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Business Model Canvas

What is the business model canvas.

A business model canvas provides a high-level, comprehensive view of the various strategic details required to successfully bring a product to market. The typical use case for this tool is to outline the fundamental building blocks of a business, but it can be used effectively for individual products as well. The exact ingredients may vary, but these are some of the typical components included:

Customer segments —Who is going to use this product?
Product value propositions —What is this going to do for the customer to make their life/job better?
Revenue streams —How will the company make money from this product?
Channels —How will the product be sold or distributed?
Customer relationships —What is the success and support strategy for new customers?
Key partners —What other companies or individuals are part of the development and go-to-market strategy?
Key activities —What must happen internally to release this product?
Key resources —What people, materials and budget are required to pull this off?
Cost structure —How much will it cost to develop, manufacture, distribute, and support the product?

Asking and answering these questions should be de rigueur for any new product, but this particular framework is useful for distilling the supporting business case down into something easily digestible. By forcing everything to be on a single page, each question must be answered succinctly, which often cuts through any grandstanding to illustrate whether each area is truly addressed and viable.

How do product managers use the business model canvas?

The business model canvas serves two primary purposes for product managers : focusing their thinking during its creation along with expediting and framing the conversation when communicating with others.

Because the business model canvas is a comprehensive summary of what the product will do, who will use it, why they’ll use it, how it will happen, and how the money works, it requires a lot of thinking and homework to put it together. This exercise is very helpful for product managers to fully understand the market opportunity and refine their story while uncovering potential problem areas and fully vetting their impact. Plus the process of boiling everything down to a single page ensures that what is included is as truthful and well supported as possible.

The business model canvas can serve as a continually referenceable touchstone for the product development process and beyond, essentially serving as a mission statement for the product. As conditions on the ground change and more is learned about the product’s market reception and usage, the canvas can be updated to accurately reflect the latest information; reviewing the canvas periodically is a worthy activity in and of itself.

As a communication tool, the business model canvas is an ideal document for our short attention span world and is as useful with the executive team as it is with a junior developer. Since it only contains the most salient and relevant information, the audience won’t be drowning in details or distracted by supporting evidence or non-sequiturs. The canvas can also create a universal vocabulary for the product and get everyone using the same language and concepts going forward.

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Tips for using the business model canvas

Here is how to make the most of the business model canvas and the process of creating and maintaining it:

Note assumptions and challenge them —Since a business model canvas is developed while a product is still “theoretical” there is often a lack of actual facts to rely on. Instead, educated guesses, informed opinions and assumptions are utilized to build it out. While there’s often no escaping these, anything in the canvas that is an assumption versus a proven fact should be called out, with every effort made to both challenge the assumption and anticipate the impact if the assumption turns out to be incorrect.
Bounce it off a virgin audience —Fellow employees and even board members will approach a business model canvas with a trunkload of inherent biases. To truly test the veracity and completeness of a canvas, allow some outside parties to validate it independently. It should be a self-explanatory document, so allowing them to review it and provide feedback without any dialogue or explanations is a great test of its worthiness and thoroughness.
It’s easy to update, so keep it current —Unlike longer, weightier documents, the single-page nature of the business model canvas means there’s no excuse for it to languish and fall behind the business’s current line of thinking or newly gathered information. Reviewing it on a regular basis and maintaining its accuracy enhances its usefulness and is a helpful process to note when assumptions or plans have changed.
An ever-present reminder —Thoughts, plans, goals, and assumptions were laid out succinctly in the canvas with great care and deliberation. Going forward the canvas can be continually referred to for guidance, inspiration, and level setting as folks become swept up in the momentum of product development, sales, and marketing.
Present it in pieces —Sure, the entire business model canvas fits on one piece of paper, but there is a lot of things on that 8 ½ x 11 inch page. When presenting it, discuss each piece individually, gradually revealing the entire contents. This will prevent information overload and allow the team to convey things narratively instead of an information dump.
Reference all the evidence —Any hard data should be clearly referenced (if not included) in the canvas to give the arguments and statements as much legitimacy as possible. Reviewers will be trying to poke holes (as they should), so firm things up whenever there’s a chance.
Be specific —No one needs a business model canvas to understand fundamental business case elements; it is intended to tell the story and rationale for this particular product. Cut out anything generic and make it as relevant to this exact opportunity as possible. In particular, link individual customer segments with their respective value propositions, since a product won’t be all things to all people.
Create multiple canvases —During the early phases, generating more than one business model canvas based on divergent assumptions, target markets, or value propositions can be a useful tool for exploring different directions the product could head. After the plans are firmed up, multiple canvases can still be employed, this time to see how different scenarios pan out when key factors change… it can be used as a wargaming tool to prepare for different potential outcomes.
Who, what, and why first. How and how much second —Although a business model canvas includes everything from a value proposition and personas to implementation costs and resources, everything should be driven from the market opportunity and rationale for bringing a product to market. If those aren’t solid, spending cycles on technology and costs is a waste of time.

Creating a business model canvas puts new product ideas under the microscope and pulls together disparate sources of intelligence, opinions, hunches and research into a single piece of paper. It forces critical thinking and analysis of assumptions and guesses and provides an excellent reference point for the entire organization.

Once the canvas is approved and productization begins, the canvas can also serve as a straw man for the product roadmap, lining up future features and functionality based on the priorities laid out in the document to achieve market success.

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Business Model Canvas: Explained with Examples

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.

What Are the Benefits of Using a Business Model Canvas

Why do you need a business model canvas? The answer is simple. The business model canvas offers several benefits for businesses and entrepreneurs. It is a valuable tool and provides a visual and structured approach to designing, analyzing, optimizing, and communicating your business model.

The business model canvas provides a comprehensive overview of a business model’s essential aspects. The BMC provides a quick outline of the business model and is devoid of unnecessary details compared to the traditional business plan.
The comprehensive overview also ensures that the team considers all required components of their business model and can identify gaps or areas for improvement.
The BMC allows the team to have a holistic and shared understanding of the business model while enabling them to align and collaborate effectively.
The visual nature of the business model canvas makes it easier to refer to and understand by anyone. The business model canvas combines all vital business model elements in a single, easy-to-understand canvas.
The BMC can be considered a strategic analysis tool as it enables you to examine a business model’s strengths, weaknesses, opportunities, and challenges.
It’s easier to edit and can be easily shared with employees and stakeholders.
The BMC is a flexible and adaptable tool that can be updated and revised as the business evolves. Keep your business agile and responsive to market changes and customer needs.
The business model canvas can be used by large corporations and startups with just a few employees.
The business model canvas effectively facilitates discussions among team members, investors, partners, customers, and other stakeholders. It clarifies how different aspects of the business are related and ensures a shared understanding of the business model.
You can use a BMC template to facilitate discussions and guide brainstorming brainstorming sessions to generate insights and ideas to refine the business model and make strategic decisions.
The BMC is action-oriented, encouraging businesses to identify activities and initiatives to improve their business model to drive business growth.
A business model canvas provides a structured approach for businesses to explore possibilities and experiment with new ideas. This encourages creativity and innovation, which in turn encourages team members to think outside the box.

How to Make a Business Model Canvas

Here’s a step-by-step guide on how to create a business canvas model.

Step 1: Gather your team and the required material Bring a team or a group of people from your company together to collaborate. It is better to bring in a diverse group to cover all aspects.

While you can create a business model canvas with whiteboards, sticky notes, and markers, using an online platform like Creately will ensure that your work can be accessed from anywhere, anytime. Create a workspace in Creately and provide editing/reviewing permission to start.

Step 2: Set the context Clearly define the purpose and the scope of what you want to map out and visualize in the business model canvas. Narrow down the business or idea you want to analyze with the team and its context.

Step 3: Draw the canvas Divide the workspace into nine equal sections to represent the nine building blocks of the business model canvas.

Step 4: Identify the key building blocks Label each section as customer segment, value proposition, channels, customer relationships, revenue streams, key resources, key activities, and cost structure.

Step 5: Fill in the canvas Work with your team to fill in each section of the canvas with relevant information. You can use data, keywords, diagrams, and more to represent ideas and concepts.

Step 6: Analyze and iterate Once your team has filled in the business model canvas, analyze the relationships to identify strengths, weaknesses, opportunities, and challenges. Discuss improvements and make adjustments as necessary.

Step 7: Finalize Finalize and use the model as a visual reference to communicate and align your business model with stakeholders. You can also use the model to make informed and strategic decisions and guide your business.

What are the Key Building Blocks of the Business Model Canvas?

There are nine building blocks in the business model canvas and they are:

Customer Segments

Customer relationships, revenue streams, key activities, key resources, key partners, cost structure.

Value Proposition

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.

Let’s look into what the 9 components of the BMC are in more detail.

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.

Customer Persona Template for Business Model Canvas Explained

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.

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.

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

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 to Avoid When Creating a Business Model Canvas

One thing to remember when creating a business model canvas is that it is a concise and focused document. It is designed to capture key elements of a business model and, as such, should not include detailed information. Some of the items to avoid include,

Detailed financial projections such as revenue forecasts, cost breakdowns, and financial ratios. Revenue streams and cost structure should be represented at a high level, providing an overview rather than detailed projections.
Detailed operational processes such as standard operating procedures of a business. The BMC focuses on the strategic and conceptual aspects.
Comprehensive marketing or sales strategies. The business model canvas does not provide space for comprehensive marketing or sales strategies. These should be included in marketing or sales plans, which allow you to expand into more details.
Legal or regulatory details such as intellectual property, licensing agreements, or compliance requirements. As these require more detailed and specialized attention, they are better suited to be addressed in separate legal or regulatory documents.
Long-term strategic goals or vision statements. While the canvas helps to align the business model with the overall strategy, it should focus on the immediate and tangible aspects.
Irrelevant or unnecessary information that does not directly relate to the business model. Including extra or unnecessary information can clutter the BMC and make it less effective in communicating the core elements.

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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FAQs About the Business Model Canvas

Use clear and concise language
Use visual-aids
Customize for your audience
Highlight key insights
Be open to feedback and discussion

What is a Business Model Canvas?

By: Francesca Monaco | Published on: Nov 22, 2019 | Categories: #LearnWithMerlin , Blog |

The Business Model Canvas (BMC) tool which helps to map existing business models, improve them and invent new ones. It has 9 building blocks, each of which is described in detail and using real life examples:

Customer segments

The BMC itself has two stages – the front stage and the back stage. The front stage is the part of the business that is directly facing the customer. The back stage is everything that the company needs to have or do in order to provide the right half.

Value propositions

The main purpose of value proposition is to solve a customer problem or satisfy a need. It is a bundle of benefits that a company offers customers.

Customer relationships

It describes the types of relationships a company establishes with specific customer segments.

It describes how the company communicates with and reaches its Customer Segments to deliver a Value proposition. The main question to answer when filling out this building block is: „Through which Channels do our Customer Segments want to be reached?“

Key resources

It describes the most important assets required to make a business model work. The main questions to answer when writing this building block are: „What Key resources do our Value Propositions require?”

Key activities

It describes the most important things a company must do to make its business model work. In this building block, the main questions to answer are: „What Key Activities do our Value Propositions require?“

Key partnerships

It describes the network of suppliers and partners that make the business model work. The main questions to be answered are: „Who are our Key Partners?“,

Cost structure

It describes all costs incurred to operate a business model. The questions to be answered in this building block include: „What are the most important costs inherent in our business model?“

Revenue streams

It represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings). Main questions to answer include: „For what value are our customers really willing to pay?“

After taking a brief look at the 9 blocks that make the Business Model Canvas, here below you can find a description of what you need this for.

A business model describes the rationale of how an organization creates, delivers and captures value. A Business Model Canvas (BMC) is a tool to help map existing business models, improve them and invent new ones . It will lead to insights about the customers the entrepreneur plans on serving, what value propositions are offered through what channels and how the company makes money. It gathers all necessary information about the product and business and conveniently puts it on one page.

The BMC leads to insights about the customers a company serves, what value propositions are offered through what channels and how your company makes money. The key benefits that a BMC brings to its users are:

It is focused . Enterprises need a definition of how to get their products to their customers and the business model canvas helps you define them. It also gives you the competitive edge to launch a profitable business not only through product innovation but also through designing your business correctly.
BMC is clear and concise . It helps you document your startup journey so you can easily modify it as you go along. The business model is a blueprint that defines your business initially and you later expand on it. It is useful for easy communication with your team, investors, partners as well as employees to come on board with your vision.
It targets customers’ needs . The biggest reason for startup failure is “Product/Market fit” and not the product itself. Too often we forget this and direct our energy on building an awesome product. “Build and they will come” is a dying mantra. The business model canvas forces you to think beyond your product. When you envision how you will sell your product, what type of resources you need the different customer segments as well you can serve, the business becomes lucid. Documenting it gives you the clarity when you talk to your customers.
It reduces the risk of failure . The business model canvas helps you with the execution steps requirement to take your idea to market. Connecting the dots between your value proposition + customer segments + revenue streams, is a good input to your marketing strategy, positioning statement as well as your Sales strategy. You have the edge over your competitors who are immersed in the lengthy pages of the business plan.
It is a scientific framework that works . Business model canvas is a tried and tested methodology not only for startups but also for innovating in large enterprises. Nespresso, a fully owned daughter company of Nestl., is a great example of a powerful business model. It changed the face of the coffee industry by turning a transactional business (selling coffee through retail) into one with recurring revenues (selling proprietary pods through direct channels).

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WORKSHOP #7

Building the right ip for your business, poznan 5th june 2019, cambridge 16th july 2019, vilnius 12th september 2019, warsaw 4th december 2019.

Understand the key differences between operating a spin-off and a startup
Understand how to work within local and university regulations to launch a spin-off
Creating sustainable commercial partnerships
Dealing with IPR issues such as patents and trademarks and licencing

WORKSHOP #6

Lean hardware, cambridge 22nd may 2019, berlin 25th september 2019.

Understand the definition of a hardware prototype
Converting a prototype into a minimum sellable product
Know the phases from prototype to production passing through the lean hardware loop of Learn, Build, Measure
Know the key relationships with manufacturers and where to manufacture to reduce time to ship

WORKSHOP #9

How to pitch, poznan 4th june 2019, cambridge 24th october 2019, warsaw 3rd december 2019.

Know the types of pitch decks and undertand their key structure and message
Create a powerful and compelling 2-minute elevator pitch
Understand what investors are looking for and how to engage them

WORKSHOP #5

Interpreting the customer, talinn 17th january 2019, cambridge 22nd january 2019, poznan 29th march 2019, warsaw 3th april 2019, vilnius 17th april 2019.

Know best practice for conducting interviews and receive customer inputs.
Can structure this input into jobs-to-be-done to identify opportunities
Have the tools to independently assess and structure customer input

WORKSHOP #4

Entrepreneurial mindset, berlin 14th november 2018, cambridge 22nd november 2018, bucharest 6th december 2018, vilnius 13th june 2019.

Aware of techniques like effectuating to approach decision making in uncertainty
Equipped with tools to develop realistic short and medium term goals and to adapt for change
Ability to foster new partnerships and exploit new opportunities rapidly

By the end of this workshop you will have the understanding of how to become more entrepreneurial, to think more creatively and find new solutions. You will be equipped with a range of tools to put this into practice.

WORKSHOP #3

Customer discovery, cambridge 24th september 2018, madrid 27th september 2018, vilnius 4th october 2018, warsaw 10th october 2018, poznan 28th march 2019, warsaw 2nd april 2019, cluj-napoca 8th may 2019.

Understand the cycles and activities of Customer Development
Know the principles of Customer Discovery for achieving porduct-market fit
Know how to identify and approach potential customers
Know how to conduct effective customer interviews
Develop my personal action plan for Customer Discovery

By the end of this workshop you will have learnt the customer discovery methodology and how to apply it to your research findings or early stage product/service.

WORKSHOP #2

Business model canvas, vilnius 8th june 2018, poznan 14th june 2018, cambridge 19th june 2018, madrid 21st june 2018, talinn 13th december 2018, warsaw 18th december 2018, cluj-napoca 20th november 2019.

Understand different types of business model
Understand the use of Business Model Canvas as a tool to plan your business model
Be able to independently develop a business model canvas
Learn how to test your business model, understand where your gaps are and how to address them

By the end of this workshop you will have had the opportunity to build your own business model canvas and will know how to test and refine this.

WORKSHOP #1

Lean startup, poznan 17th april 2018, cambridge 24th april 2018, madrid 26th april 2018, vilnius 27th april 2018.

Understand the Lean Start Up model and how to apply it
Practice with practical examples
Discover how to test your assumptions and make changes to your model based on feedback
Learn what a value proposition is and how to develop one for your idea/early stage product or service

By the end of this workshop you will have a good understanding of the lean start up methodology and how to apply this in your work.

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Business Model Canvas Explained with Examples

In this article:

In this article, we’ll examine the nine steps needed to create your first business model using the Business Model Canvas. We’ll also look at the business models of Google, Uber, and Gillette to bring the theory to life and integrate all nine steps.

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Before we jump in and look at the Business Model Canvas, let’s take a moment to define what we mean when we use the phrase “business model”.

What is a business model?

A business model is defined as:

A plan for the successful operation of a business, identifying sources of revenue, the target customer base, products, and details of financing.

Essentially it tells us how the key drivers of a business fit together.

Now if you think about writing all this down in a document, then it’s obviously going to require multiple pages to capture all of that information. Now think about trying to get all of this information into your brain at the same time and its easy for business models to overwhelm us.

That’s where the Business Model Canvas comes in. It gives you a way to create a pretty clear business model using just a single sheet of paper. And what is great about it is it can be used to describe any company – from the largest company in the world to a startup with just one employee.

Advantages of the Business Model Canvas

The reason why you might want to create a Business Model Canvas is that they have the following advantages:

Easy to understand : Because the canvas on just a single page and is very visual it’s very easy to understand.
Focussed : It removes any fluff that might have been present in a traditional business model. It’s all killer no filler.
Flexible : It’s quick and easy to make changes to your model and sketch out different ideas.
Customer Focused : the canvas forces you to think about the value you’re providing to your customers, and only then what it takes to deliver that value.
Shows Connections : The single page graphical nature of the canvas shows how the different parts of the model interrelate to each other. This can be really difficult to ascertain from a traditional business plan.
Easy to Communicate : Because the canvas is so easy to understand you’ll be able to share and explain it easily with your team, making it easier to get them on board with your vision.

Using the Business Model Canvas

The first thing to notice is that there are nine elements or building blocks which make up the canvas:

We’ll look at each building block of the canvas in more detail shortly, but briefly, each segment tries to answer the following questions:

Customer Segments : Who are your customers?
Value Proposition : Why do customers buy from you? What is the gain you provide or the need you satisfy?
Channels : How are your products and services delivered to the market?
Customer Relationships : How do you get, keep, and grow your customers?
Revenue Streams : How does your business earn money?
Key Resources : What unique strategic resources does your business have or need?
Key Activities : What unique strategic activities does your business perform to deliver your value proposition?
Key Partnerships : What non-key activities can you outsource to enable you to focus more on your key activities.
Cost Structures : What are the major costs incurred by your business?

Left/Right Split

Before we dig deeper into the detail of each of these elements, there’s just one thing to be aware of…

Broadly speaking we can say that those elements on the lefthand side of the canvas represent costs to the business, whereas elements on the righthand side generate revenue for the business.

With that, let’s dig into each of the nine building blocks in a little more detail.

1. Customer Segments

In this building block, you enter the different customer segments or that you will serve. If you can, create one or more persona for each segment you serve. A persona is simply a relatable description of each customer type you serve. They try to highlight your customers’ motivations, their problems and capture the “essence” of who they are.

One really important point to get across here is that customers don’t exist for you, but rather you exist to serve your customers.

Many businesses will serve just one customer segment, but not all. For example, Google serves two customer segments, people performing searches as well as advertisers.

If you think about breaking down the advertiser customer segment into personas, then there are many different types of advertisers you might identify. For example, Fortune 500 companies such as Nike with massive advertising budgets might be one persona, whereas small one-man businesses might form another.

2. Value Proposition

The value proposition describes the value that you deliver to each customer segment. What problems do you solve for each customer segment? What needs do you satisfy? The Value Proposition answers the question, “why will customers buy from us?”.

Some of the most common value propositions are:

High performance.
Ability to customize.
Brand/Status.
Cost reduction.
Risk reduction.
Convenience.

3. Channels

Channels refer to how your products or services are sold to customers. To complete this section ask yourself how do your customers want to be reached? How are you reaching them now?

Broadly speaking you can either have your own channels or partner with someone else.

Your own channels might include any combination of stores you own, a sales force you employ, or your website.

Partner channels could include a multitude of options, from using a wholesaler to working with affiliates to sell your products or even using Google Adsense.

4. Customer Relationships

The Customer Relationships building block answers the question of how you get, keep, and grow customers.

Get : How do customers find out about you and make their initial purchase? For example, this could be through advertising on Google.
Keep : How do you keep customers? For example, excellent customer service might help keep customers.
Grow : How do you get our customers to spend more? For example, you could send out a monthly newsletter to keep them informed about your latest products.

The easiest way to define all of this is to walk through the entire customer journey in detail. That is how do customers find out about you, investigate whether to buy your product, purchase it and how are they managed after purchase.

5. Revenue Streams

Where does the money come from? In this building block, you state where your revenue is generated.

This might sound super simple but it isn’t. You’re actually trying to figure out what strategy you’ll use to capture the most value from your customers? Will customers simply pay a one-time fee? Will you have a monthly subscription fee? Perhaps you give away your product for free like Skype and hope that some portion of customers upgrade to the paid premium product?

Consider Google. Advertisers pay Google to place their ads in front of users with buying intent. For example, if you search for “Nike trainers” you will see ads. If you search for something without purchasing intent, such as “picture of flowers” you probably won’t see any ads.

In fact, you could say that Google operates searches without purchase intent as a loss leader to keep people using the Google system.

Taking a Step Back

If you look at what we have done so far we’ve filled in our Value Proposition and the building blocks to the right of it.

In a nutshell, we’ve developed our understanding of everything that relates to our customers.

Now we need to work on the area to the left of the value proposition. We need to build our infrastructure to be able to best provide the value proposition.

So with that let’s move on to the first infrastructure building block, Key Resources.

6. Key Resources

This building block describes your most important strategic assets that are required to make your business model work.

Broadly speaking resources can fall into one of four categories:

Physical : such as buildings, vehicles, machines, and distribution networks.
Intellectual : such as brands, specialist knowledge, patents and copyrights, partnerships, and customer databases.
Human : sometimes your people will be your most key resource, this is particularly true in creative and knowledge-intensive industries.
Financial : such as lines of credit, cash balances etc.

7. Key Activities

The Key Activities are the most important strategic things you must do to make the business model work. Key Activities should be directly relatable to your value proposition.

If your Key Activities are not relatable to your Value Proposition then something is wrong, because the activities you view as most important aren’t delivering any value to customers.

Key Activities can typically be broken down into three broad categories:

Production : refers to delivering your product. You will typically do this to either a high quality or a high quantity.
Problem Solving : Consultancies and other service organizations often have to come up with new solutions to individual customer problems.
Platform/Network : Networks, software platforms can function as a platform. For example, a key activity for Facebook is updating the platform.

When completing this section, it is a mistake to list all the activities of your business, instead only include activities which are absolutely core to delivering your value proposition.

8. Key Partners

In this building block, you list the tasks and activities that are important but which you will not do yourself. Instead, you will use suppliers and partners to make the business model work.

Let’s look at Spotify. Spotify’s key activity is updating its platform. However, as it doesn’t produce its own music one of the key partnerships of Spotify will be the deals it strikes with record labels and publishing houses, without which it would have no music!

There are usually three reasons for creating a partnership:

Economies of scale.
Reduction of risk and uncertainty.
Acquisition of resources or activities (e.g. music for Spotify).

9. Cost Structure

In the Cost Structure building block, we want to map key activities to costs. We also want to ensure that costs are aligned with our Value Proposition.

It should be straightforward to determine your most important costs and your most expensive after you’ve defined your Key Resources, Key Activities, and Key Partnerships.

Business Model Canvas Examples

That’s the theory out of the way. However, the Business Model Canvas comes to life when you see it in action.

So let’s look at three different examples of the Business Model Canvas so you can see just how useful it can be.

Example 1: Google

The first thing you should know about Google’s business model is that it is multi-sided. This means that it brings together two distinct but related customers.

In Google’s case, its customers are its search users and its advertisers. The platform is only of interest to advertisers because search users are also present. Conversely, search users would not be able to use the platform free of charge were it not for advertisers.

The Business Model Canvas for Google is shown below:

As you can see the diagram gives you an immediate understanding of the key parts of Google’s business model.

We can see that:

Google makes money from the advertiser customer segment, whose ads appear either in search results or on web pages.
This money subsidizes a free offering to the other two customer segments: search users and content owners.

Google’s business model has a network element to it. That is, the more ads it displays to web searchers the more advertisers it attracts. And the more advertisers it attracts the more content owners it attracts.

Google’s Key Resource is its search platform including google.com, Adsense (for content owners) and Adwords (for advertisers).

The key strategic activities that Google must perform are managing the existing platform including its infrastructure.

Google’s key partners are obviously the content owners from whom a large part of its revenues is generated. OEMs (Original Equipment Manufacturers) also form a key partner.

OEMs are companies who produce mobile handsets to whom Google provides its Android operating system to for free. In return, when users of these handsets search the internet they use the Google search engine by default, thus bring more users into the ecosystem and generating even more revenue.

A Word on Color Coding

There are no hard and fast rules when it comes to using color within your canvas. Some people prefer to use color to represent the links between elements, as we have done in this article. Others like to use different colored elements or sticky notes to represent related elements.

The choice is up to you. What is important is that any relationships between elements are easy to identify and easy to understand.

Example 2: Skype

In the diagram below you can see the Business Model Canvas for Skype.

From the Business Model Canvas we can see that Skype has two key value propositions:

The ability to make calls over the Internet, including video calls, for free.
The ability to make calls to phones cheaply.

Skype operates a freemium business model, meaning the majority of Skype’s users (the Free Users customer segment) use the service for free to make calls over the internet, with just 10% of users signing up to the prepaid service.

