain nine core components. Here are the building blocks of a business model canvas.
- Key partners. Every business model canvas lists the partners and suppliers that your business leverages for success. The canvas includes any motivations for the partnerships — i.e. what exactly you get out of them.
- Key activities. The canvas summarizes the activities that your business must undertake in order to support your value proposition. It lists the activities that are most important for distribution channels, customer relationships, and revenue streams.
- Value proposition. The value proposition is the core value you aim to deliver to your customer. Think of it as two key components: the need you are serving for your customer, and how that’s different from what your competitors are doing.
- Customer relationships. These include any relationships you have with customers, including how you interact with them, how interactions differ between customers, what needs your customers have, and how you integrate those needs into your business in terms of cost and format.
- Customer segments. These are the ideal customer personas that your value proposition is designed to benefit. A basic business model canvas outlines the potential differences between segments and steps in the customer journey.
- Distribution channels. The canvas details how you reach customers, provide services, and deliver your value proposition. This portion of the canvas answers crucial questions about your customers, such as: Which channels work best for reaching them? How much do they cost? How can you integrate these channels into your workflows and your customers’ routines?
- Cost structures. A business model canvas identifies the primary costs that go into operating your business and providing services. It shows the relationship between those costs and other business functions, including which resources or activities are the most expensive.
- Key resources. These are the resources that your business uses to operate distribution channels, provide services, maintain customer relationships, and build revenue streams.
- Revenue streams. The canvas describes how your business generates revenue by delivering on your value proposition. How do your customers pay? How much does each revenue stream contribute to your overall revenues? And what are you customers willing or unwilling to pay for?
How to Create a Business Model Canvas
To create a business model canvas, start with your overall business model. At its core, a business model is simply:
- The products and services you plan to sell,
- the expenses you will incur in delivering those products and services, and
- how you expect to make a profit.
Once you have those core components in place, you can break them down even further in your business model canvas. Spell out the partners, activities, resources, and propositions that define your business and allow you to offer your products or services. From there, articulate the relationships you have with your customers, including your customer segments and the channels you use to reach them. Finally, you can spell out the cost structure and revenue streams associated with your business.
Creating Your Own Business Model Canvas
Want to get started on your own business model canvas? Miro’s free template makes it easy to customize and share a business model canvas with your collaborators. Get started today!
Improve your business value with Miro
Check out our business model canvas template.
Business to the Moon
Feb 5, 2018
Member-only
How to Fill in the Business Model Canvas?
The Business Model Canvas is a simple tool to create, analyze and optimize business models. It’ easy to grasp and understand. If you don’t know it yet, learn about it in my Udemy video course (you get 75% off currently!).
One of the first questions when starting with the Business Model Canvas is:
How do I fill it in? Where do I start? What do I put here?
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The Business Model Canvas (BMC) gives you a structured way to design a business. The goal is to create a business model that is unique and compete in the
Spell out the partners, activities, resources, and propositions that define your business and allow you to offer your products or services. From
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Still you need to do some work to deliver a great product or service. Move on with the key resources and key activities to make your front stage