We can see from the customer relationship building block that customers typically have a help themselves relationship with Skype. Typically this will be by using their support website.

The channels Skype uses to reach its customers are its website, skype.com, and partnerships with headset brands.

Looking at key partnerships, key activities, and key resources together, the main thing to notice is that Skype is able to support its business model of offering cheap and free calls because it doesn’t have to maintain its own telecoms network like a traditional telecoms provider. Skype doesn’t need that much infrastructure at all, just backend software and the servers hosting use accounts.

Example 3: Gillette

The Business Model Canvas for Gillette is shown below:

Gillette’s business model is based on the “Bait & Hook” business model pattern. This model is characterized by an attractive, inexpensive or even free initial offer that encourages ongoing future purchases of related products or services. With this business model, the bait is often provided at a loss, subsidized by the hook.

In Gillette’s case, an inexpensive razor handle forms the bait, and continued purchases of the blades represent the hook.

The business model is very popular in SaaS (Software as a Service) businesses, where typically a free initial month leads to a monthly subscription.

In the diagram above we have used the thickness of the arrows to indicate the size of revenue generated. In Gillette’s case, all revenues are generated by just one customer segment, but the vast majority of revenues come from Frequent Blade Replacements, with just minor revenues coming from the purchase of handles.

If you look at the left-hand side of Gellettes Business Model Canvas you will notice how all major costs are aligned with delivering the value proposition. For example, marketing costs help to build Gillette’s strong brand and R&D costs help to ensure that the blade and handle technology is unique and proprietary.

Key Takeaway

Through these three Business Model Canvas examples, you should be able to see just how easy it is to represent the complete business model of any company on just one single sheet of paper.

Creating Your First Business Model

If you’re going to do create your first Business Model Canvas, then here are some tips to help you get started:

Don’t go it alone: Don’t try to create your model singlehandedly. Instead get a small team of 3-5 people together so you can brainstorm ideas.
Use a whiteboard if you can.
Have plenty of different colored whiteboard pens and sticky notes handy.
Plan on the process taking about an hour to complete your first draft Business Model Canvas.
Decide which building block you’re going to fill in first. Usually, it makes sense to start with Customer Segments or Value Proposition and then work from there.

The Business Model Canvas provides a way to show the key elements of any business model on a single sheet of paper. The canvas is based on nine building blocks and the interrelationships between them. You can use the canvas regardless of whether you are trying to understand a startup with two employees or a Fortune 500 company with over 50,000 employees.

Cite this article

Minute Tools Content Team, Business Model Canvas Explained with Examples, Minute Tools, Oct, 2018 https://expertprogrammanagement.com/2018/10/business-model-canvas-explained/

Originally hailing from Dublin, Denis has always been interested in all things business and started EPM in 2009. Before EPM, Denis held a leadership position at Nokia, owned a sports statistics business, and was a member of the PMI's (Project Management Institute’s) Global Executive Council for two years. Denis now spends his days helping others understand complex business topics.

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Business Model Canvas: Pengertian, Elemen, dan Tips Membuatnya

Pengertian Business Model Canvas

Elemen business model canvas, tips dalam membuat business model canvas, kenapa perlu menggunakan business model canvas.

Menjalankan sebuah bisnis membutuhkan sebuah perencanaan yang tepat dan matang. Dalam bisnis juga membutuhkan yang namanya manajemen, sistem, dan strategi yang sekiranya dapat memudahkan orang-orang untuk melakukan pekerjaan, sehingga menjadi lebih efisien dan efektif. Salah satu model bisnis yang bisa digunakan yakni business model canvas.

Bagi yang sudah lama menggeluti dunia bisnis mungkin hal ini terdengar familiar. Namun, bagi yang awam dan baru memulai untuk terjun ke dunia bisnis hal ini menjadi sesuatu yang tidak familiar. Kira-kira apa sih business model canvas itu? Elemen apa saja yang ada pada business model canvas? Simak artikel di bawah ini untuk tahu lebih lengkap mengenai apa itu business model canvas.

Menurut Osterwalder dan Pigneur (2014) Business Model Canvas (BMC) adalah sebuah metode atau strategi manajemen yang digunakan untuk memaparkan ide atau gagasan sebuah bisnis dalam bentuk visual. Sederhananya, business model canvas bisa diartikan sebagai strategi manajemen yang digunakan untuk membantu perusahaan dalam memudahkan memperoleh gambaran mengenai ide bisnis dan merealisasikannya dengan cepat.

SCROLL TO CONTINUE WITH CONTENT

Dengan menggunakan business model canvas, pebisnis akan dipicu untuk menemukan sebuah strategi dalam berbagi hal yang memiliki kaitan dengan bisnisnya. Seperti mengetahui target pelanggan, pengelolaan pelanggan, media yang dibutuhkan untuk menyebarkan produk, keperluan biaya yang akan dikeluarkan, dan pemasukan apa saja yang akan masuk ke dalam petty cash (kas kecil).

Dilansir melalui buku berjudul Bisnis Model Kanvas (2014) ada 9 elemen dari business model canvas. Berikut ini elemennya:

1. Key Partnership (Mitra Kunci)

Key partnerships atau mitra kunci adalah mitra kerjasama dalam menjalankan dan mengoperasikan organisasi. Kemitraan sangat dibutuhkan oleh sebuah organisasi untuk melakukan penghematan ketika ekonomi skala tidak tercapai, mengurangi adanya resiko, mendapatkan sumber daya, dan mendapatkan pembelajaran. Menurut Osterwalder dan Pigneur (2012) kemitraan dibedakan menjadi 4 jenis yaitu:

Aliansi strategi antara non pesaing.
Competition: strategi kemitraan antar pesaing.
Usaha patungan yang bertujuan untuk mengembangkan bisnis baru.
Hubungan antara pembeli dan pemasok untuk memastikan bahwa pasokannya dapat diandalkan.

2. Key Activities (Aktivitas Kunci)

Key activities adalah kegiatan yang dilakukan untuk menentukan suatu keberhasilan dalam model bisnis. Key activities berperan penting dalam mewujudkan proposisi nilai. Tidak semua kegiatan dapat dicantumkan dalam key activities, melainkan hanya kegiatan yang betul-betul menunjang keberhasilan organisasi dalam mengantarkan proposisi value kepada pelanggan. Ciri-ciri dari key activities adalah sebagai berikut:

Kegiatan menghasilkan proposisi nilai.
Menyalurkan proposisi nilai kepada pelanggan.
Kegiatan yang dilakukan untuk menjalin hubungan dengan pelanggan.
Kegiatan yang dilakukan untuk menangani pendapatan.

Key activities dikelompokkan ke dalam 3 jenis yaitu:

Operasi Produksi.
Operasi Jasa.
Platform dan Jaringan.

3. Key Resources (Sumber Daya Kunci)

Key resources adalah adalah sebuah sumber daya yang memungkinkan organisasi untuk menjalankan key activities dalam menawarkan proposisi nilai, menjangkau pasar, menjaga hubungan dengan pelanggan, dan menghasilkan uang.

Key resources menggambarkan aset-aset yang dinilai penting untuk menentukan keberhasilan dari pengoperasian model bisnis. Dengan aset-aset ini, memungkinkan perusahaan untuk mewujudkan proposisi nilai yang sudah dijanjikan kepada pelanggan. Key resources berupa:

Sumber daya fisik: bangunan, peralatan, dan kendaraan.
Aset intelektual: hak cipta, merek, data base pelanggan, dan paten.
Sumber daya manusia.

Key resources dalam organisasi berbentuk:

Intelektual.

4. Value Propositions (Proposisi Nilai)

Value propositions atau proposisi nilai adalah suatu keunikan yang menentukan apakah suatu jasa atau produksi layak untuk dipilih oleh pelanggan. Value propositions membantu dalam memecahkan masalah pelanggan atau memenuhi keinginan pelanggan dengan semaksimal mungkin. Keunikan ini harus berbeda dengan pesaing, buat menjadi sesuatu yang akan didambakan oleh pelanggan.

Value propositions digolongkan ke dalam dua kelompok besar yakni, kuantitatif dan kualitatif. Contoh dari value propositions kualitatif adalah rasa senang, rasa kenyang, rasa senang, dan rasa rileks. Sedangkan contoh untuk value propositions kuantitatif adalah kecepatan pelayanan dan harga murah. Menurut Osterwalder dan Pigneur (2012) ada 11 elemen dalam value propositions.

Performance.
Customization.
Getting the Jobs Done.
Brand atau Status.
Cost Reduction.
Risk Reduction.
Accessibility.
Kegunaan atau Kenyamanan.

5. Customer Relationships (Hubungan dengan Pelanggan)

Customer relationships adalah penjalinan hubungan dengan pelanggan yang memiliki tujuan untuk memperoleh pelanggan baru, mempertahankan pelanggan lama, dan menawarkan jasa atau produk lama dan baru pada pelanggan lama.

Customer relationships menggambarkan jenis hubungan yang berusaha dibangun oleh sebuah perusahaan antara segmen pasar tertentu. Customer relationships memiliki peranan yang penting karena memiliki fungsi sebagai berikut:

Mengakuisisi (acquisition) pelanggan, yakni mengubah calon pelanggan menjadi pelanggan sungguhan atau aktual.
Mempertahankan pelanggan, dengan cara menjaga pelanggan yang sudah ada untuk tetap menjadi pelanggan.
Meningkatkan penjualan, yakni dengan cara mendorong pelanggan yang sudah ada untuk berbelanja lebih banyak lagi melalui perusahaan.

Ada 6 kategori dalam customer relationships:

Personal Assistance.
Dedicated Personal Assistance.
Self Service.
Automated Service.
Communities.
Co Creation.

6. Channels (Saluran)

Channels atau saluran adalah elemen yang menyatakan bagaimana cara organisasi dalam berkomunikasi dengan pelanggan segmennya dan menyampaikan proposisi nilainya. Faktor-faktor yang memungkinakan perusahaan untuk berinteraksi dengan pelanggan adalah distribusi, saluran penjualan, dan komunikasi.

Channels merupakan penggambaran interaksi antara perusahaan dengan pelanggan yang memiliki peranan penting dalam setiap proses yang dialami pelanggan. Channels menjadi wadah untuk berkomunikasi dengan pelanggan agar dapat menyampaikan proposisi nilai yang ditawarkan. Fungsi Channels:

Memunculkan kesadaran dari tiap pelanggan mengenai sebuah jasa atau produk.
Membantu pelanggan dalam mengevaluasi proposisi nilai perusahaan.
Memfasilitasi pelanggan yang membeli produk dan menggunakan jasa dari perusahaan.
Menyampaikan proposisi nilai kepada pelanggan.
Menyediakan adanya dukungan pasca penjualan.

Osterwalder (2012) membagi channels dalam 5 fase yaitu:

Fase 1 Awareness.
Fase 2 Evaluation.
Fase 3 Purchase.
Fase 4 Delivery.
Fase 5 After Sales.

7. Customer Segment (Segmen Pelanggan)

Customer segment atau segmen pelanggan adalah pihak yang menggunakan produk atau jasa dari sebuah organisasi dan berkontribusi dalam memberikan penghasilan kepada organisasi. Customer segment merupakan organisasi atau kelompok orang yang dituju oleh perusahaan untuk dilayani. Perusahaan harus memperhatikan setiap keinginan dan kemauan dari pelanggan, karena pelanggan merupakan inti dari model bisnis. Tanpa ada pelanggan, perusahaan tidak mendapat keuntungan dan tidak bisa bertahan lama.

Tidak semua pelanggan bisa dikategorikan ke dalam segmen, kecuali memenuhi kriteria sebagai berikut:

Memerlukan pelayanan yang tersendiri karena adanya suatu permasalahan dan kebutuhan.
Dilayani dan dicapai dengan saluran distribusi yang berbeda.
Memerlukan pendekatan yang berbeda.
Memberikan sebuah profitabilitas yang berbeda.
Memiliki kemauan membayar yang berbeda dengan persepsi terhadap nilai yang akan mereka terima.

Customer segment memiliki 5 ragam yaitu:

Pasar Terbuka.
Ceruk Pasar.
Pasar Tersegmentasi.
Diversifikasi Pasar.
Multi Pasar.

Menurut Fandy dan Gregorius (2012) langkah-langkah dari segmentasi pasar dibedakan menjadi 3 yaitu, tahap segmentasi, tahap targeting, dan tahap positioning.

8. Cost Structure (Struktur Biaya)

Cost structure atau struktur biaya merupakan penggambaran semua biaya yang muncul akibat dari pengoperasian model bisnis. Cost structure sangat dibutuhkan untuk mewujudkan key resources dan key activities yang handal. Selain itu, cost structure digunakan untuk mewujudkan value propositions dengan channels yang tepat. Cost structure dipengaruhi oleh strategi yang perusahaan gunakan, apakah mengutamakan manfaat atau biaya. Ada dua jenis cost structure yaitu cost driven dan value driven.

Cost structure memiliki 4 karakteristik yaitu sebagai berikut:

Fixed Cost.
Variable Cost.
Economies of Scale.
Economies of Scope.

9. Revenue Stream (Aliran Dana Masuk)

Revenue stream atau aliran dana masuk menggambarkan bagaimana organisasi atau perusahaan memperoleh keuntungan dari customer segment. Revenue streams membantu organisasi untuk tetap hidup. Pada revenue streams, ada dua jenis pendapatan yakni berbentuk pengulangan dan yang bersifat transaksional. Ada 8 cara untuk membangun revenue streams yaitu:

Penjualan Aset.
Biaya Pemakaian.
Biaya Langganan.
Biaya Jasa Perantara.
Menganalisis pesaing atau kompetitor.
Mengurutkan dan menghubungkan setiap elemen secara sistematis.
Fokus pada perkembangan perusahaan atau organisasi.
Melakukan pengecekan ulang atau review secara berkala.

Untuk menggambarkan ide dengan cepat tentang apa yang dibutuhkan oleh organisasi atau perusahaan.

2. Hal ini memungkinkan untuk mendapatkan pemahaman tentang bisnis melalui proses membuat hubungan antara apa ide yang dimiliki oleh suatu organisasi dan bagaimana membuatnya menjadi bisnis. 3. Untuk melihat jenis keputusan pelanggan yang mempengaruhi penggunaan sistem organisasi atau perusahaan. 4. Memungkinkan semua orang untuk mendapatkan gambaran yang jelas tentang apa yang akan terjadi pada suatu bisnis.

Demikian penjelasan mengenai business model canvas yang bisa detikFinance rangkum. Semoga bermanfaat!

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The Essential Guide to the Business Model Canvas (with Templates)

The Essential Guide to Understanding and Using the Business Model Canvas (with Templates)

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Customer relationships, distribution channels.

Revenue streams

Key activities.

Production - when a company manufactures and delivers a product.
Problem-solving - offering a new solution to a customer’s pain.
Platform - developing and maintaining platforms that will support third-party products.

Key resources

Human - your employees and you
Financial - investments, grants, cash, lines of credit, etc.
Physical - inventory, buildings, machinery, any other equipment.
Intellectual - your company’s brand, patents, IP, copyright, etc.

Key partners

Joint venture - when partners develop a new business together.
Strategic alliance - when non-competitors form a partnership to strengthen their positions.
Buyer-supplier relationship - when one company provides the other with resources to carry out its key activities.

Cost structure

Value proposition, business model canvas template.

Business Model Canvas for early stage businesses

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What is a business model canvas? Overview with template

June 29, 2023 6 min read 1788 108

In 2013, I co-founded a startup in the Indian online gifting industry with three friends. It was my first involvement with a startup. Startups are fascinating — they’re small, agile, and quick. However, another key feature of startups is their ability to creatively solve problems.

At that time, we aimed to target India’s gifting market, which was more than 90 percent offline. We had plans to establish an online shop selling a wide variety of gifts. But before we got started, we decided to document our idea. Amidst many templates, we discovered the business model canvas, a lean tool for outlining business models. It was neat, straightforward, and free. This tool brought remarkable clarity to our idea.

Despite shutting down the startup in 2015, I gained a wealth of knowledge during those two years. One major takeaway was the tools and techniques I learned along the way. The business model canvas was one of them. Even after seven years, I still use the business model canvas in my role as a product manager.

In this blog post, we’ll explore how product managers and entrepreneurs can effectively use a business model canvas.

What is a business model canvas, customer segments, value proposition, customer relationships, revenue streams, key activities, key resources, key partnerships, cost structure, business model canvas template, what are the benefits of using a business model canvas, example of successful use of the business model canvas in product management, how do i create a business model canvas for my business.

The business model canvas is a template introduced by Alexander Osterwalder in 2005 as part of his Ph.D. studies under the supervision of Yves Pigneur. The business model canvas outlines nine crucial elements of a business model in an easy-to-understand visual template: customer segments, value proposition, channels, customer relationships, revenue streams, key activities, key resources, key partnerships, and cost structure.

Various companies, including startups, scale-ups, and large software organizations, have utilized this template since its inception to simplify their business strategy and improve their understanding of the overall business structure. However, before we delve into what a business model canvas entails, it’s important to comprehend why simplifying business strategy and structure is essential.

The last company I was part of employed 10,000 individuals. It ran more than 20 different businesses, each generating millions in revenue. When operating on such a large scale, it’s vital to have a clear strategy that outlines the business models. This strategy should define who the customers are, identify key partners, elaborate on the value proposition, and explain the cost structure, among other things.

The strategic blueprint serves as a go-to source of information whenever confusion arises. While this is true for large corporations, it’s equally applicable to smaller scale-ups and startups. It’s crucial to understand the business strategy and models from the onset. This comprehension aids in crafting a framework that can be applied when tackling complex issues or determining priorities.

This is where the business model canvas proves invaluable. It assists in laying out business models in a straightforward, user-friendly format.

What are the 9 components of the business model canvas?

The business model canvas comprises nine key elements:

These components cover the three main areas of a business: desirability, viability, and feasibility. The nine components also aim to bring transparency and understanding to a broad audience, which can include upper management and internal teams such as engineering, design, product management, marketing, sales, legal, and customer service.

Collectively, these elements capture the essence of a business model. They help map the relationship between these elements and how they intertwine with one another. Let’s take a more in-depth look at each element.

Everything starts with the customers, which is why this is the first element of the business model canvas. This component identifies the different customer segments a company targets. These can vary across business models.

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For example, while working at Zalando (one of Europe’s largest fashion eCommerce companies), there were multiple business models. One focused on end customers, while another focused on partners selling products on Zalando. The business model canvas helps outline these customer segments in a single snapshot.

Try to avoid being too detailed. Mention who the partners are, but there’s no need to note the demographics, age, gender, etc., of the customer segment unless required.

This term refers to the unique advantage or value a business provides. It’s what sets the business apart from competitors. This could be a product or a service that the business uses to solve a customer’s problem.

For instance, Uber’s value proposition is its ability to help customers travel from point A to point B on demand.

Channels are the various ways through which a business intends to interact with customers and/or partners. For Airbnb, their website and apps are the primary channels. But they also leverage social media, offline hoardings, email marketing, and community forums to reach their audience.

This element addresses the various ways a business interacts with customers to improve satisfaction and the overall experience. Monitoring customer feedback and how they interact with a company’s product is critical in a competitive landscape.

Amazon, a company that prioritizes customer focus, includes 24/7 customer support, personalized recommendations, regular newsletters, ratings and reviews, Amazon Prime membership, and community engagement as part of its customer relationships.

This component lists the different ways a company plans to generate revenue. For Google, revenue streams include advertising, the Google Play Store, Google Cloud, and hardware sales.

This section includes all necessary activities needed to keep the business functioning smoothly and to deliver value to all users. Microsoft’s key activities, for example, include software development, hardware development, cloud computing, gaming, research and development, and VR.

Visual representation

A business model canvas provides a visual overview of all the critical elements of a business. This allows stakeholders to see how these elements relate to each other, facilitating understanding and decision-making.

The visual nature of the canvas makes it accessible to various stakeholders, including top management, engineers, designers, customer service, and operations teams.

Clear collaboration, communication, and alignment

Developing and managing products often require the input and collaboration of multiple stakeholders . A business model canvas provides a clear, concise tool for aligning all these parties, promoting better communication and collaboration. It also helps product managers secure buy-in from stakeholders at an early stage, reducing risks and fostering better alignment, especially in a cross-functional environment.

Strategic long-term thinking and analysis

By design, a business model canvas encourages long-term strategic thinking. It helps identify business strengths and weaknesses, facilitates brainstorming new ideas and improvements, and shapes long-term strategies to better serve customers.

Flexibility

Businesses and ideas evolve, and a business model canvas accommodates these changes. It offers a flexible template that can be easily modified, often featuring version numbers to track document evolution. This flexibility supports an iterative approach, ensuring the canvas captures all necessary information as the business evolves.

The internet is replete with various business model templates. A quick Google search will return 34,200,000 results. Here’s a quick template that I created on Google Sheets:

Click here to access the business model canvas template. You can click File > Make a copy to download the canvas and customize it for your business.

Here’s an example of a business model canvas for Facebook:

After you fill out the nine components we went over earlier, there are some other key points to keep in mind to successfully create a business canvas model.

Involve all the stakeholders early on

Since a business model canvas has elements ranging from tech to marketing, sales, and customer service, it’s important to involve these stakeholders right at the start. This reduces the risk and helps to bring everyone on the same page.

Keep it simple

Don’t use complex sentences while explaining the pointers under every element. Use simple and short words. Simplicity will make it easier for the audience to consume the information effectively.

Be data-driven

Let every pointer included in the business model canvas be data-driven. This will help lay down a strong foundation for long-term decision-making.

Focus on an iterative approach

It’s difficult to come up with a business model canvas right at the first go. Hence, it’s important to keep an iterative approach and let the document evolve depending on the feedback from the contributors. You can use versioning to keep track of all the changes.

Consider external factors

Currently, the growth of many businesses is slow and it’s projected to be the same for the entire year. It’s important to consider these external factors while coming up with a business model canvas since it helps to consider factors that might not be in control of a business.

Conclusion and key takeaways

A business model canvas can be a very effective tool if used right away. Product managers can use this tool before starting a product or a feature. It can help them have clarity on the idea before the actual development work starts.

Also, since it involves all the major stakeholders right at the start, a business model canvas can help mitigate risks early on. It’s a great tool for validating business ideas, products, or a feature.

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What Is a Business Model Canvas? Business Model Canvas In A Nutshell

The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in the book Business Model Generation enabling the design of business models through nine building blocks comprising : key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

Table of Contents

A quick intro to business models

A business model is a way in which organizations capture value. Not only the economic value but also the social values an organization can foster and the cultural values it can sustain in the long run.

In other words, generating a business model isn’t just about how companies make money but how they create value for several players. Unlocking profits for the organization that came up with that business model is one of the critical elements.

There isn’t a single way to design and assess a business model . However, the business model canvas is a holistic model that takes into account nine factors or building blocks.

Alexander Osterwalder proposed the Business Model Canvas. He’s a Swiss business theorist that in 2000 together with a team of 470 co-creators in an attempt to create a tool that entrepreneurs could use for their businesses.

The aim of having a sharp understanding of your business model is critical to provide strategic insights about your customers, product/service, and financial structure.

Thus, to take action and iterate the business model until it unlocks value for your organization as a whole.

Let’s take a real case study. I often mentioned the Google business model as a great example. You might like or not the giant from Mountain View.

Yet what made this company so profitable – I argue – was its ability to unlock value for several players in the digital marketing space.

In fact, on the one hand, with AdWords, Google allowed businesses to transparently bid on keywords based on the clicks those ads received.

This allowed companies to disintermediate advertising from intermediaries that were taking up most of the margins (of course now Google gets them).

On the other hand, with AdSense, Google allowed small publishers around the world to monetize their content. All they needed was an AdSense account and enough traffic to start earning money.

Of course, as of today, this model isn’t sustainable anymore for many businesses. In a way, AdSense democratized the ads revenues, which before were only taken by large players. With Google , those profits got shared with content creators.

Also, Google offered the best search experience compared to any other search engine.

Even though it wasn’t the first to take over the market (it was actually among the last movers ) Google offered a free service that worked wonders.

The focus on a great search experience was one the most crucial factor in Google ‘s success.

Little critical note: Just like professors study birds flight and go around the world to teach birds how to fly while they can’t. So entrepreneurs that tinker on a daily basis with business models might have a better feel for that compared to theorists trying to teach them what a business model is. In short, my point is that you don’t need to get bogged down on its definition or to stick with the business model canvas to assess your business model . You might want to develop your way to look at your business as – if you’re an entrepreneur – there’s none better than you to do that. In short, use the business model canvas as one of the many methods you can use to assess your business. What really matters is that you’ll be able to build a valuable business in the marketplace.

Going back to the business model canvas Alexander Osterwalder , outlined several prescriptions that form the building blocks for a business model .

Those building blocks enable entrepreneurs to focus on operational, strategic, and financial assessments of their business.

Successful Types of Business Models You Need to Know

Business model canvas in a nutshell

The nine-building blocks of the business model canvas comprise vital partners, key activities, value propositions , customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

Key partners

Who are your key partners/suppliers? What are the motivations for the partnerships?

It all begins with your partners. If you don’t have the right partnerships in place, you don’t have a business at all. That is the starting point of your business model . Finding the right partners is critical.

The success of your business and the traction depend upon your ability to identify and offer your partners a compelling reason to do business with you.

For instance, if you think about Google , the principal partners are the small publishers part of the AdSense program, together to the businesses that are part of the AdWords network and the users that daily keep going back to the Google search box by giving it critical data to sustain its business model .

If you think about Uber instead, you’ll notice how the key partners are its drivers for which Uber means an additional if not a full-time income as self-employed. Its engineers that keep the platform smooth and running and people that sustain the cause of Uber.

If you think instead at Airbnb , you’ll notice that those key partners aren’t only hosts and travelers that transact each day on the platform. Also, freelance photographers that travel the world to take professional pictures that enrich the user experience of Airbnb are also key players.

When it comes to partners “who” and “why” are critical questions. In short, who’s the niche of people that can sustain your business? And why, so what compelling reason are you giving them? What value do they get from this partnership? It doesn’t have to be just in terms of finances.

Of course, initially, a better deal would do. But it could also be about social values or personal values. For instance, initially for its drivers, Uber didn’t mean right away full-time income. But it also meant more freedom for its drivers to work when they wanted. So initially freedom might have been a critical aspect.

Key activities

What key activities does your value proposition require? What activities are important the most in distribution channels , customer relationships, revenue stream…?

As innovationtactics.com explains, critical actions for Uber were:

Remove friction from all interactions
Scale driver and customer side to reduce idle times for drivers and waiting times for customers
Reduce negative externalizes , e.g., bad behaviors on both sides
Grow the platform by getting more participants joining
Keep participants engaged and stimulate ongoing participation
Continue improving the value proposition , e.g., cheaper rides for regular commuters through UberPOOL
Look out for complementary value propositions (e.g., car financing, new customer segments, etc.)
Deliver on the customer proposition
Reduce churn (esp drivers)
Expand to more cities (US and global)
Analyze the data to fine-tune everything
Enhance technological lead and intellectual property to steepen barriers of entry

In short, those are the activities needed to make your value proposition compelling for your key partners. Thus, they can vary from removing friction (think of a marketplace that is hard to use), add features, or make transactions smooth.

In short, the more your organization acts as an enabler of business relationships among several players the more its value proposition consolidates. Thus, anything that solves a customer problem, or satisfies an unfulfilled need would do.

Based on my personal experience from the case studies I’ve looked at the more the value proposition can adapt to several players’ needs, the more it makes a business model become the driver for organizational growth. Take Quora:

The Q&A social network can bring together several partners (users, writers, top writers, publishers/online businesses, and investors) with different value propositions ; all met on the same platform.

Value proposition

What core value do you deliver to the customer? Which customer needs are you satisfying?

Although the value proposition is not listed as the first element. In reality, this is the first thing you should assess. I’d say this is the foundation of your business model . That is what keeps the blocks together.

Without knowing the core values for your customers or partners and what needs you’re satisfying, or what problems you’re solving for them you might have a product but not a business.

This is connected with the previous building blocks and with the next ones. This is the glue that keeps it all together. As explained in the last point a value proposition doesn’t have to be for only one player, partner, or type of customer.

Take the case of a multi-sided platform like LinkedIn. The value proposition can embrace both sides of the marketplace:

The value proposition isn’t marked in the stone, but it can change over time. As new partners join; and as you tinker with your business model and as new unforeseen needs come about your value proposition might also change.

Customer relationship

What relationship that the target customer expects you to establish? How can you integrate that into your business in terms of cost and format?

Based on the identified partners and customers you need to assess how to manage those relationships to keep them aligned with their expectations and within your business model .

If you take Uber, as specified by innovationtactics.com it needs to consider four elements to manage their customer relationships.

(1) the customers(=riders),

(2) the drivers,

(3) the broader public and

(4) regulators.

Each of those relationships will have different dynamics. For instance, drivers might be concerned about safety risks while regulators might be worried about transparency and proper data management.

Another example, if you take the Airbnb business model , hosts are critical to the success of the platform, and concerns like liability coverages are essential for them to keep using it.

That is why hosts are provided with insurance and liability coverage, the “Host Protection Coverage” (of course that might have happened because of some accidents).

https://fourweekmba.com/airbnb-business-model-explained/

Customer segment

Which classes are you creating values for? Who is your most important customer?

Once you have the previous building blocks in place, it shouldn’t be hard to define for which class of people you’re creating value and what are your most important customers.

It is important to stress that although this is a list of blocks, it is not necessarily meant to be read or assessed in order. In fact, at times you might have some blocks but miss others.

For instance, let’s take the case of a startup that has created an innovative software-based on new, emerging technologies. The startup founders might know for sure that technology is valuable and it will open up market opportunities.

Yet that same founder might not have a clue about who the potential customers might be. This shouldn’t surprise you. Starting up a business doesn’t necessarily mean starting from a problem people have.

That is true in more traditional industries. In tech, the opposite might apply. You have new technology and a product that does many things.

However, you struggle to have that business take off. How to find your customers? Often they will come to you as the interactions with the first customers become more intense. You’ll also refine your service to make it more focused on specific features and needs.

That process of iteration will bring you to the so-called “product-market fit.” This process can be at times painful and time-consuming.

Key resource

What key resources does your value proposition require? What resources are important the most in distribution channels , customer relationships, revenue stream…?

As we’ve seen the value proposition is the glue that keeps all the blocks of your business model together. Thus, it is critical to assess what financial and human resources to allocate to allow your value proposition to keep your business model going.

For instance, on Airbnb , it is critical to continue growing the offering and the quality of it to give more and more options to travelers. Also, Airbnb has noticed users wanted more experiences . It started to offer a whole new section focused on those experiences.

Distribution channel

Through which channels that your customers want to be reached? Which channels work best? How much do they cost? How can they be integrated into your and your customers’ routines?

A Peter Thiel might say if you don’t have a distribution you don’t have a product. As engineers are running many successful tech companies, it’s easy to get deluded by the fact that engineering alone can generate a successful business model . This is false!

The business world is a competitive environment. It doesn’t matter if you’re technically skilled if you don’t have the guts to take action in critical moments your business might well sink with your technical skills.

If you take Bring and Page, Google ‘s founders, they are engineers, but they are businessmen.

When Google paid $300 million for keeping its search engine as default choice within Mozilla, when Microsoft was about to steal it, it was an aggressive move to keep one of the most important distribution channels (at the time).

Microsoft was trying to have Bing featured as the default choice of Mozilla. When Google’s founders understood what was happening, they didn’t stop thinking for a second. They didn’t build algorithms to make that decision. They acted out of their guts feelings.

If I had to name what’s the most important asset of any company, the distribution would come first. Finding the distribution channels that best fit your business isn’t a natural process. Traditional channels are word of mouth, paid marketing , and media coverage.

In the digital business world instead, there are channels like SEO, social media, and content marketing . I know you might look at them as marketing tactics and they are. However, those are meant to build distribution channels .

For instance, content can be used as a way to connect with key players in your industry that you’d want to have as business partners. Google can also act as a “distributor” as with a proper SEO strategy can bring a continuous stream of qualified traffic to enhance your business and so on.

Gabriel Weinberg, the author of “Traction” and founder of DuckDuckGo , a search engine that doesn’t track you, has identified 19 channels you can tap into to grow your business .

Zero to One: Sales and Distribution Lessons from Peter Thiel

Cost structure

What are the most cost in your business? Which key resources/ activities are most expensive?

In the business community often growth is confused for profitability. That is not the case. Many companies that achieved staggering growth rates have failed to be profitable.

This isn’t necessarily bad, but a successful long-term business needs to become profitable as soon as possible. When Google opened its hood in 2004 after its IPO, the numbers were staggering. In terms of growth, revenues, and profitability.

A cost structure is then crucial to allow sustainable long-term growth.

Generally speaking, your customer acquisition cost has to be lower than the lifetime value of your customers. Easy said than done. This connects us to the next, critical building block, the revenue stream generation.

Revenue stream

For what value are your customers willing to pay? What and how do they recently pay? How would they prefer to pay? How much does every revenue stream contribute to the overall revenues?

Until you don’t have a stream of revenues coming in you can’t say you have a business. This might seem a trivial point. Yet the way you monetize the company will also affect the overall business model .

There isn’t a single way to generate revenues. You might choose a subscription business model , a freemium , a fee, or membership model . That also depends upon the industry, product, and service you offer.

For instance, Facebook uses a hidden revenue generation model .

In short, the utterly free platform in a way “hides” to its users the way it monetizes. Of course, business people and marketers are well aware of how Facebook makes money as it has been so far a proper advertising channel for many businesses.

However, the average user doesn’t have a clue. Things are changing now that privacy issues and new regulations have brought attention to the Facebook , business model .

Yet for a decade Facebook has benefited from a vast stream of revenues and high profitability without most users ever noticing it.

https://fourweekmba.com/facebook-business-model/

Many might argue that the hidden revenue generation model is the most powerful. And in fact, it has proved so ( Google is another example).

Indeed, as Peter Thiel remarks in his book, Zero to One, sales works best when hidden. As none likes to be reminded of being sold something. However, a business model that works , in the long run, needs to be aligned with users’ interests.

Thus, the way you monetize isn’t only about the bottom line but also about the kind of organization you’re building. If the revenue streams you generate provides value and is in line with your users’ interests, there is no need for corporate slogans like “don’t be evil.”

What more? Once you’ve found a revenue stream the works and is in line with your business model you can’t stop there. You need to keep experimenting with new revenue models.

In short, the business model canvas is the starting point for your business, rather than the ending point of your entrepreneurial journey.

Read : Google Business Model Canvas

Key takeaways

The business model canvas is a model that helps you have an overall strategic vision of your business. It is comprised of nine building blocks. Those building blocks are critical to assessing your long-term strategy .

This is one of the methods you can use. To sum up, the nine building blocks are:

Each of those blocks is not independent of the other. In fact, in many cases, they are strictly tied to each other.

And from the interactions between them, you can build a sustainable business model able to unlock value for your organization and other players that are part of its growth.

Alternative ways to design, develop and understand a business model

The business model canvas is a good starting point to assess your business or a competitors’ business. It is also a simple tool to leverage if you need to design a sustainable and financially viable business model.

However, that is not the only tool. Alternative tools for business model innovation and design comprise the lean startup canvas , the growth hacking canvas , Blitzscaling business model innovation canvas , and many others.

Leaner canvas

The customer/problem quadrant from the LEANSTACK, also called by its author, Ash Maurya, “leaner canvas.”

A tool like the leaner canvas might be quite useful in the first stage. Where all the building blocks are still missing. And they will probably be lacking for a while.

Thus, at that initial stage, it becomes critical to focus on understanding the problem you’re trying to solve and who you’re solving that for. Once you fine-tune that process you’re ready to move to the next step.

The most important takes from Ash Maurya leaner canvas is a via negativa approach (as Nassim Nicholas Taleb explains in his book Antifragile, via negativa is about focusing on the things you might want to remove), where you need to limit your focus to the problem rather than having a pre-conceived solution to it. Thus avoiding to fall in what Ash Maurya called in our interview the “ Innovator’s Bias .”

Lean startup canvas

Once you fine-tune the process of truly understanding the problem, it might make sense to move to the next building blocks to test some of the assumptions underlying the business you’re building.

Assumptions can make or break a business.

While in the past or when financial resources are easily available to companies, it is possible to hold these assumptions for a long time (until you won’t run out of cash or potential investors interested in your business) in a beautifully drafted business plan.

For a company with limited resources, gathering feedback from customers, mastering the problem, and building a solution on top of that becomes a key element. Therefore, the Lean Canvas by Ash Maurya helps do that:

lean-startup-canvas-vs-business-model-canvas

The Lean Canvas is a variation of the Business Model Canvas by Alexander Osterwalder, put together by entrepreneur and author (Running Lean and Scaling Lean) Ash Maurya.

The advantage of the lean startup canvas is the reduction in uncertainty and risk intrinsic to the initial stage of the launch of a business. It’s important to highlight that there is no tool that can remove all the risks.

And entrepreneurship is risky, that’s part of the game. And that is also what makes the opportunity worth it. What these tools should help us achieve is a focus on the things that matter and remove the rest.

The business world can be very noisy, and if we have a few tools that make us focus on a few key elements those are welcome. Thus, with a tool like the lean canvas, as you start reiterating on a measuring whether the product or service delivered to your audience is a solution to their problems.

You can track that by looking at key metrics. This model is well suited for those that want to grow a lean organization by limiting the risk of running a business based on too many assumptions and with an approach that is driven by your customers’ needs.

Growth hacking canvas

Another tool that might work instead, if you want to accelerate the growth process, via a framework that is designed to test and prioritize marketing channels to enhance growth, the growth hacking canvas :

The growth hacking canvas also built on top of the business model canvas and similar to the lean startup canvas, it has an additional layer in comparison to the latter as it allows to identify a set of actions to undertake to measure, assess and speed up growth.

Growth marketing is a key ingredient for the success of any business in the current landscape. It is also the first move toward a 10X growth thinking for your business.

Blitzscaling business model canvas

The last tool, you can use for your business is called Blitzscaling business innovation canvas . I put together this framework after reading the book Blitzscaling , by LinkedIn co-founder Reid Hoffman.

The Blitzscaling canvas aims to design an innovative business model to generate aggressive growth. More precisely Blitzscaling prioritizes speed over efficiency and makes of massive growth its primary objective.

Thus, in a climate of uncertainty where competition or the market might threaten your business, any delay might mean the death of your business. Then the Blitzscaling framework might be the best suited to face that scenario:

Blitzscaling tells you that – in some particular circumstances – if you want to scale a business, you’ll need to leverage a few elements, among which business model innovation plays a key role.

This business model will need to be built around four growth factors (market size, distribution, high gross margins, network effects) and to avoid the to primary growth limiters (lack of product/market fit and operational scalability).

Blitzcaling is well suited if you’re trying to scale a business and bring it to a billion-dollar business as quickly as possible. This is only suited to a few scenarios, where the company is in a place to doing or dying. Thus, this framework might be both a defense and an attack mechanism.

FourWeekMBA Two-Deimensional Business model

The key components of any business model according to the FourWeekMBA analysis are:

A compelling value proposition: How do you want your people to think about your brand?
A unique brand positioning: What do you offer to your people that make them want more?
A 10x goal setting: Can you offer a 10X better product or service? (compared to existing solutions)
Customer segments: Who is your customer? (to notice here we’re not talking anymore about people but customers, those willing to pay for your product or service)
Distribution channels: How do you get your product or service to your customers?
Profit formula: Is the business financially sustainable?

This business model framework by FourWeekMBA has four aims:

simplicity : heuristics-based rather than complex models
noise reduction : choosing a few key data points, rather than looking at a massive amount of data that only adds noise and paralyze decision-making processes
branding and distribution : looking at a business model as a systematic way to build a strong distribution network and a strong brand. The two things walk hand in hand
and profitability : the financial viability of a business model is a key element for its success

In short, according to this framework, there are two dimensions of a business:

The people dimension
The financial dimension

These two dimensions walk hand in hand.

Yet the people side is also what makes the business thick from the economic standpoint.

The people side comprises the following elements:

This people dimension will help you build a solid brand. A solid brand builds up a tribe, a group of people that can follow you anywhere. Once you have a solid brand, you can focus on the second dimension: the financial dimension.

The three elements of the financial dimensions are:

3c Business Model Analysis

Another way to look at business models is through the 3c model analysis , where the three components that make up the business model are customers, competitors, and company. The 3C Analysis Business Model was developed by Japanese business strategist Kenichi Ohmae.

Platform Canvas

VTDF Framework

What tool to use.

What tool to use to design your business model will depend on what is that you’re after. In this guide, you have enough material to get going with your business.

Business model tools can be used for several reasons:

Analysis : imagine you are a business analyst trying to make sense of a company, a tool like the business model canvas is a great framework to start with as it gives you a clear path to follow.
Entrepreneurship : if you’re an entrepreneur trying to build a valuable company than using tools like the leaner canvas or the lean canvas is probably a good starting point.
Business innovation: if you’re looking for the recipe to build an innovative business, intended as a company that finds new ways to build value for its customers, both the business model canvas to study existing successful businesses, in other fields might be a good starting point. In many cases, business innovation is about finding the right mix of existing patterns. Or transposing things that have been done in other faster industries, in a slower, and less attractive industry.
Business acumen: if you want to just improve your business acumen, I’d suggest not using any particular tool, but rather keep your mind open to the things you might stumble upon. Look at financials, at data, look at entire industries and try to absorb as much as you can. Once the process becomes automatic and almost unconscious your mind will know how to make sense of that!

Keep it creative

One of the biggest mistakes people make (I do it as well) is to fall in love with particular tools, methodologies, and instruments. But those are just tools, that while helpful to get us started and give us a clear path, they might also limit our understanding.

The real world is extremely messy and it requires an open approach, where you are able to look at different aspects, angles, and perspectives. Only when you leave the process creative, and you leave space to test many things out, eventually you might stumble on incredible business discoveries!

Alternatives to the Business Model Canvas

Fourweekmba squared triangle business model.

This framework has been thought for any type of business model , be it digital or not. It’s a framework to start mind mapping the key components of your business or how it might look as it grows. Here, as usual, what matters is not the framework itself (let’s prevent to fall trap of the Maslow’s Hammer ), what matters is to have a framework that enables you to hold the key components of your business in your mind, and execute fast to prevent running the business on too many untested assumptions, especially about what customers really want. Any framework that helps us test fast, it’s welcomed in our business strategy .

An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand . The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.

FourWeekMBA VTDF Framework For Tech Business Models

This framework is well suited for all these cases where technology plays a key role in enhancing the value proposition for the users and customers. In short, when the company you’re building, analyzing, or looking at is a tech or platform business model , the template below is perfect for the job.

A tech business model is made of four main components: value model ( value propositions, mission , vision ), technological model (R&D management), distribution model (sales and marketing organizational structure ), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model .

Download The VTDF Framework Template Here

FourWeekMBA VBDE Framework For Blockchain Business Models

This framework is well suited to analyze and understand blockchain-based business models. Here, the underlying blockchain protocol , and the token economics behind it play a key role in aligning incentives and also in creating disincentives for the community of developers, individual contributors, entrepreneurs, and investors that enable the whole business model . The blockchain-based model is similar to a platform-based business model , but with an important twist, decentralization should be the key element enabling both decision-making and how incentives are distributed across the network.

A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.

Download The VBDE Framework Template Here

Key Highlights

Key Partners : Identify the key partners or suppliers who are crucial for the success of your business. Understand the motivations and reasons for forming partnerships.
Key Activities : Determine the key activities your value proposition requires. These activities are essential for distribution channels , customer relationships, and revenue streams.
Value Proposition: Define the core value you deliver to your customers and identify the customer needs you are satisfying. Your value proposition is the foundation of your business model.
Customer Relationships: Establish the type of relationship your target customers expect you to establish. Understand how to integrate these relationships into your business in terms of cost and format.
Customer Segments: Identify the different classes of people for whom you are creating value. Determine who your most important customers are.
Distribution Channels : Determine the set of steps through which your product or service reaches your customers. Consider both direct and indirect distribution channels , as well as physical and digital distribution.
Cost Structure : Identify the most significant costs in your business and the key resources or activities that are most expensive.
Revenue Streams: Understand what value your customers are willing to pay for and how they prefer to pay. Assess the contribution of each revenue stream to your overall revenues.
Key Resources: Determine the key resources your value proposition requires and those that are most important in distribution channels , customer relationships, and revenue streams.

Read Next: Business Model Innovation , Business Models .

Related Innovation Frameworks

Business Model Innovation

Innovation Theory

Types of Innovation

Continuous Innovation

Disruptive Innovation

Business Competition

Technological Modeling

Diffusion of Innovation

Frugal Innovation

Constructive Disruption

Growth Matrix

Innovation Funnel

Idea Generation

Design Thinking

FourWeekMBA Business Toolbox

Business Engineering

Tech Business Model Template

Web3 Business Model Template

Asymmetric Business Models

Transitional Business Models

Minimum Viable Audience

Business Scaling

Market Expansion Theory

Speed-Reversibility

Asymmetric Betting

Revenue Streams Matrix

Revenue Modeling

Pricing Strategies

Business Strategy Examples
Business Models
What Is a Value Proposition?

What is a business model canvas?

The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in the book Busines Model Generation enabling the design of business models through nine building blocks comprising : key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

How do I create a canvas model for my business?

By going through the nine building blocks proposed by the business model canvas (key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams) you can have in one page the whole representation of a business.

What is cost structure in business model canvas?

The cost structure building block in the business model canvas asks the questions, “What are the most cost in your business?” and “Which key resources/ activities are most expensive?” Thanks to the cost structure building block, it is possible to look at the vital resources and cost centers of an organization.

What is Lean Canvas model?

The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics , unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.

More Resources

About The Author

Gennaro Cuofano

6 thoughts on “what is a business model canvas business model canvas in a nutshell”.

Awesome stuff. Good explanation of the business model canvas. Thanks a million!

thanks a lot, Roman! Make sure to check this out too: https://fourweekmba.com/what-is-a-business-model/

Thank you so much for sharing all this.

Absolutely Roman 🙂

Significant article, every aspect clearly explained, will love to read more, thanks a lot!

Thanks a lot Antonio! Check this out then: http://fourweekmba.com/business-strategy

Business Model Canvas (BMC)

Business Model Canvas: this article describes the Business Model Canvas (BMC) , developed by Alexander Osterwalder and Yves Pigneur in a practical way. This article contains the definition of the BMC model, an example and practical tips. The article also contains a downloadable and editable Business Model Canvas template.

What is the Business Model Canvas (BMC)?

The Business Model Canvas (BMC) is a strategic tool for organizations. It is also known as the BMC model. It is a graphic representation of a number of building blocks that represent the elements of an organization.

The Business Model Canvas can be deployed as a strategy tool for the development of a new organization and business model innovation. It can also be used to analyse the (business) situation of an existing business.

The Business Model Canvas was developed by the Swiss business model guru Alexander Osterwalder and management Information Systems professor Yves Pigneur . They defined nine categories for the Business Model Canvas which they refer to as the building blocks of an organization. The model was published in the book Business Model Generation.

The building block are:

Key partners
Key activities
Key resources
Value propositions
Customer relationships
Customer segments
Cost structure
Revenue streams

The performance of an existing organization can easily be improved using the Business Model Canvas. All company aspects are made clear at a glance because of the visual aspect. By looking at the developments per category, an organization can fine-tune its value proposition and structurally improve its strategy. When setting up a new company clear decisions can be made in advance using the Business Model Canvas.

business model canvas bmc template - Toolshero

Figure 1 – Business Model Canvas (BMC)

1. Key partners

Key partnerships are placed on the left side of the canvas. For both start-up organizations and existing organizations it may be important to create alliances with partners. For instance when fighting the competition and combining knowledge and skillfulness.

Essential information will be acquired by knowing in advance which partners may constitute a valuable relationship.

2. Key activities

A good understanding of the value proposition can be obtained by having proper knowledge of the core activities of a company. This is not just about production. A problem-solving approach, networking and the quality of the product or service are important as well.

When the organization knows what the added value for the customer is, a better relationship may develop with existing customers. This may be helpful in the canvassing of new customers and makes it easier to keep the competition at bay.

3. Key resources

Resources are means that a company needs to perform. They can be categorized as physical, intellectual, financial or human resources.

Physical resources may include assets such as business equipment. Intellectual resources include among other things knowledge, brands and patents. The financial resources are related to funds flow and sources of income and human resources comprises the staffing aspect.

4. Value propositions

The value proposition is about the core of a company’s right to exist, it meets the customer’s need.

How does an organization distinguish itself from the competition? On the one hand, this distinction focuses on quantity such as price, service, speed and delivery conditions. On the other hand, it also focuses on quality including design, brand status and customer experience and satisfaction.

5. Customer relationships

It is essential to interact with customers. The broader the customer base the more important it is to divide your customers into different target groups. Each customer group has specific needs.

By foreseeing the customer needs, the organization invests in different customers. A good service will ensure good and stable customer relationships that will be ensured in the future.

6. Channels

An organization deals with communications, distribution and sales channels. It is not just about customer contact and the way in which an organization communicates with their customers. The purchase location and the delivery of the product and/or services provided are decisive elements in this.

Channels to customers have five different stages: awareness of the product, purchase, delivery, evaluation & satisfaction and after sales. It is advisable to combine offline and online channels to reach as many customers as possible.

7. Customer segments

As organizations often provide services to more than one customer group, it is sensible to divide them into customer segments.

Products and services can be better geared towards specific needs and requirements for each group. This can be done by identifying what those needs are and which value is attached to them. This will lead to greater customer satisfaction, which in turn will contribute to a good value proposition .

8. Cost structure

By gaining an insight into cost structure, an organization will know what the minimum turnover must be to make a profit.

The cost structure considers economies of scale, constant and variable costs and profit advantages. Costs have to be adjusted when it’s obvious that more investments must be made than the organization is generating in revenue. Often an organization will opt for deleting a number of key resources.

9. Revenue streams

In addition to the cost structure, the revenue streams will provide a clear insight into the revenue model of an organization. For example, how many customers does an organization need on an annual basis to generate a profit? How much revenue does it need to break even?

The revenue streams are cost drivers. Aside from the sale of goods, subscription fees, lease income, licensing, sponsoring and advertising may also be an option.

The power of brainstorming sessions

All members of the management team can make excellent contributions to the business model canvas. This can be done by filling it out on a large sheet of paper.

This way, all members can enjoy brainstorming sessions with each other, think about the categories and voice their opinions. This will create a good and objective image of the organization. Any new ideas can be discussed immediately and possibly be developed concretely.

Business Model Canvas example

Figure 2 – a example of a filled Business Model Canvas

Business Model Canvas Template

Start describing the different aspects of the Business Model Canvas with this ready to use Business Model Canvas template.

Download the Business Model Canvas Template

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It’s Your Turn

What do you think? Is the Business Model Canvas applicable in today’s modern economy and business? Do you recognize the practical explanation or do you have more suggestions? What are your success factors for good business model canvas management?

Share your experience and knowledge in the comments box below.

More information

Osterwalder, A. (2004). The business model ontology: A proposition in a design science approach .
Osterwalder, A. , & Pigneur, Y. (2013). Designing business models and similar strategic objects: the contribution of IS. Journal of the Association for Information Systems, 14(5), 237-244.
Veyrat, P. (2017). Lean Business Model Canvas: For every type of organization .
Osterwalder, A. , & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers and challengers . John Wiley & Sons .

How to cite this article: Mulder, P. (2017). Business Model Canvas (BMC) . Retrieved [insert date] from Toolshero: https://www.toolshero.com/strategy/business-model-canvas/

Original publication date: 03/14/2017 | Last update: 08/14/2023

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11 responses to “business model canvas (bmc)”.

Salutations! Je pense que c’est l’une des informations les plus utiles pour mon entreprise. Je suis heureux de lire votre article. Merci de partager avec nous pour cet article.

Great article about an awesome tool! As a business model coach I use the Business Model Canvas almost daily with my clients! It is such a valuable tool if applied correctly.

Thank you for your comment and sharing your experience Matthias.

Thank you i am just getting the hang of it however i see the value in keeping it brief and impact-full. love it!

Thank you for your feedback Kevin. I am glad that you found the article helpful.

I’m trying to prepare an effective business model canvas for my school project and I’m having hard time on it. Being my first time and it’s not a organization yet so i don’t know what to fill in. Please i need assistance.

It’s understandable that filling in a fictive BMC can be challenging. Perhaps you could brainstorm with a classmate to come up with ideas? What can be really helpful as well is creating a mind map . Hope this helps!

Best regards, Tom

that’s great content, thanks for it

Awesome stuff. Good explanation of the business model canvas. Thanks a million!

Thank you for your comment, Ana.

Business model canvas if the tool being applied effective it enhance the organization to know their strength and weaknesses and be more productive.

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How to Map Out Your Digital Transformation

Benjamin Mueller

Start by focusing on your business model — not your technology.

If digital transformation is supposed to be meaningful and lasting, companies must think about changes in products and processes more than changes in technology. But many companies struggle to look past the shiny promises that usually accompany new technologies. As a result, they dedicate too many resources and too much attention to the technology side of digital transformation projects. One approach to counter this imbalance is to think of digitalization as business model innovation rather than technology-related change. The author shows how one simple, well-known tool — the business model canvas — can facilitate the necessary shift in perspective.

At the start of the pandemic, businesses around the globe found themselves exposed to an unexpected boost in digitalization. Those who promised to keep the wheels turning were given carte blanche to do whatever it took to keep a company running. But as many now return to the office, they also realize that the digitalization lodestar is beginning to fade. Where investment priorities were clear early in the pandemic, companies now face the same uncertainties regarding digitalization as they faced before it.

At the heart of this uncertainty is a simple question: How do leaders make sure that digitalization makes a purposeful and sustainable impact on the business — and doesn’t just follow the next tech hype?

Behind this question stand legions of digitalization leaders who have tried to figure out what the latest trend in tech means for them — from AI and blockchain to quantum computing. But while many of these trends are hyped initially, executives have become all too familiar with the hype cycle’s “valley of tears”: the sobering phase after the initial hype when impacts and benefits remain vague and many projects are abandoned. Only a few manage to pull through and reach the “plateau of productivity” where digital investments start to make a difference.

One approach to counter this imbalance is to think of digitalization as business model innovation rather than technology-related change. Over the past three years, I’ve been working with dozens of teams who made that shift. They were faced with digitalization challenges across a wide range of industries (e.g., consumer goods, health care, education, construction, finance) and firm sizes (from small and medium enterprises to larger, international organizations).

While their motivations and goals differed, the teams shared the experience that envisioning business model change — whether in response to digital disruption or to innovate digitally themselves — helped them see technology in context and better understand what measurable changes to expect. Across the teams, one simple, well-known tool turned out to facilitate the necessary shift in perspective: the business model canvas.

The Business Model Canvas

The business model canvas , developed by Alexander Osterwalder and Yves Pigneur, has helped organizations sketch out and transform their business models since the late 2000s. It’s intuitive to use and consists of nine key elements that each business usually relies on. At the heart is the value proposition , usually understood as a combination of pains addressed and gains delivered from a customer’s perspective. Toward the right, an understanding of who a business’s customers are leads to the capturing of customer segments . Between the two, customer relationships and channels sketch out how to relate to customers, stay open to their input, and deliver the value to them. On the more operational left side of the canvas, businesses are encouraged to think about the key activities and key resources needed to create that value. This side of the canvas also takes a look at key partners , such as through strategic alliances or complementary offerings, that help create value or further add to it. The canvas is then underpinned by an understanding of a business’s cost structure and insights into its anticipated revenue streams .

There are two aspects of the canvas that make it particularly suited to the digitally oriented conversations in focus here. First, while it serves as a sort of checklist to ensure that none of the nine key elements is overlooked, it also pulls all of the elements together, allowing for an understanding of the crucial interplay between them. Changes to one element usually have ripple effects across the entire canvas. For instance, changes in how an innovation is monetized will alter cash flows, which then in turn requires key activities to be restructured. This focus on interplay is key in digital transformation projects, too, because their success depends not only on investing in the right technologies, but also on the complementary changes in organizations that ensure that the technologies are used efficiently and effectively.

Second, the business model canvas is strongly rooted in the thinking that a perfect business plan rarely emerges in its final form overnight. Generating one is a process of iterative refinement driven by intense customer testing (e.g., through minimum viable prototypes or focus groups). In this way, smaller aspects of the canvas are subjected to feedback from key stakeholders to see how much sense they make and whether any changes are needed to improve the business model. This spirit is expressed well by the idea of lean startups . Changes that result from such testing can be evolutionary, gradually refining the business model, or even revolutionary, pivoting the whole idea. The same logic can also be applied to digitalization projects because many parts — both technological and organizational — need to be aligned iteratively to make them work.

How to Use the Business Model Canvas for Digital Transformation

Like generating innovative business models, managing digital transformation is one of the key challenges many organizations face today. This is especially true for small and medium enterprises that don’t have the luxury of large transformation budgets, the talent pool that comes with them, or the ability to just spin off their more digital ventures. But luckily, innovating in your business model and transforming your business digitally can use more than one page from each other’s playbook. Like business model innovation, genuinely engaging with digital transformation is not just about paradigm deepening or doing what you’ve always done but with fancier tech. Especially as organizations around the globe are now facing the question of what to make of their recent tech investments, there’s an opportunity to turn the often continuity-focused tech investments of recent years into foundations for a more genuine transformation of the enterprise.

1. Map out the current business model

In order to know where you’re going and how to get there, you first need to understand where you are. Start mapping out your current business model. Going through the nine elements of the canvas for your business — especially if your current business model has grown rather than having been carefully engineered — will add an important baseline to your transformation efforts.

In this process, it is paramount that you do not simply fill in the nine boxes, but that you also pay close attention to the interplay between them. This exercise reveals the fault lines in your current business model.

A company developing and manufacturing medical prosthetics delivers a good case in point. When forced to sketch out their current business model, they realized that their relationship with their end customer (i.e., patients) was fully mediated by the doctors who interact with the patients directly. Not only did this limit the company’s ability to get important direct feedback on products and quality from their end customers, but it also limited their ability to inform patients about further customization options that could be added beyond insurance coverage.

In mapping out their business model, the company realized that they needed to augment their sales and order process to directly involve the end consumer early on. To do that, they brought in a digitally integrated sales management system that would allow them to collaborate with customers and made investments in a manufacturing process that relied on 3D models that could easily be shared online.

2. Engage with the transformation opportunities

Look for ways to engage with the transformation opportunities the previous step revealed. A ranking exercise will allow you to identify the key elements you want to focus on, then you can begin to gradually develop the necessary changes.

In my work with digital transformation teams, an important part of these conversations has been to let go of the status quo to be able to envision not the process of transformation, but its goal. Many of the teams also employed strategic foresight approaches to help with this step. As I mentioned earlier, this second step is not a singular, Eureka-like effort. Carefully experimenting with the key changes and their ripple effects proved to be essential if teams wanted to a) break down the overall transformation effort into manageable chunks and b) make sure that a coherent vision for the transformation resulted.

An international manufacturer of specialized construction machinery had to face the fact that its traditional products were coming under increasing pressure because competitors managed to provide smarter and more networked machines. Working with the business model canvas, the company realized that the challenge they were facing wasn’t a primarily tech-driven one. By carefully reflecting on the impact that smarter and connected products would have on their business model, the company realized that it needed to focus its transformative efforts on developing and communicating an updated value proposition first. Consequently, the focus of the project shifted from being about embedding smart and connected components into their products to understanding the need for an updated value proposition.

Going back to the business model canvas, this step starts introducing changes and updates into your canvas.

3. Derive the necessary changes

Once you’ve sketched out the goal in the second step, the third step is all about deriving the necessary changes to get from the status quo to the digital target. Successful digital transformations have been compared to conducting an orchestra rather than just buying the latest instrument. Beyond identifying the key changes that the transformation relies on, it’s also important to keep an eye on the ripple effects throughout the canvas and be sensitive toward the complementary efforts that will be needed. In this way, training and upskilling can prove to be at least as essential to a successful digitalization as picking the right tool for the task and understanding its business implications.

Continuing the example of the construction equipment manufacturer, the team’s discussions that followed focused strongly on the subsequent adaptations needed in the other parts of the business model canvas and how to design the transformation path to orchestrate the changes. Applying a canvas-based analysis to related cases, such as John Deere’s shift toward smart farming or Caterpillar’s emphasis on monetizing their customers’ need for a reliable service level, provided complimentary insights on how to design the transformation beyond its digital spark.

Work in this step will result in a roadmap that links the transformation goals defined in the previous step to a coherent set of change initiatives. Clearly, technology will remain key in these initiatives. But from the perspective instilled by the business model canvas, providing the actual tool is only a minor change in terms of your business’s key resources. What matters more is a clear understanding and vision of what you can now do differently. Most teams experienced that purposeful changes to their key activities were needed to ensure that technology investments were used effectively and led to lasting transformations in how value was created and delivered.

4. Make sure you’ve hit your target

Finally, a fourth and complementary step is all about making sure that you’ve hit your target. Digital transformations often rely on breaking down the overall transformation efforts into smaller steps and might even prove to be an ongoing effort. Keeping an eye on the business model is essential to keeping iterative efforts on track and helps businesses not to fall into some kind of post-transformation stasis that conveys a false sense of stability. Especially when digitalization of one aspect of the business leads you to realize that other parts of the business need to follow suit, this continued engagement with digital transformation is crucial to staying ahead of the competition.

For example, a chain of convenience stores mostly located at transportation hubs initially faced challenges because of restrictions regarding the numbers of customers in their stores during the pandemic. While this could have been viewed as a temporary issue — requiring a temporary solution — the team’s business model focus encouraged them to think more comprehensively about their value propositions to people “on the move” and pressed for time.

In the process, the team realized that an app they rolled out soon after the first lockdown that allowed their customers to preorder items to pick them up in-store could lead to a more permanent transformation of their business and operating model, including aspects like store layout and supply chain optimizations. For them, focusing on the business model and their key value proposition shifted the key question from “what can we do with this technology?” to “how can technology help us achieve this goal?” and unlocked a cascade of changes far beyond the initial digitalization of the sales channel.

The fourth step is forward looking and emphasizes an important capability-focused approach to digitalization. In other words, rather than focusing on technology, the focus should be on what you can do now that you could not do before. Many organizations around the globe — from businesses to universities and nonprofits — have realized that there is more than one way of doing the things that they do. This has been the real driver and threat behind digital disruption for a long time.

If your business is facing the challenge of how to maintain its digitalization momentum, drawing on the business model canvas might make for a welcome change in perspective that helps you stay focused on business priorities and impacts instead of just technological trends. If digitalization is supposed to be truly transformative, impacts of corresponding changes are bound to show up in the canvas and its elements.

[Editor’s Note 5/2/22: This piece has been updated to credit Alexander Osterwalder and Yves Pigneur, who developed the business model canvas.]

BM Benjamin Mueller is the professor for digital business at the University of Bremen and an associate researcher at the Karlsruhe Institute of Technology. He specializes in digital ethics as well as understanding how advanced information and communication technologies transform organizations and individuals’ work. Follow Benjamin on LinkedIn .

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14 ways to apply The Business Model Canvas

When Alex Osterwalder and Yves Pigneur wrote Business Model Generation in 2009 they couldn't have imagined all the different applications users would come up with for their Business Model Canvas. In this post I'll give you fourteen very different but very practical applications of the Business Model Canvas that we've observed first hand from our global community of practitioners.

Over the years we've observed a lot of different types of people who are using the Business Model Canvas in a lot of different types of organizations. We wrote about those learnings in a previous post where we shared our recently published research report . We shared why organizations around the world are adopting the tool and provided some general ideas for ways they are using it. We expand on those useful applications below. We focus primarily on applications we've observed from within large organizations but entrepreneurs and startups will find these ideas equally helpful.

14 Business Model Canvas applications

Strategic Planning/Development - One of the primary ways we've seen organizations use the BMC is in their regular strategic planning and development cycles. They use it to create a blueprint of their strategy. The BMC provides a very clear foundation and direction for the conversation at hand, whether done in a corporate offsite with the executive team or done around the board room table .

Retrospective/Outlook - When used as a strategic plan users apply the BMC to describe what they’ve done the past year and what they intend to do in the year ahead. If there are changes in the business model or entirely new building blocks to be developed then they would indicate that with colour coding. An interesting trend here is that the BMC is increasingly used as a modern version of the strategic plan to co-create strategy with people from around the organization to boost alignment and buy-in.

Strategic Planning per Business Unit - In larger organizations we’ve also seen the canvas being used for strategic planning per business unit, because it gives you an overview of what the different business units are doing. The BMC works as a shared language across business units and provides you with a snapshot of your organization's business model portfolio (cf usage 4).

Dashboard - We’ve seen a couple of teams and companies start using the BMC as a dashboard. They define a set of indicators for each building block of their Business Model Canvas that they want to follow. Then they define a performance threshold for each indicator. It's on green if they are happy with the performance per indicator, turns orange if there is something to look at, and turns red if there’s a problem. For us it was interesting to see how some users hacked the canvas to "repurpose" it in a very very innovative way in order to follow the performance of their organization.

Understanding Competition - Another interesting way to use the BMC is to understand competition. By sketching out the business model of each one of your competitors you gain a better understanding of their strengths, limits, constraints, and what they can or can't do. This increased understanding of your competitive landscape will allow you to act accordingly and design a better business model.

Portfolio of Business Models - A particularly interesting area for application of the BMC is the idea of developing a portfolio of business models, ranging from improving existing business models all the way to inventing new business models. While product and brand portfolios are relatively well mastered in large organizations, business model portfolios are an entirely new phenomenon.

A business model portfolio helps you understand and highlight with which business model you are making cash today and with which business models you’re going to make cash in the future. Beyond growth and cash generation the portfolio approach also helps you understand synergies and potential cannibalization between the different business models.

Increasingly, organizations are moving away from just managing product portfolios and brand portfolios towards business model portfolios. This is still a very young field of development, but it’s a very very promising one.

A good illustration of this business model portfolio approach is Nestlé's use of it's machine and pod technology. It all started with Nespresso 's innovative business model built around single portioned coffee. Today the same technology is used in its mass market coffee ( Dulce Gusto by Nescafé), it's tea business ( SpecialT ), and even for its baby formula ( BabyNes ). While they all use the same underlying technology all of these businesses have different business models with potential synergies and cannibalization.

Design, test, and build new growth engines - This application is very closely related to the original intent of the BMC outlined in Business Model Generation and refined in Value Proposition Design . Here the BMC is used to prototype alternative business models and test them with the Lean Startup / Customer Development Process . We call this the search for the right business model and value proposition .

New idea template - A lot of organizations use the BMC as a (sometimes mandatory) template to develop and/or submit new ideas. The interesting thing here is that then the ideas become comparable. This unifying lense or language allows you to compare all types of innovations ranging from process innovation and product innovation all the way to substantial business model innovation and the creation of new growth engines. Corporate incubators and accelerators in particular are huge fans of the BMC to manage the ideas of their different teams.

Understanding customers - An incredibly interesting and innovative use of the BMC is that of companies that use the Canvas to sketch out the business models of their customers. By better understanding their customer’s business model they can develop better value propositions and/or better explain their solutions in the context of their customer's business.

For example, Ericsson, the telecom equipment manufacturer, uses a version of the BMC to better understand the network operators they are serving. Or, SAP, the German software giant, uses the BMC in their pre-sales process. Sales teams map out the customer's business model in collaboration with the customer or as a preparation for sales meetings.

Alignment/CxO/executive on boarding - While we always saw the BMC as an alignment tool, it was a surprise to us that leadership teams would use the BMC as an onboarding tool for CEOs or senior executives.

The first time we discovered this type of application it was more of an accident. We were running a business model workshop in a company that just hired a new CEO. He loved the approach because it gave him an immediate understanding of the entire organization in one workshop. Another organization in Asia started using the BMC systematically for every senior executive on boarding. They get every new hire to sketch out the company's business model. In another case a CFO used the BMC to understand the business model he was getting into when he was starting a new job. He then got the entire leadership team to run an alignment workshop with the Business Model Canvas.

Strategy diffusion and co-creation - A very powerful way to use the BMC is in the context of strategic alignment across the organization. On the one hand it can be used for strategy diffusion or on the other hand - as I mentioned previously (cf usage 1) - for strategy co-creation to create buy-in. The canvas plays a very powerful role in strategy diffusion because it becomes the blueprint of your strategy that shows more concretely, more clearly how you’re going to implement your strategy.

Shared language across functions - One of the biggest areas of application where we’ve seen the canvas succeed phenomenally is as a shared language across the organization. The Canvas is particularly helpful when applied across functions. People from marketing, technology, engineering, operations, finance, and so on can all work together around a BMC and have a shared language to discuss their ideas. Whether it's new ideas on the table, new businesses on the table, or new business models that are going to be developed, the Canvas becomes the central, unifying tool to center the conversation. The Canvas doesn't just provide a shared language to make conversations better, it also makes conversations more strategic, and in particular, it provides an outcome that can actually be implemented.

General alignment - The BMC helps generally with alignment because on one piece of paper we have all the essentials of the blueprint of your strategy. In a previous post we shared The Business Model Theatre video and how the Canvas is made up of a front stage and a back stage. On the front stage, the Canvas very clearly delineates how you’re creating value for customers and how that allows you to generate revenues. On the backstage the Canvas describes what resources, activities, and partners you need to create this value and how that generates costs. The BMC makes it possible for everybody to have a shared understanding of what we’re trying to achieve as an organization. It makes explicit what the pieces of your business model are, what the blueprint of your strategy is, and guides everybody to work towards that end.

Investment decisions - Some organizations are using the BMC to make better investment decisions. Once you've sketched out a business model(s) and you understand the underlying business opportunity, you have a better understanding of where you should allocate resources. This is true both for improving existing business models to inventing entirely new business models. Of course we recognize that it’s actually easier to generate quick revenues from existing business models and harder to generate long-term revenues from new ones, but we need to allocate resources across the entire portfolio of business models. The Canvas makes business opportunities explicit and can serve as a guide to how those resources get allocated.

Mergers and acquisitions - One application that we really didn’t expect would come up is the application of using the BMC in context of mergers and acquisitions. The idea here is that you would sketch out the business models of two organizations and figure out if there is a good fit. If you do this for a couple of organizations within a specific industry you'll better understand where there are potential synergies and opportunities for integration and where more differentiating factors will cause you to run into challenges. This application can be used for large and small mergers and acquisitions as well as in settings where an organization has an internal startup and wants to acquire or merge it back into the parent company or back into an existing business unit.

Exit strategies (IPO, acquisition) - The last application we'll provide here is using the Canvas in the context of exit strategies. When assessing the opportunity of bringing an organization to the market you can use the Canvas to determine where you are going to allocate the money, how you will create better value propositions, how you will acquire more customers, or how to decrease your costs and increase your revenues. If you aren't going for an IPO and you want to sell the company and get acquired you will want to understand if and how your organization fits with other organizations. In this case you would apply the Canvas in the same way as we’ve seen with Mergers & Acquisitions (cf usage 13).

It has been incredibly exciting to see so many very different applications of the Business Model Canvas. Here we've provided 14 ways to apply the Canvas and I’m sure there are many more. Hopefully this gives you a little bit of a taste and some appetite to figure out how you could apply the Business Model Canvas within your organization.

What new or interesting ways have you found to apply the Business Model Canvas? How will you apply it in your organization?

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About the speakers

Benson is a business design consultant and a member of the Strategyzer content team. He helps companies of every shape and size, big, small, and everything in between to design or even redesign their business models and their value propositions. And at Strategyzer he also helps to create content for the Strategyzer workshops, the online course, Strategyzer blog, webinars. He is a contributor to our book: Value Proposition design.

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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.

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!

How Companies Make Money

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What Is a Business Model?

Understanding business models, evaluating successful business models, how to create a business model.

Business Model FAQs

The Bottom Line

Learn to understand a company's profit-making plan

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

Investopedia / Laura Porter

The term business model refers to a company's plan for making a profit . It identifies the products or services the business plans to sell, its identified target market , and any anticipated expenses . Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff.

Established businesses should regularly update their business model or they'll fail to anticipate trends and challenges ahead. Business models also help investors evaluate companies that interest them and employees understand the future of a company they may aspire to join.

Key Takeaways

A business model is a company's core strategy for profitably doing business.
Models generally include information like products or services the business plans to sell, target markets, and any anticipated expenses.
There are dozens of types of business models including retailers, manufacturers, fee-for-service, or freemium providers.
The two levers of a business model are pricing and costs.
When evaluating a business model as an investor, consider whether the product being offer matches a true need in the market.

A business model is a high-level plan for profitably operating a business in a specific marketplace. A primary component of the business model is the value proposition . This is a description of the goods or services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors.

A new enterprise's business model should also cover projected startup costs and financing sources, the target customer base for the business, marketing strategy , a review of the competition, and projections of revenues and expenses. The plan may also define opportunities in which the business can partner with other established companies. For example, the business model for an advertising business may identify benefits from an arrangement for referrals to and from a printing company.

Successful businesses have business models that allow them to fulfill client needs at a competitive price and a sustainable cost. Over time, many businesses revise their business models from time to time to reflect changing business environments and market demands .

When evaluating a company as a possible investment, the investor should find out exactly how it makes its money. This means looking through the company's business model. Admittedly, the business model may not tell you everything about a company's prospects. But the investor who understands the business model can make better sense of the financial data.

A common mistake many companies make when they create their business models is to underestimate the costs of funding the business until it becomes profitable. Counting costs to the introduction of a product is not enough. A company has to keep the business running until its revenues exceed its expenses.

One way analysts and investors evaluate the success of a business model is by looking at the company's gross profit . Gross profit is a company's total revenue minus the cost of goods sold (COGS). Comparing a company's gross profit to that of its main competitor or its industry sheds light on the efficiency and effectiveness of its business model. Gross profit alone can be misleading, however. Analysts also want to see cash flow or net income . That is gross profit minus operating expenses and is an indication of just how much real profit the business is generating.

The two primary levers of a company's business model are pricing and costs. A company can raise prices, and it can find inventory at reduced costs. Both actions increase gross profit. Many analysts consider gross profit to be more important in evaluating a business plan. A good gross profit suggests a sound business plan. If expenses are out of control, the management team could be at fault, and the problems are correctable. As this suggests, many analysts believe that companies that run on the best business models can run themselves.

When evaluating a company as a possible investment, find out exactly how it makes its money (not just what it sells but how it sells it). That's the company's business model.

Types of Business Models

There are as many types of business models as there are types of business. For instance, direct sales, franchising , advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that combine internet retail with brick-and-mortar stores or with sporting organizations like the NBA .

Below are some common types of business models; note that the examples given may fall into multiple categories.

One of the more common business models most people interact with regularly is the retailer model. A retailer is the last entity along a supply chain. They often buy finished goods from manufacturers or distributors and interface directly with customers.

Example: Costco Wholesale

Manufacturer

A manufacturer is responsible for sourcing raw materials and producing finished products by leveraging internal labor, machinery, and equipment. A manufacturer may make custom goods or highly replicated, mass produced products. A manufacturer can also sell goods to distributors, retailers, or directly to customers.

Example: Ford Motor Company

Fee-for-Service

Instead of selling products, fee-for-service business models are centered around labor and providing services. A fee-for-service business model may charge by an hourly rate or a fixed cost for a specific agreement. Fee-for-service companies are often specialized, offering insight that may not be common knowledge or may require specific training.

Example: DLA Piper LLP

Subscription

Subscription-based business models strive to attract clients in the hopes of luring them into long-time, loyal patrons. This is done by offering a product that requires ongoing payment, usually in return for a fixed duration of benefit. Though largely offered by digital companies for access to software, subscription business models are also popular for physical goods such as monthly reoccurring agriculture/produce subscription box deliveries.

Example: Spotify

Freemium business models attract customers by introducing them to basic, limited-scope products. Then, with the client using their service, the company attempts to convert them to a more premium, advance product that requires payment. Although a customer may theoretically stay on freemium forever, a company tries to show the benefit of what becoming an upgraded member can hold.

Example: LinkedIn/LinkedIn Premium

Some companies can reside within multiple business model types at the same time for the same product. For example, Spotify (a subscription-based model) also offers free version and a premium version.

If a company is concerned about the cost of attracting a single customer, it may attempt to bundle products to sell multiple goods to a single client. Bundling capitalizes on existing customers by attempting to sell them different products. This can be incentivized by offering pricing discounts for buying multiple products.

Example: AT&T

Marketplace

Marketplaces are somewhat straight-forward: in exchange for hosting a platform for business to be conducted, the marketplace receives compensation. Although transactions could occur without a marketplace, this business models attempts to make transacting easier, safer, and faster.

Example: eBay

Affiliate business models are based on marketing and the broad reach of a specific entity or person's platform. Companies pay an entity to promote a good, and that entity often receives compensation in exchange for their promotion. That compensation may be a fixed payment, a percentage of sales derived from their promotion, or both.

Example: social media influencers such as Lele Pons, Zach King, or Chiara Ferragni.

Razor Blade

Aptly named after the product that invented the model, this business model aims to sell a durable product below cost to then generate high-margin sales of a disposable component of that product. Also referred to as the "razor and blade model", razor blade companies may give away expensive blade handles with the premise that consumers need to continually buy razor blades in the long run.

Example: HP (printers and ink)

"Tying" is an illegal razor blade model strategy that requires the purchase of an unrelated good prior to being able to buy a different (and often required) good. For example, imagine Gillette released a line of lotion and required all customers to buy three bottles before they were allowed to purchase disposable razor blades.

Reverse Razor Blade

Instead of relying on high-margin companion products, a reverse razor blade business model tries to sell a high-margin product upfront. Then, to use the product, low or free companion products are provided. This model aims to promote that upfront sale, as further use of the product is not highly profitable.

Example: Apple (iPhones + applications)

The franchise business model leverages existing business plans to expand and reproduce a company at a different location. Often food, hardware, or fitness companies, franchisers work with incoming franchisees to finance the business, promote the new location, and oversee operations. In return, the franchisor receives a percentage of earnings from the franchisee.

Example: Domino's Pizza

Pay-As-You-Go

Instead of charging a fixed fee, some companies may implement a pay-as-you-go business model where the amount charged depends on how much of the product or service was used. The company may charge a fixed fee for offering the service in addition to an amount that changes each month based on what was consumed.

Example: Utility companies

A brokerage business model connects buyers and sellers without directly selling a good themselves. Brokerage companies often receive a percentage of the amount paid when a deal is finalized. Most common in real estate, brokers are also prominent in construction/development or freight.

Example: ReMax

There is no "one size fits all" when making a business model. Different professionals may suggest taking different steps when creating a business and planning your business model. Here are some broad steps one can take to create their plan:

Identify your audience. Most business model plans will start with either defining the problem or identifying your audience and target market . A strong business model will understand who you are trying to target so you can craft your product, messaging, and approach to connecting with that audience.
Define the problem. In addition to understanding your audience, you must know what problem you are trying to solve. A hardware company sells products for home repairs. A restaurant feeds the community. Without a problem or a need, your business may struggle to find its footing if there isn't a demand for your services or products.
Understand your offerings. With your audience and problem in mind, consider what you are able to offer. What products are you interested in selling, and how does your expertise match that product? In this stage of the business model, the product is tweaked to adapt to what the market needs and what you're able to provide.
Document your needs. With your product selected, consider the hurdles your company will face. This includes product-specific challenges as well as operational difficulties. Make sure to document each of these needs to assess whether you are ready to launch in the future.
Find key partners. Most businesses will leverage other partners in driving company success. For example, a wedding planner may forge relationships with venues, caterers, florists, and tailors to enhance their offering. For manufacturers, consider who will provide your materials and how critical your relationship with that provider will be.
Set monetization solutions. Until now, we haven't talked about how your company will make money. A business model isn't complete until it identifies how it will make money. This includes selecting the strategy or strategies above in determining your business model type. This might have been a type you had in mind but after reviewing your clients needs, a different type might now make more sense.
Test your model. When your full plan is in place, perform test surveys or soft launches. Ask how people would feel paying your prices for your services. Offer discounts to new customers in exchange for reviews and feedback. You can always adjust your business model, but you should always consider leveraging direct feedback from the market when doing so.

Instead of reinventing the wheel, consider what competing companies are doing and how you can position yourself in the market. You may be able to easily spot gaps in the business model of others.

Criticism of Business Models

Joan Magretta, the former editor of the Harvard Business Review, suggests there are two critical factors in sizing up business models. When business models don't work, she states, it's because the story doesn't make sense and/or the numbers just don't add up to profits. The airline industry is a good place to look to find a business model that stopped making sense. It includes companies that have suffered heavy losses and even bankruptcy .

For years, major carriers such as American Airlines, Delta, and Continental built their businesses around a hub-and-spoke structure , in which all flights were routed through a handful of major airports. By ensuring that most seats were filled most of the time, the business model produced big profits.

However, a competing business model arose that made the strength of the major carriers a burden. Carriers like Southwest and JetBlue shuttled planes between smaller airports at a lower cost. They avoided some of the operational inefficiencies of the hub-and-spoke model while forcing labor costs down. That allowed them to cut prices, increasing demand for short flights between cities.

As these newer competitors drew more customers away, the old carriers were left to support their large, extended networks with fewer passengers. The problem became even worse when traffic fell sharply following the September 11 terrorist attacks in 2001 . To fill seats, these airlines had to offer more discounts at even deeper levels. The hub-and-spoke business model no longer made sense.

Example of Business Models

Consider the vast portfolio of Microsoft. Over the past several decades, the company has expanded its product line across digital services, software, gaming, and more. Various business models, all within Microsoft, include but are not limited to:

Productivity and Business Processes: Microsoft offers subscriptions to Office products and LinkedIn. These subscriptions may be based off product usage (i.e. the amount of data being uploaded to SharePoint).
Intelligent Cloud: Microsoft offers server products and cloud services for a subscription. This also provide services and consulting.
More Personal Computing: Microsoft sells physically manufactured products such as Surface, PC components, and Xbox hardware. Residual Xbox sales include content, services, subscriptions, royalties, and advertising revenue.

A business model is a strategic plan of how a company will make money. The model describes the way a business will take its product, offer it to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should try to cater to, and what revenue streams it may expect.

What Is an Example of a Business Model?

Best Buy, Target, and Walmart are some of the largest examples of retail companies. These companies acquire goods from manufacturers or distributors to sell directly to the public. Retailers interface with their clients and sell goods, though retails may or may not make the actual goods they sell.

What Are the Main Types of Business Models?

Retailers and manufacturers are among the primary types of business models. Manufacturers product their own goods and may or may not sell them directly to the public. Meanwhile, retails buy goods to later resell to the public.

How Do I Build a Business Model?

There are many steps to building a business model, and there is no single consistent process among business experts. In general, a business model should identify your customers, understand the problem you are trying to solve, select a business model type to determine how your clients will buy your product, and determine the ways your company will make money. It is also important to periodically review your business model; once you've launched, feel free to evaluate your plan and adjust your target audience, product line, or pricing as needed.

A company isn't just an entity that sells goods. It's an ecosystem that must have a plan in plan on who to sell to, what to sell, what to charge, and what value it is creating. A business model describes what an organization does to systematically create long-term value for its customers. After building a business model, a company should have stronger direction on how it wants to operate and what its financial future appears to be.

Harvard Business Review. " Why Business Models Matter ."

Bureau of Transportation Statistics. " Airline Travel Since 9/11 ."

Microsoft. " Annual Report 2021 ."

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Business Model Canvas

INTERACTIVE TEMPLATE Build your business model with the Business Model Canvas.

2023-09-25 •

From Wooclap

What is the Business Model Canvas?

The Business Model Canvas is a comprehensive and visual framework that helps entrepreneurs and business leaders analyze and develop their business ideas. It was introduced by Alexander Osterwalder and Yves Pigneur and has become a popular tool for businesses of all sizes to map out their strategies and value propositions.

The model is organized into nine essential building blocks, each representing a key aspect of a business. These building blocks cover the entire business model and allow you to see how different elements of your business interact and align with each other.

The 9 building blocks of the Business Model Canvas:

Customer Segments - Who are your target customers? Identify specific groups or segments you are addressing.
Value Proposition - What unique value does your product or service offer to each customer segment? What problems does it solve or needs does it fulfill?
Channels - How do you reach your customers and deliver your value proposition? Consider the various distribution and communication channels you use.
Customer Relationships - How do you interact with your customers? Determine the type of relationships you establish, whether they are personal, automated, or community-based.
Revenue Streams - How does your business generate revenue? Identify revenue sources, such as product sales, subscriptions, or advertising.
Key Resources - What essential assets, skills, or technologies are required to deliver your value proposition and operate the business efficiently?
Key Activities - What critical activities must you perform to ensure the success of your business model?
Key Partnerships - Are there external entities or organizations you need to collaborate with to enhance your business model or gain a competitive advantage?
Cost Structure - What are the primary costs and expenses associated with managing your business?

When to Use the Business Model Canvas?

You are a startup entrepreneur with a new business idea and want to refine and validate your concept.
You want to innovate and optimize an existing business by identifying new opportunities and potential challenges.
You need to effectively communicate your business model to stakeholders, investors, or team members.

The Business Canvas is an excellent tool to use at different stages of your entrepreneurial journey, whether you are starting out or seeking strategic improvements.

By working on each building block of the model, you gain an overview of your business, allowing you to identify areas for improvement, innovation, or cost optimization. The model encourages creative thinking and collaboration, making it easier to align your team's efforts toward a common goal.

What Are the Benefits of Using the Business Model Canvas on Wooclap?

Using the Business Model Canvas on Wooclap offers several advantages for businesses, entrepreneurs, and professionals looking to design, analyze, or improve their business model. Here are some of these benefits:

Real-Time Collaboration - Teams can work together in real-time to fill out the Business Model Canvas on Wooclap, facilitating collaboration, especially if team members are geographically dispersed. Collaborate with your team to complete each building block and make adjustments as needed until you've developed an innovative new business model.
Visual and Interactive - Wooclap allows you to create a visual and interactive Business Model Canvas. This makes presenting and communicating the business model more engaging and understandable for teams, partners, and investors. The visual nature of the model enables active participation in defining the business model and its components.
Live Data Collection - Wooclap allows you to collect live data from the audience during presentations or meetings. This can help gather instant feedback on the business model or collect relevant information for future adjustments.
Customization - You can customize the Business Model Canvas on Wooclap to suit your specific needs by adding custom fields or adjusting canvas components to better match your business model.
Accessibility - You can access your Business Model Canvas from any device with an internet connection. This makes managing and updating your business model easy, no matter where you are.
Integration with Other Tools - Wooclap can be integrated with other project management or strategic planning tools, allowing for a more holistic management of your business model and initiatives.

In summary, using the Business Model Canvas on Wooclap adds a visual, interactive, and collaborative dimension to the design and analysis of business models, which can significantly enhance understanding and management of these models.

Using Wooclap for the Business Model Canvas with an audience is seamless and straightforward! Wooclap is an intuitive and user-friendly platform, easy to use for both presenters and participants. Wooclap provides real-time feedback and insights, allowing presenters to adjust the presentation on the fly for better audience engagement. By using Wooclap, you can easily build the economic and strategic model of your organization and develop strategies to progress and ensure better future success.

What is Wooclap?

Wooclap is a platform that makes creating interactive presentations easy. With Wooclap, you can engage your audience with interactive and dynamic collaborative activities, leading to greater motivation, better learning outcomes, and increased productivity.

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Business Model Canvas (BMC)

A visual tool used to map out the structure of a business, including its key components such as customer segments, value propositions, channels, customer relationships, revenue streams, and key resources. product glossary business model canvas (bmc) see also: competitive landscape , business owners , competitive analysis , competitive intelligence , competitive landscape , business model archetypes relevant metrics: customer segments, value proposition, channels, customer relationships, and revenue streams in this article what is the business model canvas.

The Business Model Canvas is a strategic management and lean startup template for developing new or documenting existing business models. It is a visual chart with elements describing a firm’s or product’s value proposition, infrastructure, customers, and finances. It assists firms in aligning their activities by illustrating potential trade-offs.

The Business Model Canvas consists of nine blocks that represent a company’s value proposition, customer segments, channels, customer relationships, revenue streams, key resources, key activities, key partners, and cost structure. Each block is further broken down into sub-elements that provide a more detailed description of the business model. The canvas is designed to be used as a tool to help entrepreneurs and business owners develop and refine their business models.

Where did Business Model Canvas come from?

The term “Business Model Canvas” was first coined by Alexander Osterwalder in his book “Business Model Generation”. The concept was developed as an open-source tool to help entrepreneurs and business owners visualize their business model in a simple and concise way.

The canvas is a visual representation of the nine building blocks of a business model, which are customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partners, and cost structure. The canvas is designed to help entrepreneurs and business owners quickly identify and understand the key elements of their business model and make decisions about how to optimize it. The canvas has become a popular tool for entrepreneurs and business owners to use when developing and refining their business models.

Using the Business Model Canvas to create innovative business models

The Business Model Canvas is a great tool for entrepreneurs and business owners to use when:

Brainstorming new ideas and strategies . It allows them to quickly and easily identify areas of their business that need improvement, as well as areas that are working well. Additionally, it can be used to identify potential opportunities for growth and expansion. By utilizing the Business Model Canvas, business owners can quickly and easily identify areas of their business that need improvement, as well as areas that are working well.
Developing and refining their business strategies . It allows them to quickly and easily identify areas of their business that need improvement, as well as areas that are working well. Additionally, it can be used to identify potential opportunities for growth and expansion. By utilizing the Business Model Canvas, business owners can quickly and easily identify areas of their business that need improvement, as well as areas that are working well.

The Business Model Canvas can be used as a starting point for companies looking to innovate or pivot their business strategy, as well as for startups looking to validate their business ideas. Here are 10 practical use cases for utilizing the Business Model Canvas:

Startup Business Planning . The Business Model Canvas can be used by entrepreneurs and startups to develop and communicate their business concept, value proposition, and revenue streams.
Corporate Strategy . Large corporations can use the Business Model Canvas as a tool to rethink and re-design their business models, improving their competitiveness and responding to market disruptions.
Product Development . Companies can use the Business Model Canvas to understand how their product fits into the overall business strategy, and identify potential new revenue streams.
Service Innovation . Service companies can use the Business Model Canvas to design and test new service offerings, and understand the interplay between service delivery, customer segments, and revenue streams.
Market Assessment . The Business Model Canvas can be used by market researchers and consultants to analyze existing business models and identify new market opportunities.
Business Process Re-engineering . Companies can use the Business Model Canvas as a tool to streamline their internal operations, identify inefficiencies, and improve their overall performance.
Market Entry . The Business Model Canvas can help companies entering new markets understand the local business environment and design a viable business model that takes into account local market conditions.
Social Enterprises . Social enterprises can use the Business Model Canvas to design sustainable business models that deliver both social and financial impact. If you are working within a non-profit social enterprisse, government institution, or NGO, you mmight consider the Mission Model Canvas .
Public Sector . The Business Model Canvas can be used by government agencies to design and evaluate new public service initiatives and programs. You might alsso want to consider Mission Model Canvas .
Mergers and Acquisitions . The Business Model Canvas can be used as a tool to assess the strategic fit of potential acquisition targets, and help integrate new business models into the acquiring company.

Unlock the potential of your bussiness

The Business Model Canvas is a great tool that businesses can use to visualize and strategize their business model. It is a simple and effective tool that offers a clear overview of the business model, allowing for quick and easy changes to be made as necessary. With its visual format and straightforward design, the Business Model Canvas can help businesses to collaborate more effectively between stakeholders and provides a platform for testing and validating ideas. In this blog post, we will explore the many benefits of using the Business Model Canvas.

A clear overview of your Business Model

One of the primary benefits of using the Business Model Canvas is that it provides a clear and concise overview of the business model. The visual format of the canvas helps to organize information and makes it easier to understand and digest. This clarity can help business owners and managers to better understand their own business model, identify areas for improvement, and communicate their ideas to others.

Quickly and easily changes your model

Another advantage of the Business Model Canvas is that it allows for quick and easy changes to be made to the business model. This is particularly beneficial for businesses that are just starting out or for those that are in a state of flux. The canvas provides a flexible format that can be adjusted and refined as needed, helping to keep the business model up-to-date and responsive to changes in the market or the industry.

Facilitate effective collaboration between stakeholders

The Business Model Canvas is also an excellent tool for collaboration between stakeholders. Its visual format makes it easy for team members, stakeholders, and partners to understand the business model and contribute their own ideas and insights. This can help to foster greater collaboration and communication within the organization, leading to more effective and efficient decision making.

A platform for testing and validating ideas

In addition to providing a clear overview and enabling quick changes, the Business Model Canvas also provides a platform for testing and validating ideas. By using the canvas to develop and experiment with new ideas, businesses can quickly determine the viability of their ideas and make informed decisions about which strategies to pursue. This can help to reduce risk and increase the chances of success.

Challenges of Implementing a Business Model Canvas

Although a powerful tool, The Business Model Canvas is not without its challenges. While it can provide clarity and a structured approach to building a business, companies may face obstacles as they try to implement it. Here are 10 things that can be hard, challenging, or prone to errors when using the Business Model Canvas:

Understanding and Accurately Articulating the Current Business Model . The first step in using the Business Model Canvas is to accurately articulate your current business model. This can be a challenge, especially for companies with complex or multi-faceted business models.
Identifying the Target Customers and Their Needs . To create a successful business model, it’s important to understand the target customers and their needs. This can be difficult, especially if the target market is large, diverse, or rapidly changing.
Defining and Aligning Value Proposition . The value proposition is the foundation of a successful business model. It’s essential to define and align this proposition with the target customers and their needs, which can be challenging, especially when dealing with multiple target markets.
Establishing Revenue Streams . Establishing revenue streams that are consistent, predictable, and scalable is a critical component of a successful business model. This can be challenging, especially for companies that are entering new markets or launching new products.
Determining the Most Efficient and Cost-Effective Distribution Channels . Finding the most efficient and cost-effective distribution channels can be a challenge, especially for companies that are entering new markets or launching new products.
Proper Allocation of Resources . Proper allocation of resources is key to a successful business model. This can be challenging, especially for companies that are rapidly growing or dealing with changing market conditions.
Securing and Managing Partnerships and Key Activities . Securing and managing partnerships and key activities is a critical component of a successful business model. This can be challenging, especially for companies that are entering new markets or launching new products.
Forecasting Financial Projections . Accurately forecasting financial projections is a critical component of a successful business model. This can be challenging, especially for companies that are entering new markets or launching new products.
Measuring and Monitoring Progress . Measuring and monitoring progress is essential to evaluate the success of a business model and make necessary changes. This can be challenging, especially for companies that are rapidly growing or dealing with changing market conditions.
Adapting to Changes in Market Conditions and Customer Behavior . Adapting to changes in market conditions and customer behavior is a critical component of a successful business model. This can be challenging, especially for companies that are rapidly growing or dealing with changing market conditions.

Despite these challenges, the Business Model Canvas has helepd hundres of companies map, understand, and innovate their business models.

While it provides a structure for mapping out the components of a business model, there are limitations to its mapping capabilitiess. You could argue that if it didn’t have limitations, it wouldn’t be a good canvas or tool. The magic is in its simplicity. Yet, here are a list of some of the more important limitations of the canvas and how to overcome them:

Limited Detail . The Business Model Canvas is designed to provide an overview of a business model in a simple and concise manner. However, this simplicity can also limit the level of detail that can be included. Some important details may be left out, making it difficult to fully understand the intricacies of the business model.
One-Size-Fits-All Approach . The Business Model Canvas was developed as a generic tool that can be applied to various types of businesses. While this is a strength in terms of its versatility, it can also be a weakness because not all businesses have the same needs. The Business Model Canvas may not be a good fit for more complex or specialized business models.
Over-Reliance on the Canvas . The Business Model Canvas provides a useful framework for developing a business model, but it’s important to remember that it’s just a tool. Over-reliance on the canvas can lead to a lack of creativity and original thinking, and businesses may end up with a business model that is too formulaic and doesn’t truly reflect their unique offerings.
Lack of Financial Projections . The Business Model Canvas doesn’t provide a detailed financial analysis, and it’s up to the users to add that information. This can lead to incorrect financial projections, which can impact the success of the business model.
Limited Flexibility . The Business Model Canvas is a static tool, and once a business model has been mapped out, it can be difficult to make changes. This can limit the ability of businesses to adapt to changing market conditions or customer needs.
Time Consuming . Creating a Business Model Canvas can be time-consuming, especially if the business is large and complex. Businesses may find it difficult to allocate the time and resources required to properly map out their business model using the canvas.

By keeping these limitations in mind, businesses can make the most of the canvas and use it to effectively map out your business model.

What is the purpose of the Business Model Canvas? Hint The purpose of the Business Model Canvas is to provide a visual representation of a business model that can be used to analyze and discuss the potential of a business idea.
What are the key components of the Business Model Canvas? Hint The key components of the Business Model Canvas are customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partners, and cost structure.
What are the advantages and disadvantages of using the Business Model Canvas? Hint The advantages of using the Business Model Canvas include the ability to quickly and easily visualize a business model, the ability to quickly identify potential areas of improvement, and the ability to easily share the business model with others. The disadvantages of using the Business Model Canvas include the potential for oversimplification of the business model, the potential for overlooking important details, and the potential for overlooking potential risks.
How will the Business Model Canvas help me to better understand my business? Hint The Business Model Canvas can help you to better understand your business by providing a visual representation of the key components of your business model. This can help you to identify potential areas of improvement and to identify potential risks.
What resources do I need to create a successful Business Model Canvas? Hint To create a successful Business Model Canvas, you will need to have a clear understanding of your business model, access to data and information about your business, and the ability to create a visual representation of your business model.
How will I use the Business Model Canvas to make decisions about my business? Hint You can use the Business Model Canvas to make decisions about your business by analyzing the different components of your business model and identifying potential areas of improvement.
What are the key elements of a successful Business Model Canvas? Hint The key elements of a successful Business Model Canvas include a clear understanding of the customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partners, and cost structure.
How will I measure the success of my Business Model Canvas? Hint You can measure the success of your Business Model Canvas by analyzing the data and information associated with each component of the Business Model Canvas and by comparing the results to your desired outcomes.
What are the potential risks associated with using the Business Model Canvas? Hint The potential risks associated with using the Business Model Canvas include the potential for oversimplification of the business model, the potential for overlooking important details, and the potential for overlooking potential risks.
How can I ensure that my Business Model Canvas is uptodate and accurate? Hint To ensure that your Business Model Canvas is up-to-date and accurate, you should regularly review the data and information associated with each component of the Business Model Canvas and make any necessary updates.

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What is a Business Model Canvas?

July 14, 2020
Venture Capital Funding

Example for Business model canvas, Business model canvas examples, Business model canvas, Business model canvas template, The Business model canvas example

As an entrepreneur, you need to get your idea(s) out from your head into a tangible format. This is so that you can communicate with others.

In the past, this usually meant a well-researched business plan. It would often take weeks (more like months) to create. Thus, the Business Model Canvas emerged.

The Business Model Canvas can be defined as a strategic management tool. It establishes and communicates a business idea or concept. Think of the business model canvas as a mission statement for your product roadmap.

Check out our business model example blog to select the best-suited business model according to your business requirement and build a complete canvas thereafter.

Again, there it’s always business model vs business plan confusion brewing among founders. These are an altogether different entity.

In this article, we will give you all the Business Model Canvas details, including its blocks and how to implement them.

We will also chalk out its pros and cons. Finally, we give our verdict on the Business Model Canvas versus Lean Canvas.

Why was it created

The canvas was co-created with many practitioners. It was based on The Business Model Ontology developed by Alexander Osterwalder.

The outcome is a best-seller book, entitled Business Model Generation. It also included the tool Business Model Canvas.

The canvas has been published with a Creative Common License . It is thus published and iterated by many practitioners.

Since then, it has been taught at business schools. It has also been iterated upon to fit more niche businesses.

The Structure and Template of the Business Model Canvas

The right side focuses on the customer (external). In contrast, the left side of the canvas focuses on the business (internal).

Both external and internal factors meet the value proposition. It is the exchange of value between your business and your customer/clients.

Now, let’s take a look at the components of the Business Model Canvas:

1. Key Partners of Business

Key partners are the people you work with to create a strategic relationship. Examples of key partners are distribution partners or suppliers.

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We recommend mapping Key Partners to Key Activities. If an activity is key, it’s part of your business model. This is a method to denote which partners are handling different Key Activities for you.

Here are a few things to consider about key partners:

What key resources do the business receive from these partners?
What key activities are done by these partners?

2. Key Activities

After figuring out your key partners, the next step is to find out our key activities. As mentioned earlier, key partners and key activities go hand in hand.

Key activities are specific tasks that are fundamental to business operations. An example of a key activity would be the procurement of fresh produce in bulk for a restaurant.

For a product-driven organization, this includes ongoing learning about users. It is also about new techniques to build a better product.

You may be focused on doing many things for a particular set of customers (ex: comprehensive IT for law offices). This includes maintaining expertise on the segment(s). It also includes creating or acquiring products and services that are a good fit.

For an infrastructure business such as electric utility, it includes keeping the infrastructure working reliably and efficiently.

Here are a few things to consider about key activities:

How do your revenue streams, distribution channels, and customer relationships differ from competitors?
How do your key activities affect the above factors?

3. Key Resources

The next important step is figuring out the key resources of your business. It is imperative to find out what resources are necessary for your business to function.

Key resources are the assets required to operate and deliver your value proposition. For example, a diamond mining company cannot function without mining equipment. An automotive company cannot work without human capital and expertise.

Key Resources in product-driven organizations are key talent in areas of expertise. It is also about accumulated intellectual property related to their offering.

Scope-driven organizations create synergy around a particular Customer Segment. These companies typically have key know-how about their segment. They also have a repeatable set of processes, and sometimes infrastructure, like service centres.

Infrastructure-driven organizations get economies of scale in a specific, highly repeatable area. An example is a retailer like Walmart.

Key resources can be divided into the following categories:

Physical – Tangible property such as facilities, buildings, vehicles, machines, etc.
Financial – Bank lending or seed funds such as the 3F’s (“family, friends, and fools”).
Human – People that integrate your project.
Intellectual – Intangible property based on human knowledge such as a patent, etc.

Here are a few things to consider about key resources:

What specific assets are necessary for business operations and delivering your value proposition?
Does your company need significant capital or human resources ?

4. Value Propositions

At this point, you have covered the left side of the canvas. You have figured out key partners, key activities, and key resources. Now we come to the middle of the canvas, which is value propositions.

Value propositions are the most essential element of the business model canvas. It is the primary driver of business operations. Generally, value is exchanged from a consumer for money when a problem is solved. It also happens when a pain is relieved for them by your business.

To ensure a fit between product and market we use Value Proposition Canvas .

Spotify’s value proposition, “ Music for everyone .”, states its mission and offers. Spotify wants to be a music streaming platform that has music for everyone.

An excellent way to approach this for users/customers is by looking at your customer segments. You should then figure out where your product/service solves your customer’s problem. This is based on Maslow’s Hierarchy of Needs .

You may be selling your service or product to another business. Then you are a key partner in them. You help them achieve their Value Proposition for their customers.

It is important to have context around the company’s goals for their Customer Segments and where your business/product/service fits in the value chain.

Here are a few things to consider about value propositions:

What exactly is your company trying to give to customers?
What needs are your company satisfying?

5. Customer Relationships

We defined what value propositions we provide for our customers in the previous section. But what relationship do we have with them? This section helps to answer that.

Customer relationships are the types of interactions a company has with its customers.

A beneficial step is to create a User Journey Map of your customers as they interact with your business. This helps clarify the engagement points between you and your customer and the modes used to relate to your customers.

This will also help you start to define your operations as a business and even help you identify opportunities for automation.

Telecommunications companies often have poor reputations and customer relationships. Many of them practice aggressive and predatory sales practices through their call centers.

Whereas a designer suit company will provide excellent customer support. It will give tailoring according to their needs.

It will also work with them to create the suit they want. So, the designer suit company has more fulfilling customer relationships.

Here are a few things to consider about customer relationships:

What type of relationship does your company have with its customers?
How much support is provided by your company?

6. Channels

Now we come to figure out the channels of an organization. But what are organizational channels?

Channels encompass a company’s supply, distribution, and marketing channels. It is a must to consider all channels of a company. They should all be functioning together.

A company like Amazon needs integration of fulfilment centers and shipping services. This is to send out timely shipments.

Here are a few things to consider about channels:

Information – How do we make the products and services of our company known?
Evaluation – How do we help clients check the value proposition of our organization?
Buy – How to allow customers to buy specific products and services?
Delivery – How do we extend our service to our consumers?
After-sales – What are our policies for attention to suggestions, claims, technical help?

7. Customer Segments

You may have heard of customer segmentation before. It is an activity that can boost organizational efficiency, profitability, and customer service.

Customer Segmenting divides a customer base into groups of people similar in specific ways. This may be based on gender, age, interests, and spending habits.

An example of this would be airline companies. First-class passengers have access to exclusive benefits and luxury travel arrangements. Whereas economy passengers are provided much less support, thus costing less.

Understand your market size and how many people there are in the Customer Segment. This will help to analyze the market from a macro and micro perspective.

A great way to start understanding your consumer is to develop customer personas for each of your Customer Segments.

Here are a few things to consider about customer segments:

Who is the main focus of your value proposition? Who are you creating value for?
What are your different types of customers?

8. Cost Structure

In the final stages of the canvas, we proceed into an essential part of operations. It is the cost structure that can make or break a business.

The cost structure refers to how a company spends money on operations. It can be defined as:

Cost-Driven

It focuses on minimizing costs and, thus, prices for customers.

E.g., Forever 21 is a fast-fashion company focused on delivering the newest styles at low costs.

Value-Driven

It focuses on creating value for its customers, with less focus on cost.

E.g., Gucci is a luxury brand. It is focused on delivering high-quality clothes and accessories. They are designed with the latest trends in the fashion industry.

Here are a few things to consider about cost structure:

What are the essential costs of your company’s business model?
How do your costs relate to your revenue streams?
How do your costs relate to your key activities?
Are the costs well aligned with the value propositions?
Are the costs more fixed or variable?

9. Revenue Streams

Finally, we reach the last part after going through each and every stage. In this block, we elaborate on the various revenue streams of an organization.

Revenue streams are a company’s source of cash flows. A company might have many revenue streams.

Revenue Streams are how your business converts your Value Proposition or solution to the customer’s problem into financial gain.

It is also important to understand pricing your business according to the pain of purchase in exchange for solving the problem for your customer.

Apple has many revenue streams between its variety of products and its services. An example is Apple Music.

If you have a startup or are re-engineering the business, it is 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? Is there an actionable analogue in your business?

Here are a few things to consider about revenue streams:

Does your company have many methods of generating revenue?
Through what channels do your customers pay?

Classification of the components of the Business Model Canvas

The nine blocks of the Business Model Canvas can be grouped into three major heads:

Feasibility

Blocks – key partners, key resources, & key activities..

This includes working with the right tools, employees, and partners. It also includes focusing on the right set of core activities.

We need to run sustainably, or else we’ll implode.

Desirability

Blocks – customers segments, customer relationships, channels, and value propositions..

This is about understanding your customer. This includes what motivates them and how they engage with you. It is also about what makes or breaks a buying decision.

We need to be desirable to our customers, or else we’ll have no sales.

Blocks – Cost Structure and Revenue Streams.

This is about how much we earn and how many we spend. We need to be viable, or else we’ll go bankrupt.

How to create an effective Business Model Canvas

We often see people employing the BMC to better understand how their company creates, delivers, and captures value today. Just as commonly, it’s used to make an idea (for the future) more concrete.

However, in between those two things is ideation. In other words, if you know where you are today, and you’re looking for ways to create business models for tomorrow, you must ideate.

It’s best to start with your current business model for ideation. In other words, if you’re starting from zero, there are probably better methods for ideation.

Here are some great methods for the creation of a Business Model Canvas:

1. Freshwatching

Freshwatching is an ideation method by which you mix and match (or overlay) business models from other companies with your own. This is often totally outside of your business or industry.

It doesn’t matter if the company is an online business, an offline retailer, or even a massively popular one. With Freshwatching, you’re merely looking at your company through the lens of another.

For instance, say your current business model is one by which you sell accounting software to accountants through an extensive reseller channel to other businesses (i.e., B2B).

2. Remove your core

Look at your business model. Find the one thing you are absolutely sure is how your company creates, delivers, or captures value (it’s your special sauce). It could also be an irreplaceable partner or a specific customer segment.

Now, remove that. Chances are your business model now has a big hole in it. Your task: try to fix it. This constraint will definitely give you new ideas.

For instance, BMW also has a core value proposition. It is “The Ultimate Driving Machine®” (i.e., excellent, German-engineered cars built for people who love to drive).

3. Epicenters

In the Business Model Canvas, changing an element in one block will affect another. This lends itself well to a technique called epicenter-based ideation.

With epicenter-based ideation, you effectively have nine different boxes, or epicenters, to play with to generate more ideas.

This works to clear your business model of eight boxes, leaving the focus on one. What would you build if you kept that one?

Amazon did just this when it figured out that it could use its cloud-infrastructure to generate revenue.

Other areas to place focus on using this method:

a. Customer segments (what else could you offer them)

b. Value proposition (what other customer segments could you address?)

c. Revenue streams (what other ways might you sell, lease, or rent your product/service?)

d. Channels (what else could you leverage your channels to do?)

4. Follow Patterns

When you scan the landscape of existing business models, you’ll notice that there are lots of business model patterns.

Business model patterns are like formulas. They can be applied to address a new customer need. They can also be used to create a new revenue stream, etc.

Some well-known examples of business model patterns use subscription revenue streams and/or have product platforms.

There one part of the product relies on the other to make money (think cheap handles, expensive blades, or cheap printers, expensive ink). This is often called bait-and-hook.

5. Ask Trigger Questions

Asking “what if?” is a powerful way to help a team develop great ideas. The key to doing this with the BMC is to come up with a list of questions that challenges what you do presently.

This is perhaps for each box of your business model. As the trigger questions are asked by a facilitator in 10-15 second intervals.

Each individual will write whatever comes to mind on a sticky note. By the end, there should as many sticky notes as there are questions.

If, for instance, you’re BMW and you sell your product today through dealers, what would happen if you sold it directly to customers through an online channel? What would that look like? You get the picture.

Practical tips to fill the boxes of the Business Model Canvas

The Canvas is not an industry or application-specific tool. The focal point of the model is the company itself.

There are different ways to start the process of filling the boxes:

1. With an idea

Start with defining a customer segment’s value proposition.

2. With potential/existing customers

Start with the customer segment. Ask what value proposition you are delivering / could deliver to them and how.

3. With your resources

Start thinking about what key resources you and your partner(s) have. These can be competences, experiences, resources, etc. Then create a customer group’s offer.

4. Some more pointers

a. Use sticky notes because they can be removed or changed.

b. Use different colours for different value propositions and customer groups.

c. Create many different versions and test them with a SWOT analysis

Example of a Good Business Model Canvas – Airbnb

Hotel alternative provider Airbnb concentrates on two significant customer segments. They are guests and hosts. Both can be broken down into subcategories.

The same goes for value propositions. Some are attracted by low prices for a higher value than hotels. Others search for luxurious and unusual experiences.

Airbnb’s most significant revenue source is its fees. Hosts are charged 3 per cent and guests up to 20 per cent.

Thus, Airbnb’s business operations are in alignment with the Business Model Canvas. This has been one of the primary reasons for their astounding success.

Disadvantages of the Business Model Canvas

It is NOT a strategy. You still need a business plan .
Doesn’t take into account the competitive arena.
Often when used is based on assumptions rather than facts.
Doesn’t take into account sustainability. It misses the broader view of the economy, society, and environment.
Doesn’t show the different stakeholders involved in the business model.
Lacks available components

Advantages of a Business Model Canvas

Visual thinking.

The tool allows for straightforward, visual representation for decision-makers to ponder upon. It also clears the organizational direction.

Short and Succinct

The tool encourages teams to keep their suggestions short enough to fit on post-it notes.

Easy to circulate

The tool allows easy access and shareability. It can be passed around so people can grasp its gist and additions to it.

Differences in the Lean Canvas

Lean Canvas was proposed by Ash Maurya in 2012. It is a Business Model Canvas optimized for Lean Start-ups.

The Business Model Canvas was built to encapsulate ‘all types’ of businesses. Hence a few elements didn’t seem to fit well for start-ups.

The Lean Canvas offers a much more ‘problem vs. solution’ approach.

It makes founders focus on the pain points of target customers. They then craft their solutions. This should be the only focus for start-up founders in their ventures.

Lean Canvas replaces:

‘ Key Partners’ with ‘Problem.’
‘ Key activities’ with ‘Solution.’
‘ Customer relationships’ with ‘Unfair advantage.’
‘ Key resources’ with ‘Key metrics.’

Ash Maurya also added a few extra elements, including:

Who are your ‘early adopters’?
What are the ‘existing alternatives’ that answer customer problems?
What is the ‘high-level concept’ of your idea?

Key features of the Lean Canvas.

The Lean Canvas forces a business to think about the 2 primary elements of a start-up. These are customer segment problems and solutions.
Depicting the ‘early adopters’ makes the business think about the first customer group. These customers will adopt my product, which then helps to specify channels.
‘Key metrics’ were also helpful. It makes the business think about the critical needle they need to push the company to move forward.

The Business Model Canvas is an invaluable tool for every organization.

A business model canvas will help streamline planning, development, and execution.

It should align everyone’s objectives and cut inconsistencies. It syncs the various people who contribute to your business objectives.

Thus, it is imperative to prepare a business model canvas in the ever-changing market.

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Original text

Do your marketing channels reach your target audience? Or are you pouring money down the drain?

Are you offering product delivery and service that meet your customers’ needs? Or are these channels falling short as well?

Using the right channels to market your products and serve your customers is key to the success of your business.

This post will help you map out your customer channels as part of your Business Model Canvas so you can focus your efforts and streamline your operations.

Customer Channels

Customer channels are the lifeblood of your business, feeding profit and sending energy to your operations.

Mapping out your channels will tell you where and how to interact with your customers at every stage of their journey. Before you dive into filling out the Channels component of your Business Model Canvas , make sure you’ve laid out your Value Proposition and defined your Customer Segments .

Customer channels describe how you reach your target customer segments.

How do you make potential customers aware of your business or your product?
How do you convince customers to buy your product?
How will they purchase your product?
How will the product be delivered to customers?
And after the sale, how can you continue to support customers and develop a relationship with them?

Your company’s success is determined by whether you’ve chosen the right channels to match what your customers want and need. That means not all channels are equal.

If you’re pouring money into Facebook ads but your customers are mostly spending time on LinkedIn, your choice of channel will hurt your bottom line.

Your channels need to match what your customer segments want when it comes to getting information, shopping experience, and access to after-sale assistance.

Channels and the Customer Journey

The marketing, sales, and distribution channels your company uses provide specific service to your customer.

In the graphic below, you can see the goals of various channels involved in winning and retaining customers. Orange shows the responsibility of your marketing channels, yellow shows what sales channels need to do, and green represents your distribution channels.

Let’s go through the phases of your customer journey and see how channels play an important role.

Aware – For your customer segments to even know about your company and what it provides, you need to decide how you are going to initially reach them. Through your marketing and advertising, your customer segments find out about your product and/or services and develop enough interest to want to know more.

Consider – Next, reviews, comparisons, trials, videos, or other methods need to provide information for your customer segment to evaluate your product to decide to buy it.

Purchase – Once your customer has decided to buy your product, they need to purchase it through a sales channel. The customer might buy it at in a brick and mortar store or online.

Delivery – If the customer bought your product in a store, they just take it home. Today, many customers are buying online from Amazon, Etsy, or EBay, which offer a variety of options for delivering your product.

Support – For best customer satisfaction, providing the customer access to assistance after the purchase is important. Customers will have questions. They might want to make a return or exchange. A delay may occur in shipping. You want your after-sale customer service to amaze people with your commitment to their satisfaction.

Loyalty – The hardest part of marketing a product is gaining the customer. Once the customer is impressed with your product, they may be interested in additional products or repeat purchases. The customer may also become an advocate for your product.

Marketing Channels

Marketing channels make customers aware of your products or services, provide information to evaluate/consider the products, and try to build loyalty for the product for repeat sales or influencing other customers.

Now that you know the purpose of your marketing channels, let’s take a look at some of the options you can use to create those channels.

Personal/Face-to-Face – Allows your company to build the strongest relationship with the customer. The customer can quickly have questions answered, work through any concerns, and be pampered if the product is being branded as a luxury item. A store, farmer’s market, trade shows, or speaking engagements provide avenues to reach your customers directly.

Internet/Social Media – Creating your own website, business Facebook page, YouTube channel, or Instagram presence provides your customer with 24/7 product information, and in some cases, self-service. You can provide articles, videos, reviews, email signups for additional information or questions, “Buy Now” buttons, and contact information for inquiries or issues. Additionally, you can monitor customer behavior through analytics tools. You can also fine-tune your online presence via search engine optimization (SEO) with tags and keywords, and you can reduce bounce rate with easy-to-navigate webpages. Creating a presence on Yelp is also an effective way to get exposure online.

Email/Mail – Email or mail can be an efficient way to reach your customer segments directly. Customers can be made aware of your product and provided with opportunities to take advantage of sales, special offers, or loyalty discounts.

Advertising – Newspapers, magazines, TV, Google Ads, and Facebook Ads are just a few of the options for actively gaining awareness for your product. Signage is an option if you can display your products where passersby might see it. If you have a compelling story that a newspaper or magazine would accept, you may be able to get free advertising through a featured story.

Affiliate marketing – Another business may advertise your product and you advertise theirs. Obviously, the businesses should have similar customers and not compete with each other.

Let’s take the example of an art supply store. What customer channels might they use?

Choosing the Right Channels for Your Business

Based on what you’ve learned about channels, how should you reach, nurture, and support your customers, based on your business’s value proposition?

Fill in the Channels section of the business model canvas:

A review of your customer segments and customer niches will provide you insight as to which channels to select.
You want to select the channels that will reach the maximum number of customers for the lowest cost. Consider how you will measure the effectiveness of your chosen channels so that you can assess whether you’re getting your money’s worth.
You should not select more channels than you can effectively manage. In particular, social media channels and blogs must be managed with consistency and quality.

Once you’ve mapped out your channels, stay tuned for the next post in this Business Model Canvas series so that you can integrate your chosen channels with your larger customer relationship plan.

Need help choosing the right channels for your business or mapping out any part of your business model canvas? Contact SCORE today to set up a free, confidential meeting with one of our mentors.

Want more tips for your business, as well as news about our popular workshops? Sign up to receive our newsletter.

After graduating from California Polytechnic State University at San Luis Obispo, Melissa Traynor worked for 25 years in the Silicon Valley for well-established Hewlett Packard and startup MontaVista Software. Melissa gained experience in the operations of a medium to large company doing a wide variety of support related, technical jobs. For the past five years, she has worked with several non-profits and a small business providing social media support.

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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The 15 Minute Business Plan: Business Model Canvas for Validating Your Startup Idea Fast

If you have ever thought of starting a new business or working on a tech startup idea , then you must definitely have come up with some sort of a plan.

At least in your mind, you may be thinking of a way to execute your idea and achieve the goal you are looking for from your business.

But how should you plan and how much should you plan? After all, with so much uncertainty and ambiguity what if your plan really doesn’t materialize?

Don’t worry, we are here to help you.

If you are brainstorming about the key aspects of your business and don’t know where to begin or if you are an existing manager who needs a better view of your current business, then you must read this article.

Instead of coming up with a 500 page document, articulating each and every aspect of your business plan, there is a wonderful standard template that applies wonderfully to all different kinds of businesses.

Be it an online business like blogging or ecommerce, or a manufacturing based business, retail or aviation, all types of businesses can use the elegant ‘Business Model Canvas’.

A Business Model Canvas will not only save you the time or hassle of complicated planning, but also provide you a brilliant single page look of your business that you can then use to analyse various aspects of it.

But what is Business Model Canvas?

Let’s dive straight in.

What’s the Business Model Canvas?

“ A Business Model Canvas is a tool used to visualize all the building blocks when you want to start a business, including customers, route to market, value proposition and finance. “ – eship.ox.ac.uk

In fact, a Business Model Canvas divides all the key activities, internal processes and stakeholders of a business into 9 building blocks , each representing an important area or aspect of business.

Following are the nine building blocks and the key questions they answer.

Customer Segments : Who are the key customers of your business? And what are their key characteristics and needs?
Value Propositions: Why do customers buy your product or service? What is the key benefit that your business offers?
Channels : How are these benefits communicated to your customers and how is the product or service sold or delivered and why?
Customer Relationships : What are the key touch points between you and your customers? And how do you connect with them throughout their journey?
Revenue Streams: How does business actually earn money from various value propositions?
Key Activities: What are the key things that your business strategically does to deliver this proposition?
Key resources : What are the assets that business requires in order to stay competitive and create value?
Key Partnerships: What are the external entities or stakeholders that are key to delivering the product and service to your customer? What are some of the partners to whom you have outsourced certain activities to focus more on your core work?
Cost Drivers: What are the major cost drivers for your business and how are they linked to your revenue?

Here is an example of a simple Business Model Canvas for an ice cream vendor.

These 9 blocks are essential in order to create, capture and deliver value to your customers and affect each other in various ways.

In fact, a change in one of these building blocks may affect other areas and thus looking at them together will give you a sense of what happens in one area if you change another.

For example, say you are in an ecommerce business selling physical products. Today you manufacture your products yourself, but considering the scale you want to achieve you want to outsource manufacturing to an external vendor.

This may affect your key partnerships, cost structure, key resources and key activities. You can then clearly visualize all the changes that such a decision would require.

Well, this gives you a basic idea of what a Business Model Canvas is and its basic template.

But why should you really use a Business Model Canvas and not some other method? And how will it fit in what you want to do?

Why You Should Use the Business Model Canvas. And Not a Business Plan.

A business plan is like a blueprint of the business with detailed business models and financial projections, typically running into hundreds of pages.

On the other hand a Business Model Canvas is like a single page template with 9 building blocks that are key to delivering value to your customers.

So which one should you use and why?

If you are just starting a business or have started one already and are in a growth phase or an environment that is dynamic, we would recommend using a Business Model Canvas and not a business plan .

In fact, today Business Model Canvas is being used for a variety of reasons. And almost 36% of people who use it, do it for an entirely new business.

Here are a few reasons why using a business model makes better sense than using a business plan.

1. Business Model Canvas is Built for Handling Change

A Business Model Canvas represents all the key aspects of your business in a very simple fashion on a one page model.

If there is any change that happens in any one part of the model then you can easily visualize the trickling effect and understand what other blocks will be affected.

This way you can easily change and adjust everything in one place . This is important because when you are starting out or working on a new problem in your existing business, there is great deal of uncertainty.

Modern day business work in an iterative manner. That is, they start with certain assumptions and then as things become clearer they keep on adjusting according to the changing environment.

A business plan on the other hand requires you to put in a lot of work upfront and come up with projections that may or may not turn out to be true.

Adjusting the whole business plan is also tough as various parts are present in different sections of a lengthy document. It is also possible that you may miss out on understanding how a change in part affects the other.

2. Business Model Canvas is a Simple and Commonly Understood and Proven Template

Do you know, companies like Microsoft and Mastercard actually use Business Model Canvas.

Not only that it has proved to be an important tool for startups as well.

The key point here is that this template is not only simple but also well understood by a lot of people hence it facilitates great discussion .

If you want to discuss some key points to strategize or propose some business model to your colleagues then it surely makes a lot of sense to use the Business Model Canvas.

The issue with a 400+ page document is that you tend to lose focus in skimming through such a heavy file.

And also, there are so many different templates of business plans available and some sections of those may not really make sense for your business.

On the contrary, all the 9 blocks of a Business Model Canvas are inherent and applicable to almost all business models.

This leads to much better collaboration and understanding, better teamwork and a structured conversation.

In fact, according to a research , with a score of 3.5/4 better strategizing and sharing a common language were the top two areas that people believed following a Business Model Canvas helped them in.

3. Business Model Canvas Reduces Risk of Failure

When you look at all aspects of your business in a structured manner in a single page template, you are much better able to understand the bonds or pillars that keep your business stable.

Running a successful business involves both strategic planning and efficient implementation.

In order for both these to work, different departments, areas, resources and customers have to be considered and a balance has to be created.

To avoid the risks of failure, it makes a lot of sense to have a robust Business Model Canvas.

For example, consider that you want to shift your business from offline to online in light of the recent pandemic and your long term vision.

Just cataloging your products and building a website will not make your existing and new customers come to your business.

You may have to revisit your customer segments who now have to be digitally savvy and your channels. Your touch points with your customer or the Customer Relationship block will also evolve.

Since, you can see all these aspects you are now better prepared to execute the plan and make sure that all necessary factors are taken care of while evolving your model.

Now, that you understand the importance and usage of a Business Model Canvas, you need to understand how to really create a Business Model Canvas, and how each of the 9 building blocks can be thought of and filled for best results.

It is important to give careful thought to each of these. Don’t worry we will help you out.

Proceed to the next section of the article.

Practical Business Model Canvas Walk-through

Step 1: customer segments.

Arguably, the most important stakeholders for your business are your customers.

Irrespective of whether you start an online business to earn money , or a business with a physical presence, knowing your customers comes first.

And rightly so, the process of building your Business Model Canvas begins with identifying your customers.

The first step in this exercise is dividing your prospective customers into groups with similar features known as segments .

This is necessary because different groups or segments may have very different needs and hence the product/service that would be most relevant for them may be very different.

Not just for the design of the product or service, but segments are also important when you plan about your marketing communication.

For example, say someone who buys your product in small packs very often may be targeted differently than someone who buys high volumes of your product infrequently.

So, how to go about segmentation.

Deciding between B2C or B2B model

You have to first identify, whether you are going to be in the Business to Business (B2B) or a Business to Consumer (B2C) model .

Typically in a B2B business your customers are other businesses, while in B2C your customers are individual consumers .

The behavior and characteristics of these two types of customers are very different.

B2B customers follow a much more stringent and rational approach towards buying than individual customers and B2B buying is almost never based on impulse.

There are usually clear requirements regarding what a B2B customer is looking for in the product.

On the other hand, a B2C business is mostly driven by brand awareness and the decision making cycle for buying is also much shorter.

In terms of the number of buyers, you may be able to run a very profitable business with a handful of customers in B2B, but you will require a larger base when it comes to B2C.

If you are already an expert in a particular field or have come up with a SaaS product that enterprise can use, you can be in B2B, but if you want to play on brand awareness and individual engagement, then B2C may be a fit for you.

The segmentation strategy will differ according to whether you are in B2B or B2C business. To segment your prospective customers you will need something called a segmentation variable.

Segmentation variables are the basis on which you will divide your customers.

Choosing a Customer Segmentation Variable

Broadly, there are two ways in which you can divide your audience.

Demographics

Psychographics

The number and characteristics of people who live in a particular area or form a particular group, especially in relation to their age, how much money they have and what they spend it on. – Definition of Demographics by Cambridge University

Demographics will help you understand the basic features or characteristics of your customers and are typically easy to understand and collect.

For example, you can source demographic data from the US Census Bureau and the Pew Research .

Alternatively, you can collect this data through primary research, surveys and questionnaires by asking your customers to fill up forms .

If you are in an online business and want to improve your SEO or find out what are the demographics of users who are searching for relevant keywords, we recommend a tool called Demographics.io .

For example, say you own a website that publishes content related to writing blogs. A search for the keyword ‘blog’ on this site tells you that around 27% of people searching for this keyword are between the age group 25-34 and more than 54% are females.

For a B2B business your segments may be something like Industry type, turnover, geography, number of employees etc.

While demographics are an important indicator of some things, for a deeper understanding of your customers you would need a more nuanced understanding of their motivations and behavior.

Market research or statistics classifying population groups according to psychological variables (such as attitudes, values, or fears) – Definition of Psychographics by Merriam-Webster

Here are some of the questions that psychographics can answer for you.

How do your customers spend most of their time?
What do they do on weekends?
What are their hobbies and interests?
What are their religious inclinations?
Are they heavy users or light users of your products?

Psychographics are extremely important in order to add value to your customers.

For instance, the same product or service may mean different things for different people and the motivations behind using them may vary.

For example, some people may eat healthy food in order to feel energetic throughout the day, others may be doing it to support their gym routine while some others may just want glowing skin.

Understanding your customers this way will not only help you tailor your products or service according to their specific needs but also help you to create your communication in a way that is the most effective.

Now after this exercise you need to understand your target segments.

Choosing your target customer segments

Two extremely important things that would determine whether you earn money from your customers or not are:

Ability to pay
Willingness to pay

Ability to pay depends on the income of individuals or businesses that you want to engage with and can be more or less determined from the demographics data.

On the other hand willingness to pay can be estimated on the basis of the psychographics and whether your product or service has a major value add for the lives of your customers.

Some other factors to consider are:

High audience revenue potential : The market size for your chosen segment should be high.
Expected growth rate over time: The growth rate of usage and market over time.
Customer loyalty: The current loyalty levels of customers to available products.
Attainable Market Share: What amount of market share is achievable for you?
Market Profitability: Is there enough margin that you can obtain from customers that justifies your cost and goals?

In a nutshell, you would ideally want to be in a market that has substantial demand, which is expected to grow and you can make the existing customers switch to your product because you serve their needs better, at the same time earning profit.

One important thing to understand is that it is possible that you target different segments, this is especially true if you operate a multi sided platform .

For example, say you own a marketplace platform where you earn through your customers by charging them a subscription fee and charge a fixed price from your sellers for advertisements.

Here both end consumers and sellers become your customer. In order for the platform to succeed, you would need to pay close attention to both these stakeholders.

We would recommend, if you are just starting out, to keep your focus on one particular segment.

For instance, say you want to start a blogging business and are deciding on the niche , it is always better to cater to particular segments. This will increase your chances to earn money and your customers are more likely to draw value and become loyal.

Possibly you would be certain about your target customer segments by now, so you can fill out these details clearly in your Business Model Canvas.

For instance, say you are opening a romantic restaurant targeted at young couples and the theme of the restaurant is adventure and will be situated in California, then your target segment could be…

“Young men and women aged between 25-40, who reside in California and are fond of adventure”.

Step 2: Value Propositions

A value proposition is like a simple statement of benefits that your target customers get from your products or services.

This is extremely important because your customers use your products or service depending on how strong your value proposition is.

If you are starting a new business then this becomes even more important because you would want your customers to switch from your competitors to you.

Only if you meet their needs better and they find more value in what they pay you than your competitors will they think about switching.

So, how do you begin?

Understand Customer Problems and Competition

First thing is to understand the problems faced by your customers .

The idea is to answer and resolve the most pressing issues faced by your customers effectively.

Once you narrow down on the key problems and needs of the customer, study your competition to understand what needs or problems they are solving well and where the gap lies.

For example, say you are starting an ecommerce business and want to sell physical products like portable bluetooth speakers.

One great place to understand the demands of your customers and the performance of your competitors is Amazon.com .

You could develop a good understanding of your competition from the reviews section.

In the image, you can clearly see where your prospective competition is good and where customers expect better.

The number of reviews also give you an indication of how much demand already exists for the product.

In fact, it can provide you information on a lot of categories all the way from electronics to baby care and from automotive parts to groceries.

All you have to do is search for the product you want to research on and study the results.

Here is the list of top product categories on Amazon.com.

Another way to research demand and competition is through keywords .

Estimating Consumer Demand and Competition Through Keywords

The internet today gives you a lot of information about what people are searching.

Do you know, around 48% of online shoppers begin their online journeys through search.

Thus, understanding what keywords are being searched for the most and the competition for advertisements and seo for those keywords is a great first step to estimate demand.

One tool we recommend is SEMRush.com .

This tool not only gives you an idea of the total volume of search, but also of how much competition exists for the keyword.

For instance, searching for the keyword ‘bluetooth speakers’ clearly gives the exact volume of search.

The ‘keyword difficulty’ and ‘Com.’ metrics tell you how difficult it would be for you to rank in the first page of Google search if you are new to business.

In our case keyword difficulty level is 92% which is on the higher side.

keyword difficulty level and keyword research

Now that you know the key questions your customers are asking and what is required in order to beat the competition, next is to decide how you are going to differentiate yourself.

Building a Strategy to Make Your Customer Switch to Your Product/Service

To make the customers switch to your products you can choose one of the four quadrants from the above matrix.

A narrow focus means that you concentrate on a particular segment or niche rather than a mass market.

If you are just starting out, it is better to focus on a narrow approach because you will be able to meet the needs of a particular segment better.

The other option you have to choose from is whether you want to beat your competition on price or by offering a better product .

You can make the customers switch to your product by selling the available product in the market at a lesser price. But to follow this strategy you would either need scale or a way to produce your goods and services at a lesser cost than the competitor.

Hence, we would suggest to first differentiate your product and give benefits and features that are not provided in the market by your competitors.

Writing a Value Proposition Statement

Now that you have a fair idea of what your consumer needs and how you will beat the competition.

You have to come up with clear value proposition statements .

If you are catering to multiple target customer segments, then you should have a clear and simple value proposition mapped to each of these customer segments in your Business Model Canvas.

For instance, say you start a blog that offers tips on making regular food healthy.

The typical target customer segments you have are the people who want to build muscles and stay at home moms.

Now these are two very different segments and your value proposition would be very different.

A good value proposition statement would look like this:

We help stay-at-home moms lose 14 pounds of fat in 45 days without having a jojo-effect .

We help muscle building enthusiasts reduce fat by 5 percent in 60 days without lowering energy .

Now you just have to enter these in the value proposition segment of your business model canvas.

Here is a quick checklist to validate if your value proposition is good or not.

Are the benefits explicit and clearly stated?
Is the target customer segment clearly identified?
Is the value proposition clear and simple?
Is the value proposition supported by evidence of demand?
Is the value proposition viable in light of competition?

Step 3: Channels

The third building block of the business model canvas is ‘channels’.

Channels refer to the touch points through which the company delivers value to its customers .

The primary functions of a channel are:

Educate the prospects regarding services and products that a company offers
Provide an opportunity to prospects to try these services/products
Facilitate the purchase of products or services for the customers
Helping the customers realize and benefit from the value proposition
Providing the after sales services for the clients

But how do you go about planning your channels and what are the factors to be considered. Don’t worry we have you covered.

First let us classify the channels to be decided.

Broadly we can divide the channels into two types:

Acquisition Channels : These are the channels that help you acquire your customers and bring to the point of sale.
Delivery Channels : These are channels through which the product or service is actually delivered to your customers

Let us see how to go about deciding each of these.

Acquisition Channels

Your acquisition channels help you generate more leads that eventually become paying customers.

This part consists of deciding how you will advertise and communicate about your products to the customers and guide them into buying your products .

You can choose to advertise on billboards, television, radio and other physical areas to make a large number of people aware about your offering. However, these channels help you reach a large audience but are also extremely expensive.

Today the internet offers you various avenues where you can get these leads in a very cost effective manner.

If you want to make money online and are in a digital business, it makes even more sense to try digital channels for advertising and generating leads.

Your methods of traffic acquisition could be either organic , which means natural growth and acquisition of your customers without paying. Or inorganic , which includes paid media and channels online.

The main way to acquire traffic online in an organic manner is through SEO .

Search engine optimization or SEO involves making your content search friendly and relevant so as to feature in the top results when someone searches for a product/service you offer.

With most online journeys beginning with search, SEO is the one of most effective ways for long term victory online.

consumers use search engines for purchase decision

Only downside is that it may take a while before you build your SEO to promising levels.

The next option you have is to advertise on social media channels like Facebook , Instagram, Youtube, Pinterest etc.

The great advantage that these channels offer is that they have sophisticated ways to target customers and you can customize who you want to target based on a variety of factors like demographics, geography and interests.

But how to decide between these channels?

First you have to make sure that the kind of traffic or leads you are looking for are actually logging into these sides.

For instance, if you are in a B2B business then advertising on LinkedIn would be more relevant, given that most decision makers from corporates actually spend time on it or have their profiles there.

While for B2C other channels may make more sense.

It is best to start with multiple channels and then invest more money into the ones which give you better results .

For example, say you invest $50 each on Facebook and Youtube. From Youtube you get 100 leads but only 20 from Facebook.

20 of the 100 leads from Youtube become paying customers and only 5 from Facebook eventually purchase.

Clearly Youtube is offering you better return on investment. Hence it makes sense to pump in more dollars into this channel.

Distribution Channels

Next comes distribution channels. These channels enable the delivery of goods or services to a customer.

For example, if you are in a business of selling clothes. Then how do these clothes reach the end customers? Is it through a retail outlet, or can they purchase online?

All these questions are answered by what channels you choose to distribute your products.

Broadly speaking there are two different types of channels:

Direct Channels
Indirect Channels

Direct channels are those wherein you as a company directly interact and sell to your end consumers.

For example, say you own a website which sells physical products. Your customers ‘directly’ purchase from you online.

Similarly, if you own the brick and mortar retail stores where your customers come and get your products then also you are directly interacting with your consumers.

On the other hand if you sell to some middlemen and they in turn reach your consumers then it counts as an indirect channel.

While you have more control over your margins in a direct channel approach, indirect channels usually offer less margins.

But the flip side is that indirect channels usually buy in bulk and hence are good for volumes.

To choose a particular channel you should consider these factors.

Number of consumer segments and types of market you are targeting : You want to be selling at a place where your target customers are most likely to visit. For instance, notice how Coke and Pepsi sell their soft drinks at fast food outlets like McDonalds or Burger King.
Total cost for each channel: There is an associated cost for each channel that you wish to set up . For example, the cost of setting up an ecommerce website or leasing or building your own retail channel could result in higher costs than simply selling your products to a wholesaler.
Type of product being sold and the consumer's awareness about it: If the product you are selling is fairly standard then you may need much explanation to be given to customers. But a complicated product may require the company to be in direct contact with customers to explain the offering.
Amount of control required over experience: Channels owned directly offer more chances of making the experience in line with the brand and product, while indirect channels will offer a similar experience for you and competitor products.
Duration of partnership: How long you intend to sell through the same customers also has a bearing on which channel you would choose. Hence, it is important to negotiate your terms in case you employ indirect distributors for your products.

Once you are sure of which channels to choose you can simply write them in the block. Make sure it is extremely convenient to find and buy your products for all your target customer segments.

Remember, the easier it is for customers to get the products, the more you will sell .

Step 4: Customer Relationships

This is an important block of the Business Model Canvas and helps you engage with customers in one or several ways .

Customer relationships block mentions all the ways in which a company chooses to maintain relationships with the customers.

Customer relationships are maintained with a primary motive of selling more to the customers while keeping the customer satisfied.

The goal of customer relationship management is to assist the customer in three stages of his journey with the company.

Customer Acquisition

Customer retention.

Your first task here is to guide a prospect to become a customer .

Typically this happens through different steps in a customer journey.

Let us see how each step in this journey may require different efforts on your part for customer relationship management.

Your customers mainly follow four broad steps before they become paying customers.

These stages are awareness , desire , interest and action .

The first step is to make your target customer segment aware about your offering. This includes letting your customers know that you have a potential solution to a problem that affects them.

Based on the type of business this may be done either in an automated or a manual way.

For instance, if you are in a B2B business you may choose to send over a sales representative or a solution expert to a customer.

Or wait for leads to show up themselves after you publish about your expertise in places like magazines or blogs where these prospective customers find you themselves.

Mostly awareness is built through advertising, SEO and word of mouth for a B2C business .

For instance, to build awareness about your offering you may choose to show a video ad to users who see a music video regarding your online music course.

While many users may become aware about your business, some of them may actually be convinced of its value or at least become curious about your product or service.

Consider that you showed an ad which generated 10,000 impressions or 10,000 users saw the ad. Now say 2,000 of them clicked and visited your website to read about your offering.

These 2,000 have now moved up the funnel by showing interest to buy the product.

At this stage, you may choose to save their email addresses for a more personalized conversation. You may even assign a sales rep to contact them if they choose to leave their details.

All these touch points become part of your customer relationship management strategy.

Now say that the person from your company who contacted the user showing interest manages to explain the value proposition you offer to around 500 of these users who now desire to buy your product.

The next step is to seal the deal with an action on the prospect’s part. The action of purchase by which they become your paying customers.

The goal of CRM (Customer Relationship Management) here is to make this journey as smooth as possible and convert the maximum number of prospects into paying customers.

There are certain goods and services that provide continuous value to customers and so customers keep buying them.

This stage deals with creating loyal customers who stick to your brand .

For instance, say you run an ecommerce website selling gifts. You realize that on an average a person buys gifts for someone at least once every two months. You would ideally want your customers to keep coming back for more orders every second month.

To do this your customer relationship program will have to make sure that you keep communicating with the users, apprising them of latest offers and products.

These are the few ways in which you can increase the chances of customer retention:

Create a brand image that your customers associate with.
Deliver the quality you promise.
Always solve problems and reduce friction for your customers.
Incentivize them for buying regularly from you with points or freebies.
Promptly resolve all their complaints.

Your sales will increase by either getting new customers or selling more to the existing customers.

Upselling deals with making your existing customers buy more from you. You can do this by increasing their usage of the existing products or by selling different kinds of products to them.

For example, if you have an online business that helps people find relevant jobs and you charge a subscription fee for sending them relevant openings. You can add more value to them by offering resume making services and earn more for yourself as well.

In a B2B setup, your engagement manager can actively look for opportunities to sell more.

If you are an independent consultant, then you can offer more services to your customers if you have some expertise.

Maintaining Customer Relations through Touchpoints

Now that you understand the main objectives that you can accomplish with this block, you may want to know how to maintain relationships with your customers for different touch points.

There are broadly six ways of engagement:

Personal Assistance : In this method you personally contact the customers through a human touch. These contacts may be made through call center agents or other employees.
Dedicated Personal Assistance: For buyers who are very valuable, for example, take people with high net worth for a bank who deposit millions of dollars. A bank may have a dedicated person to maintain the relationship.
Self Service: The ‘do it yourself’ method works great for reducing cost, but isn’t as strong as a human touch. This can be accomplished through videos explaining a process or an FAQ section on the website.
Automated: These include all the automated methods like an IVR or a chatbot that interacts to solve problems for your customers.
Communities: You may create communities and forums with your best customers playing a key role to solve problems for other customers. For example, there are tech groups that help all the users related to a particular technology.
Co-creation: There are products and services where you engage with your customers to co-create services that suit them. In this method the customer actively participates in the process to add value to himself/herself. For instance, an interior designing service which actively asks customers to define their taste and be involved in the designing process.

You have to focus on the cost of each of these methods and whether the value that the customer brings to you justifies it or not.

For instance, you may not want to have a dedicated person who you pay $1,000 a month for a customer who only gives you $100 business a month.

All you have to do now is enter your chosen ways maintaining customer relations and put it in the block. Remember you should have touchpoints mapped to each of the customer segments.

So for example, if you have an SaaS (software as a service) online business wherein you charge for monthly usage of the product and have individual users as well as enterprise users.

You can map ‘automated’ service of individual users and ‘dedicated’ personnel for enterprise.

Step 5: Revenue Streams

The revenue streams block covers the various ways in which you monetize your business and earn money from your customers.

There are multiple ways of earning money. Some these are:

Sale of Assets : You can completely transfer the goods or property for a price to a buyer. For example, a hotel chain selling one of the hotels to raise some cash.
Usage : Payment collected for each usage of a product or service.
Subscription: When payment is made for a repeated use of a service over a particular period. For instance, Netflix, Amazon Prime etc.
Leasing/Renting: Renting out an asset for use for a fixed period. For example, renting an apartment for a fixed period.
Licensing: Allowing the use of your intellectual property for usage by another company or person.
Brokerage Fees: Acting as an intermediary between two parties and earning a commission as a result. For instance, stock brokers who earn a commission by enabling sale and purchase of equity shares.
Advertising: Allowing your medium to be used as an advertising platform for other companies. For example, Google, Facebook and other platforms that earn money for allowing other companies to advertise on their platform.

Which method and price will work for you, depends on what kind of business you are in.

Pricing your product or service

The basic rule is that your customers pay you when the ‘perceived value’ they get from your product/service is more than what they pay.

From your perspective, you have to sell higher than the cost on an average so you earn money for yourself.

pricing including cost, price, and perceived value

While this is the basic rule, other things to consider is the price at which competition offers similar products and the supply and demand for the kind of product/service you offer.

If your value proposition is very strong, then you can charge a higher price than your competition. Otherwise to make the customers switch you will have to keep your prices lower.

It is possible that you don’t get your pricing right the first time. You can start with some assumptions and planning, and adjust your prices as you go forward. It is important to have a learning mindset.

Here is a quick snapshot of various pricing strategies that can help you.

One you decide on the price of the service, then next is to choose one of the methods of charging.

Method of charging customers for your product/service

Transaction Revenue : Charging for each transaction that customer does. For example, each time a user buys an item from your website you charge a fixed amount.
Recurring Revenue : Similar to a subscription based service where the revenue is collected automatically every month (or any fixed period) depending on usage. For example, your electricity service that charges every month based on usage.

Onboarding customers to services where the charges are recurring is tougher than transactional method because the customer is worried about committing for a longer duration to a service which is new for him/her.

Hence, you see companies offering a free trial before asking the customers to pay.

This way they try to reduce the ‘cost of trial’ for the customer.

You can decide which method will work for you based on the usage of your offering. For example, if you offer a product that is used only once in a long time, then a subscription based charging may not be the best for you.

Thinking long term with pricing

Most businesses exist to earn profit. So, remember no matter what pricing method you choose it should result in a positive cash flow for your business.

It should also be sustainable and should lead to long term success of your business.

With a dynamically evolving environment, various new offerings may be released in the market and you may get new competitors from time to time. Hence, it is possible that you may have to revisit your pricing strategy from time to time.

The important thing is that you keep the customer at the core of your decisions and be extremely clear about the value that you are adding.

If your customer is also convinced of the value, then it will be easy to make them pay.

Managing multiple revenue streams

Different customer segments may contribute to your revenue in different ways.

Take the example of Microsoft, they sell licenses for softwares like Windows, Microsoft Office for individual customers and also earn from enterprises by offering bulk deals or enterprise services through cloud.

You should be aware about what percentage of revenue is contributed by which customer segment, basis the value proposition.

For example, if you are in an ecommerce business, you may have a corporate gifting option specifically for office going people which contributes 10% of revenue .

This is important for you to understand which part of business contributes the most amount of cash for you.

Step 6: Key Activities

This block consists of all the activities that are key to delivering your value proposition to your customers .

The span of control and how you handle the key activities will vary depending on what kind of business you are in.

Some parts of your activities may be outsourced while some may be controlled internally.

To understand the key activities carried out by your business you should focus on the value chain of your business.

Following are the key activities and how to decide if they are key to your competitive advantage. While these activities may differ depending on your business model, the basic flow and idea will remain similar.

Let’s dive.

Research and Development

The value of R&D is particularly high in technology based companies and big companies spend billions of dollars on it.

Here are the top 10 spenders on R&D (values in million dollars)

Nevertheless, to stay relevant and innovative you always need to research and improve your products.

There are three basic things for which you will use R&D.

New Product Development : For growth, one of the ways to increase revenue is by offering more products in the market. Imagine a company like Apple, which first came up with iPods, then iPhones and iPads, and then Airpods. With each of these products it was able to grow its revenues multifold.
Modifications to Existing Product: With the needs of the users changing and improvement in other areas you may choose to make modifications to your existing product. The goal of this exercise may be to reduce cost, earn more revenue, stay relevant or a combination of these factors. For instance, Android comes up with a new version of their operating system with added functionalities and increased efficiencies.
Radical Innovation: Radical innovation gives you an opportunity to completely disrupt the current ways of working. This innovation may be to develop a product or a process that completely changes the status quo.

Though the chances of success are less in this scenario the gains may be very high. Consider how Uber and Airbnb changed the world, or the invention of smartphones revolutionized the mobile phone industry. If you manage to get a patent, then you can monetize it even better.

This part deals with manufacturing or procuring the end product that your customers may use.

There are three basic models that you can use:

Producing everything in house: You may choose to produce everything in your factories or facilities by procuring raw materials. The benefit here is that you are able to control the quality of your product extremely well and if you have some specialized technology this can become your competitive edge. The downside is that it is usually very capital intensive and scaling your business may also be difficult using this approach.
Outsourcing production: The next option you have is to completely outsource production and procure the end product through manufacturing partners. This reduces your overheads, allows you to scale quickly while also covering your risks. The only reason to not follow this approach is when you have some proprietary technology you don’t want to share or when the product is so different that it is difficult to find manufacturing partners.
Outsourcing a part of the production process: You can also follow a mixed approach where you can outsource a part of the production process. In this case you procure some part of the product and then process it to make the final product. For example, say you manufacture smartphones. You can procure all the parts from outside and just assemble them in house.

This part of the activity will also include handling logistics and inventory.

Logistics include all the transportation including bringing in the raw materials to your facilities, moving the unfinished products between factories (if required), moving the finished products to inventory and then finally delivering to the end customer.

Inventory includes the storage of your products in warehouses that is needed to fulfil demand of the customers. You will have to estimate demand and then plan your inventory to avoid stock outs.

Remember, managing inventory is essential as it is a major cost and you may want to minimize wastage while also maximizing sales.

Sales and Marketing

The key activities that will be performed by this function range from designing the strategy to enabling the last mile fulfillment.

Strategy : This includes the overall planning for what the company is trying to achieve from the marketing perspective and how it will go about doing it. For instance, say you are targeting a million dollars in revenue in a year, then the strategy would include everything from what products you will sell, how it will be advertised and so on.
Product Development: The marketing team works together with R&D or product development team to validate consumer demand for the new products being developed and help them design features that are most relevant to customers.
Communications and Advertising : All the communication to the customers and messaging about the company and product offerings are controlled by marketing. This includes the events that will be arranged for activations of products like exhibitions etc.
After Sales Support: These set of activities include helping your customers in the post purchase journey. Your customer support departments, automated chatbots and other ways in which you help your customers maximize the value from products they have bought and solve the required problems are covered here.

These sets of activities are just indicative. It is possible that some of them may not be relevant to your business model.

For example, if you are in a blogging business then production may not apply to you like a manufacturing process. Instead it would mean the development of content, which again you can choose to do by yourself or by hiring external help.

Similarly if you are in an ecommerce retail business then you may or may not own inventory depending on your model. In that scenario, partner management would become your key activity.

Step 7: Key Resources

This building block comprises the assets that help you unlock and create value for your customers. Key resources deal with the operational aspects of your business and are responsible for bringing the value proposition to life for your customers.

There are various kinds of key resources that act as enablers for your business.

These key resources should be well differentiated from your customers in order to be better than them

Types of Key Resources

Broadly there are four different kinds of key resources.

Physical Resources

Physical resources, like equipment, machinery, buildings etc, are tangible resources which are used to create the products and services for the customers.

While these may not be extremely vital for an online business, they have great importance when it comes to businesses which have to deal with the physical world.

For example, Amazon will need to have large warehouses, where the products are sorted and stored. Similarly, a giant like Apple would need labs to experiment on its devices and manufacturing facilities to deliver value.

A telecom company would need towers, switching centers and servers to ensure continuity of services. A cloud company like Oracle will need data centers to meet the demands of the customers.

Depending on the type of industry, these assets may comprise a large portion of the capital required for setting up business.

Intellectual Resources

Intellectual resources are powerful intangible tools that enable a company to maintain its edge over competitors.

Do you know, Coke has a secret formula for producing the syrup that eventually translates into the beverage. Similarly, Google has its proprietary page rank algorithm that retrieves the most relevant search results for you.

In the world of pharmaceuticals, this is even more important when producing medicines which have been patented.

Another intellectual resource that an online business has is the data that it collects over a period of time. With analytics and machine learning uncovering insights and patterns, data can unlock great opportunities. This also includes the customer lists or emails that you collect over a period of time.

In fact, intellectual resources are a great way to get a competitive advantage . No wonder the number of patents granted in the US is increasing year on year.

Human Resources

Employees are the key enablers of value in an organization. In fact, hardly any company can run successfully without its employees.

Imagine, would the big machines in so many industries function without any operators or maintenance staff? Would Dominos be able to deliver pizzas without delivery guys?

In service industries the role of employees is even more profound. The quality of work delivered by consulting organizations like McKinsey, BCG, Bain or the Big4 is highly dependent on the quality of consultants they have (no wonder they hire the best of people).

Hence, this block should include the key human resources that are important to your business.

In online business, content creators or people who write code for you are very important. Google may not have been the giant that it is, if it did not have expert coders.

This will also give you an idea of what kind of hiring your business would need to deliver the key products.

Financial Resources

Financial resources include the capital , the sources of debt (or line of credit) and the stock owned by a company. The requirement of this kind of resource will vary depending on the kind of business that you choose to do.

For example, the capital requirements of a bank may be completely different from that of a business that makes money through online sale of educational courses.

If you are just starting a business, you may choose to raise funds from friends and family in the beginning. Once it gets established you may turn to investors and venture capitalists.

If your business has massive requirements of advertising or needs rapid expansion to various geographies then financial resources will be the key to your success.

Another important consideration here is working capital . Working capital is the money required to meet your day to day operations like paying your vendors and buying inventory etc to keep your business running.

Which resources are most important?

To decide which resources are the most important for you, you will need to evaluate the resources without which you cannot continue your business and those which contribute greatly to your success.

Hence, employees may be more important than machinery when it comes to consulting business. Similarly, power generation will have a major dependence on plants that produce electricity.

Step 8: Key Partnerships

This block consists of entities which are not internal to your business but are extremely important in delivering value .

Consider the supplier of goods for your business, or the manufacturer to whom you have outsourced business, or the investor who has promised to back your venture.

All these are important partners for your business and are critical to the success of your model.

In fact, with the rise of outsourcing partnerships have become even more important.

in-house versus outsourcing partnerships

Would Kindle be a successful product if book writers don’t agree to publishing their content in the format? Or would the Apple iPod be successful without the music producers selling their music on the platform.

Hence, these outside partners are equally important and this justifies their place in the Business Model Canvas.

There are four broad types of partnerships that you will have:

Strategic Alliances : These are partnerships between non competitors that benefit both the parties. For example, an automobile manufacturer may give exclusive rights to a partner in one country to distribute its products.
Coopetition : These are alliances between competitors for mutual gain. For example, two video content creators may collaborate for an even greater share of audience, leading to increase in popularity of both influencers.
Buyer-Seller Relationships: You may procure raw materials or sometimes finished products from outside. These types of relationships or partnerships are referred to as Buyer-Seller relationships. Sometimes, these relationships can also become a great source of competitive edge. For example, say you have exclusive rights to buying a superior quality of coffee in a particular region with a seller. Outsourcing relationships with partners also fall under this category.
Joint Ventures: Joint ventures are partnerships between two separate companies when they have some sort of a mutual gain in working together. This could include sharing of resources, sharing of technology or if they produce complementary products. For instance, a data storage company may partner with an enterprise software firm to offer an end to end solution to the customer.

Key questions to ask before getting into partnerships

Have I researched my partner well? The first thing to do is to research your partner well. This includes the history of the company, financial stability, integrity and the quality of products delivered.
Is it a win win agreement? The partnership should be mutually beneficial. A good long term relationship cannot be built if one loses and the other wins. Therefore, there should be enough money to be made for both the parties.
How long should the partnership be? Your contract duration should be negotiated on the basis of length of the relationship required to make your business successful.
Are the key expectations and deliverables well defined? You should be clear about the terms of agreement and they should specifically contain what is to be expected from the partnership.
Is the process being outsourced part of my core activity? As long as possible you should have direct control of the most key core activity of your business.
Are my financial resources enough to cover the cost of partnership? You will need to pay your vendors on time to stay in business. Hence, be sure that the rate being negotiated is something you can easily pay for.
Do I have quality checks in place? Getting work done from partners may require strict levels of quality control. Hence, make sure you have dedicated employees to validate quality.

Why Should You Choose Partners for Some Activities?

We should remember that some types of outsourcing in business process are more common, and there are specific reasons why companies choose to delegate some work to partners.

The major reasons are reducing costs and focussing on core activities.

For instance, you may choose to focus on the core activities that generate value and outsource the ones that can be easily done by others.

Do you know, Coke mostly focuses on its marketing activities and outsources bottling to another company?

Some other reasons are improving quality , conserving capital and increasing speed to market .

Step 9: Cost Structure

This brings us to the last building block – the block for cost structures.

Cost structures include the major sources from which your business incurs cost.

The first step is to understand what are the costs contributed by each of the key activities and key partners. In order to be cash positive you should collect your revenues on time and have cost under control.

Now, different business models will have different kinds of costs attached to it. While some business businesses will be capital intensive, that is, they will require a large amount of capital in order to function (e.g. telecom) while others may not require a lot of capital to begin with (e.g. software development).

There are two major kinds of costs associated with a business:

Fixed Costs

Variable costs.

Fixed costs are costs which are paid upfront and do not vary with the number of customers served by a business.

For example, consider the money that the airlines pay to the airports. There is usually a fixed component to it known as the yearly fee. No matter how many customers fly, this cost will always exist.

Another example is rent. Consider a restaurant which pays monthly rent for the building it operates in. No matter how many customers come to dine in, this cost always remains the same.

Now, fixed cost doesn’t always have to remain fixed, it only means that it remains fixed for a particular period of time.

Example of fixed costs:

Advertising and marketing expenses
Depreciation

Contrary to fixed cost, variable cost varies with the number of customers served. For example, sales commissions paid for each dollar of sales or shipping charges per item delivered to the customers.

The biggest portion of variable costs in most businesses are the raw materials and utility bills.

Examples of variable costs:

Raw material cost
Labor costs
Shipping costs
Packing supplies
Utility bills like electricity

retail cost structure vs ecommerce cost structure

Your business model will decide whether you have a larger proportion of fixed costs or variable costs.

For example, consider a brick and mortar apparel business and an ecommerce based apparel business.

A brick and mortar based business will have rent as the major fixed cost while the cost of operations is the major driver of cost in an ecommerce business.

Another way to classify costs is categorizing them as Capital Expense (CAPEX) or Operational Expense (OPEX). Capital expenses are costs which are spent in order to acquire an asset.

Operational costs are costs which are expensed. Consider a company buying stationery, this will be counted as an operational expense. On the other hand the expenditure done to buy a big server to support operations will be classified as a capital expense since the acquired server becomes an asset.

Ideally, the margin that you obtain from your revenue over variable costs should be enough to cover your fixed costs in order to generate positive cash for you.

This can be done in two ways:

Economies of Scale : Economies of scale occur when you sell enough quantities of an item such that the cost of serving each customer reduces. This happens due to multiple reasons. A first that operates on scale is able to negotiate better prices with the vendors. This is because they get volume discounts. Since, the scale is big, fixed costs are much better covered.
Economies of Scope: Economies of scope occur when the same fixed costs are covered by different products and services. For example, consider a firm that operates its own logistics network. If it enters multiple product categories then the same trucks can now transport these multiple products sharing the cost for each of them.

How conservative should you be with costs?

This will depend on whether you consider yourself as a cost driven business or a value driven business .

A cost driven business focuses more on reducing cost. For example, consider ‘Ryanair’, the airline is based on removing all the frills and just offering the basic airline services in order to cut costs.

On the other hand a luxurious hotel business will focus less on cost and more on providing the best of comfort and facilities to its guests.

Usually luxury products are focused more on value and basic products that have less differentiation focus more on cost.

Once you decide your major cost heads, jot them down in the cost driver block and see them in conjunction with revenue from various sources.

It is important to validate whether your business model will be successful in generating cash and what level of scale you will require to make it work and whether it is doable or not.

Business Model Canvas FAQ

A business model canvas is a one page visual template that covers the key aspects required to make a business work. It consists of 9 building blocks which should work in conjunction with each other in order to deliver the key value proposition of business to the target customer segments.

A business model canvas has 9 building blocks. These are: 1. Customer Segments: Who are the key customers of your business? And what are their key characteristics and needs? 2 . Value Propositions: Why do customers buy your product or service? What is the key benefit that your business offers? 3 . Channels : How are these benefits communicated to your customers and how is the product or service sold or delivered and why? 4 . Customer Relationships : What are the key touch points between you and your customers? And how do you connect with them throughout their journey? 5 . Revenue Streams: How does business actually earn money from various value propositions? 6 . Key Activities: What are the key things that your business strategically does to deliver this proposition? 7 . Key resources : What are the assets that business requires in order to stay competitive and create value? 8 . Key Partnerships: What are the external entities or stakeholders that are key to delivering the product and service to your customer? What are some of the partners to whom you have outsourced certain activities to focus more on your core work? 9 . Cost Drivers: What are the major cost drivers for your business and how are they linked to your revenue?

Instead of coming up with a 500 page document that describes your business model, you should start with a quick business model canvas. This will give you an idea of the key parts that are required to make your business work. Start with a business model and come up with an initial version of your business model canvas. Then test your key hypothesis through experiments and take the learning from those experiments to adjust your business model canvas. Use this as an iterative process for learning and keep adjusting your business model canvas till it becomes perfect. Business model canvas is better for testing model assumptions because it is easy to change. It is also a standard template and is well understood by all. Many companies have successfully used it especially in dynamic environments.

There are various kinds of business models depending on what method of monetization you use and how charge your customers for your value proposition. Here are a few of them you can adopt if you don’t have a completely new business model. 1. Brokerage : Bring together buyers and suppliers and charge a commission for the transaction. 2 . Bundling: Offer a few products or services together as one package (eg. iPod and iTunes) 3 . Crowdsourcing : Raise funds from a group of people who are interested in supporting your offering 4 . Disintermediation : Sell directly by cutting out the middlemen 5 . Freemium: Charge a few customers for specialized service and offer a free version with limited functionality 6 . Auction: Sell products through an auction rather than a fixed price (Eg. eBay) 7 . Subscription: Charge for a fixed period of time for unlimited usage of service (Eg. Netflix) 8 . Leasing: Lease or rent an asset for a fixed period of time for money 9 . Usage : A simple model where you charge per transaction or usage of product/service 10. Advertising : Charge other businesses for advertising on your platform. 11. Affiliate: Earn a commission by selling someone else’s products. This list is just indicative, you can have a lot of business models based on one or many of these ideas.

Business model canvas was invented by Alexander Osterwalder. He is a Swiss theorist, author, consultant, speaker and entrepreneur.

A lean canvas is just an adapted version of the business model canvas which is more suited for startups. It was created because there are some blocks of the business model canvas which are difficult for a startup to know when it starts doing business. This is because by definition a startup tries to do something that no one has done before making the whole model extremely uncertain. Here is a complete list of differences between the two.

Source: canvanizer.com

Ready to Launch Your Startup using the Business Model Canvas?

Having read this article in detail, you must now be well versed with a business model canvas and how to create a quick one for your business.

If you are looking to start a side business to earn some money online or any full time business then this template is going to be very useful for you.

A lot of learning about your business and whether your assumptions are true or not will become clear only when you start your venture.

The important thing is to think like an entrepreneur and have a learning mindset and you will definitely succeed.

If you are short on money you can apply the business model canvas to earn money from a blogging business with less than a $100 investment or you can choose any business model that suits you.

The important thing is to take the dive and begin, and if you follow all the tips and tricks shared here, you will definitely succeed.

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Anastasia belyh.

Anastasia has been a professional blogger and researcher since 2014. She loves to perform in-depth software reviews to help software buyers make informed decisions when choosing project management software, CRM tools, website builders, and everything around growing a startup business.

Anastasia worked in management consulting and tech startups, so she has lots of experience in helping professionals choosing the right business software.

please help and create business model canvas for any type of...

please help and create business model canvas for any type of industry you choose, please create your own company don't copy direct from online. It needs to create a business model canvas as u can pick any business of your choice (it should be the business you assume to create) and write in your words as if it is your business or just an imaginary business facts should make sense. The project should at least demonstrate the following points mainly:

1. What is your business？

2. What are the differences between your business and other companies in the same industry?

3. What is the value proposition of your business?

4. What is the business model of your business? ( draw the BM framework and expalin each element in text）?.

5, How does this business model come up？（the process of designing the BM）

6. How does this business model affect the value proposition?

Answer & Explanation

Bite Me! is a gourmet food delivery service that specializes in delivering fresh, made-to-order meals to people's homes and offices.

Bite Me! is different from other food delivery services because we focus on delivering fresh, made-to-order meals. We also offer a wide variety of menu options to choose from, so there's something for everyone.

The value proposition of Bite Me! is that we provide a convenient, hassle-free way for people to enjoy fresh, made-to-order meals without having to cook or clean up afterwards.

The business model of Bite Me! is based on delivering fresh, made-to-order meals to people's homes and offices. We generate revenue through delivery fees and commissions from restaurants.

The business model of Bite Me! was designed to provide a convenient, hassle-free way for people to enjoy fresh, made-to-order meals. We decided to focus on delivery in order to make the process as easy and convenient as possible for our customers.

The business model of Bite Me! affects the value proposition in that it provides a convenient, hassle-free way for people to enjoy fresh, made-to-order meals. The delivery focus also makes it easy and convenient for customers to get their meals without having to cook or clean up afterwards.

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Power BI September 2023 Feature Summary

Welcome to the September 2023 update.

We’ve got some updates to editing you data models, row -level security, and a reminder to update your .NET Framework version for Desktop!

There is more to explore, please continue to read on.

Upgrade Power BI Desktop .NET Framework to 4.7.2 or newer

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Smart Narrative improvements

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The new data model editing in the Service feature was released to preview in April. We’ve been busy reacting to your feedback and enhancing the experience. Below are the improvements coming later this month:

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Similarly, changes made to layouts in the data model within the Service will now be incorporated in the Desktop upon downloading the .PBIX file.

Please continue to submit your feedback directly in the comments of this blog post or in our feedback forum .

The Q&A visual is an effective way to help users further understand their data by asking questions and receiving answers in the form of visuals. It offers users a way to explore their data in ways not covered by the rest of the report without requiring deeper knowledge of their data model or report authoring.

However, while the Q&A engine is good at answering precise questions about data, it may not be able to associate every word or phrase a user inputs with data in the model. For example, answering “what are our best consoles this year?” may require connecting the term consoles to the name products in the model, and understanding that the term best corresponds to the highest sales values. These terms are contextual, however – users could mean something completely different asking for console and best in other industries, organizations, or even datasets.

To help authors ensure that the Q&A visual provides consistent and accurate answers based on the unique language their report consumers actually use, we introduced Q&A setup tools with an emphasis on providing Q&A with synonyms for column and table names in the model. This way, authors can explicitly define console as referring to products , and users will always receive the correct answers when they ask similar questions in the future.

However, synonyms (nouns) are only half of the picture. The other half of the terms (adjectives, verbs, prepositions, adverbs) can’t be defined with such straightforward mappings because they must be understood as a part of a phrase – they qualify other terms or relate other terms together. Best in the previous example is one; asking “who sold the most books” requires us to know that stores sell books , connecting stores to books.

There are many types of these linguistic relationships, so we built a new tab entirely to help you create and manage linguistic relationships for your data. You can get into the Q&A setup menu using the gear icon on the Q&A visual or the Q&A setup option in the Modeling tab of the ribbon, then selecting the new Relationships tab.

There, you’ll be able to define a variety of relationships, including verb, adjective, noun, preposition, and more. Choose a type which fits the term you’re trying to define (for example, “best” is an adjective), then follow the prompts to define what it means in the context of your data.

Our investment into Q&A does not stop here. Even in a world where natural language capabilities are increasingly driven by large language models, there is value in the precision, consistency, and customizability of our sophisticated Q&A engine. In the other direction, defining synonyms and relationships can be a lengthy process just asking to be streamlined with the power of AI-generated suggestions. Keep an eye out in the future for the ways we’re bridging the two to bring out the best of both worlds!

We have added an optional variant parameter to MINX and MAXX DAX functions. These functions ignore text and Boolean values when there are variants or mixed data types, such as text and numeric. Now with the new optional variant parameter set to TRUE, the functions will consider the text values.

Here is an example of a variant measure. In the table below the variant measure is ordered in ascending order:

MINX and MAXX without the variant parameter set, or set to FALSE, will ignore text and Boolean data types.

MINX and MAXX with the variant parameter set to TRUE will now include text values. Boolean values are still ignored.

The default of the MINX and MAXX optional variant parameter is FALSE, so all existing DAX expressions using MINX and MAXX will not be impacted by this change. To allow text values to be included, you can update the DAX expression to include TRUE as the third parameter.

Read more about these changes at Microsoft Learn:

MINX function (DAX) – DAX | Microsoft Learn

MAXX function (DAX) – DAX | Microsoft Learn

Edit relationships in the properties pane

We are excited to announce the general availability of the edit relationships in the properties pane! The  edit relationships in the properties pane  has been available for public preview since the  October 2022 release . Now you can click on any relationship line in the modeling to edit your relationship in the properties pane. This is available in the Model view of Power BI Desktop and in web modeling of the Power BI service. Edit relationships without running queries to preview the data and only validating the relationship when you click apply changes. A welcome relief for those using DirectQuery storage mode, as these queries can take time and impact your data sources.

You can learn more about how to utilize this feature at Create and manage relationships in Power BI Desktop – Power BI | Microsoft Learn .

Data Connectivity

The update enhances the SAP HANA connector with the capability to consume HANA Calculation Views deployed in SAP Datasphere by taking into account SAP Datasphere’s additional security concepts. This enables consumption of Calculation Views in Datasphere and allows customers to connect to HANA Cloud views without the need for additional privileges on the _SYS_BI schema.

We are happy to announce the release of the new Emplifi Metrics connector. Please find release notes from the Emplifi team below:

“Integrating social media insights alongside the rest of your marketing or business intelligence data gives you a holistic understanding of your entire digital strategy, all in one place. With Emplifi Power BI Connector, you’ll be able to include social media data from the Emplifi Platform in your charts and graphs and combine them with other data you own.

The Power BI Connector is a layer between Emplifi Public API and Power BI itself. It helps you work with your data intuitively, directly in the Power BI tool. The majority of data and metrics available in the Emplifi Public API are also available in the Connector.

Please visit the official documentation for more information about Emplifi Public API and a list of available metrics. You’ll find it here: https://api.emplifi.io/.”

We have listened to your feedback about the row-level security test as role experience in the Service and have made several improvements this month including:

We have added a new dropdown, allowing you to choose and test any report connected to the dataset.

You can now easily see important permissions details pertaining to a specific individual while role testing for that person.

We have improved our warning and error messages.

To learn more about validating row-level security roles in the Service read our documentation .

We, in Power BI continue our investments in empowering frontline workers with data and insights in their work. And in this month release, the Power BI mobile apps add support in Azure active directory shared device mode .

Shared Device Mode enables you to configure devices to be shared by a group of employees. This is very common for frontline workers, who do not use their personal device for work related tasks but are getting a work-related mobile device from a shared pool of devices for these tasks.

The Shared Device Mode enables single sign-on (SSO) and device-wide sign out for Microsoft Power BI and all other apps that support Shared Device Mode.

Once a user signs in into a supported app, the user will be logged into any application compatible with Shared Device Mode as well.
Once a user signs out of a supported app, all other applications integrated with shared device mode sign out, to to prevent unauthorized or unintended access by the next user.

Back to the frontline worker scenario: when an employee picks a device from a pool at the start of their shift, they need only a single sign-in to one supported app (for example Power BI), and they’re automatically signed in to all other apps that support shared device mode on the device, so the device and the apps are ready for work with the user’s account. At the end of their shift, when they sign out of one app, they’re signed out globally from all other apps that support shared device mode, having the device is ready for the next employee and can be safely handed off.

Git integration

Since Git integration has been launched few months ago, we supported only 2 items in Power BI- Power BI reports and Power BI datasets.

We are now excited to add a new item- Paginated reports !

After connecting your workspace to Azure DevOps, you can commit your paginated reports and have them versioned in your repository. After that, you can open the .rdl files directly from git in Power BI Report Builder, edit and push the changes into git. The workspace will identify the changes and will prompt developers to update the workspace with the changes to the paginated report.

With this feature, we are adding paginated reports developers to enjoy the collaboration, versioning and modern developer workflows offered in Power BI and Fabric. Learn more about using git with paginated reports .

A workspace can connect to a single branch at a time. Once you’ve setup your separate workspace to work with git, there might be scenarios where you want to change just the connection of a branch. We have now added 2 new features to help you achieve this much faster:

Checkout branch – checkout allows you to easily create a new branch, based on the current state of the workspace.

After choosing to checkout, you can create a new branch that will be connected to the WS, while the uncommitted changes are retained. This is useful in cases of conflicts , that allows you to commit your changes to a backup branch, and then manage the merge conflict in the git repo.

Switch branch – Workspace admins can decide to change just the connection of the branch very easily.

It’s helpful in cases you want to start working on a new branch and wipe clean your WS content for that, or when you are moving from your regular project to small bug fixes (assuming they are on the same content), that should happen on a different branch.

Many users have been asking, since the release of git integration, how to work with deployment pipelines and git as part of a CI/CD process. These two features can help build a compelling e2e flow, when connected properly. Follow this step-by-step guide to learn how to make the most out of both tools together.

Visualizations

New visuals in AppSource Change Chart

Pro Circle Card by Devlup Funnels Apex Milestone Trend

Dot Chart Activity Gauge by Powerviz Bridger Visual by BI Samurai

Number lines by BI-Champ

Funnel Chart by Powerviz

Date Picker by Powerviz

Bar Chart with Export Data Feature

Wordcloud by Powerviz

PackedBubbleChart

Box Ploty by Devlup Funnels LeapLytics – Markdown Viewer Aimplan Data Input Table

Overview of Beeswarm Chart

Beeswarm chart shows the distribution of data along one axis or both axes while also showing individual points. It is like a one-dimensional or two-dimensional scatter plot but with closely-packed, non-overlapping points.

How to use this Visual

The visual is intuitive and easy to follow. Only 1 field is mandatory i.e. Bee Category.

Tip: If you don’t have any category, you can simply add a calculated column with any name and use it in the category field

Bee Size field is optional and is represented in the visual by bubble area or size. If this field is missing then all bubbles will be of same size

Bee Label field is also optional. It is used to add labels to each individual bubbles.

This chart can be used in 3 ways

Y – Axis only

X – Axis only

Scatter Plot (Both Y and X Axes)

1) Y-Axis Only

As shown in picture below, if you only use a column/field in “Beeswarm Y-Axis” section while keeping “Beeswarm X-Axis” section empty, your data will be plotted on Y-Axis categorized according to the “Bee Category” section

2) X-Axis Only

Similarly, if you only use a column/field in “Beeswarm X-Axis” section while keeping “Beeswarm Y-Axis” section empty, your data will be plotted on X-Axis categorized according to the “Bee Category” section

3) Scatter Plot (Both X and Y Axes)

If you use columns/fields in both sections i.e “Beeswarm X-Axis” section and “Beeswarm Y-Axis” section, the visual will work like a scatter plot with data points plotted on X-Axis and Y-axis . This is depicted below

You can show images inside bubbles as well using the “Images” field. For example, the report below shows top millionaires of the world with their net worth on Y-Axis and their Age on X-Axis. Its available in demo file.

Formatting Options

These options are available in the format pane of the visual under “Settings”.

1) Bubble size

As the name implies, this setting simple increases / decrease the bubble size

2) Lower Upper and Left Space

Beeswarm chart produces non colliding bubbles or in other words circles don’t overlap.

This can often cause bubbles do go outside the chart area especially when there is a concentration of data around minimum and maximum data values. This is where these settings are very useful to bring data inside the chart area. These settings increase or decrease the Y-Axis and X-Axis range to achieve this objective. Try adjusting these settings on the demo file’s sheet “ScatterPlot Beeswarm” to see how they work.

Purchase of Premium Features

To use the visual without Watermark in Power BI Online, please purchase the Visual’s license for a 1 year period. The license is for unlimited number of users and viewers.

If you have any questions, please send me email at [email protected]

Download the demo file here .

Download the custom visual from APPSOURCE

Drill Down TimeSeries PRO lets you create timeseries charts that are easy to explore on any device. Using its intuitive interactions, users can drill down to months, days or hours by clicking on the chart. Combine up to 12 series and choose between multiple charts – line, column, area. Learn more about Drill Down TimeSeries PRO!

MAIN FEATURES:

On-chart interactions – pan, zoom and drill down

Full customization – set intervals, min/max values, colors, fonts, stacking and clustering

Cross-chart filtering – select data points on multiple charts instead of using slicers
Touch device friendly – explore your data anywhere

POPULAR USE CASES:

Finance – stock exchange indices, capital ratios, transaction volumes
Sales – web traffic, audience reach, lead volume
IT – network traffic, response times, syslog and error trends
Logistics – inventory movement and turnover, loading time, fleet maintenance costs

Get Drill Down TimeSeries PRO now!

This visual comes with 30 days free access to paid features.

ZoomCharts Drill Down Visuals are known for interactive drilldowns, smooth animations and rich customization options. They are mobile friendly and support: interactions, selections, custom and native tooltips, filtering, bookmarks, and context menu.

accoPLANNING for Power BI empowers business users with writeback capabilities, advanced planning, forecasting, budgeting, project management and analysis solutions.

We have some new and exciting features for you in this release:

• Custom calculated rows and columns configuration. It allows you to customize your own client-side calculations in your already established accoPLANNING table.

• End user Lock cells. This gives the flexibility for the end user to lock cells and make sure these will not be affected by splashing or use as an approval indicator.

• Hide rows and columns. This Allows users to hide rows and columns – adding flexibility in making asymmetric column and row selections in the grid for better reporting or just for ad-hoc purpose to get a better overview.

The latest update also includes a range of new features and improvements designed to increase your productivity:

• Our navigation has undergone a major overhaul, with the most notable change being the revamped toolbar.

• Better API error message handling in the grid.

• Support for automatically expanding all rows/columns/both, eliminating the need to manually adjust the size of each cell.

With the accoPLANNING visual, you combine the planning and reporting process in Power BI. For more information, visit our website.

https://www.accotool.com/

https://appsource.microsoft.com/product/power-bi-visuals/WA200002600?tab=Overview

https://youtu.be/kNIVC6rBJWA

Zebra BI visuals for Power BI are taking another step further to make the user experience as seamless and interactive as possible . Zebra BI Charts has received some important updates so that you save time while customizing your visuals. Thanks to the on-visual settings , you don’t need to go to the visualizations pane every time you want to make a change.

COMMENTS SETTINGS can now be adjusted directly on the visual by simply clicking on the settings icon next to the comment box. You can adjust the title, which variances you display, the icon, gap between the comments, and padding.

CATEGORY SETTINGS let you adjust several settings by just clicking on the category area . Customize the axis font (family and color), trim /rotate long labels, adjust the label density, and set the gap between the columns.

LEGEND SETTINGS come in handy when you want to rename the entries and don’t want to search for this option in the formatting pane. Adjust margins, use aliases in tooltips and switch comparisons.

STACKED CHARTS SETTINGS on the visual let you adjust the Top N feature, set color of the chart, and display labels as %.

Try it on your data for free .

We are excited to announce the new Word Cloud by Powerviz, it’s an advanced visual which empowers you to create some of the most high-quality and creative word art in the Power BI.

Introducing Word Cloud by Powerviz – A Powerful Power BI Custom Visual

Key Features:

Word Styling : Make your word clouds pop with personalized text styles. It offers font styling, direction & text editing features.
Color Options: Choose from 30+ color palettes, including color-blind safe options.
Shapes: Want to make a statement? Create captivating word clouds by choosing shapes from icons and images, or upload your own image.
Exclude: No more hassles anymore! Easily remove unwanted words, symbols from the text to create a clean and focused word cloud.
Ranking : Filter out Top/Bottom N Words.
Conditional Formatting : Easily spot words with dynamic rules.

Many other features included lasso/reverse lasso, grid view, show condition, and accessibility support.

Business Use Cases:

Marketing: Sentiment analysis & SEO keywords.
Education : Brainstorming, Improve engagement.
Market Research : Opinion poll, open-ended survey.
Presentation : Capture attention & easy communication.

Try Word Cloud Visual for FREE from AppSource

Check out the visual features in demo file

Step by Step instructions and documentation

To learn more, visit Powerviz website .

Introducing Word Cloud by Powerviz – A Powerful Power BI Custom Visual on YouTube

Innofalls Charts is a powerful visual that offers a wide range of interactive features. Our bar and waterfalls charts come with a drill-down history, enabling orientation and facilitating comparisons. All charts can be stacked or grouped into columns.

Waterfalls: Our special attention to waterfalls includes running totals and delta waterfalls, enabling effective comparisons of measures or members. The waterfalls are expandable, drillable, stackable, and offer intermediate sums.

Drill Down History: Keep track of your drill downs with visual feedback. Change your drill downs retroactively and combine multiple drill downs for in-depth exploration.

New Comparison Features: Effortlessly make comparisons while viewing your report and incorporate deviation charts with a single click.

Interactivity: Enjoy various interactive features such as drill, expand, undo/redo, dynamic comparisons, and zoom for enhanced data exploration.

IBCS Formatting: Our IBCS theme provides scenario formatting, equal scaling, highlights, deviations and more for consistent and standardized reports.

Animations: Enhance data comprehension and reduce change blindness with animations. Promptly detect resorted or added data elements.

Discover the full potential of Innofalls Charts and get started today. Innofalls Charts is free for Power BI Desktop!

Get started today Visit our website

Struggling to visualize complex hierarchical relationships? Improve understanding and decision-making with the Hierarchy Chart by MAQ software.

In today’s data-driven environment, visualizing hierarchical relationships is key to business insights and decision-making. From sales structures to budget allocations, our Power BI-verified visual offers a customizable way to represent these structures easily, catering to various business needs.

Figure 1: Sample visual showing a color-coded organization chart (with a tooltip).

Key business uses:

Organization /HR: Organize human resources by department and hierarchy.
Operations : Illustrate manufacturing processes, breaking down components or ingredients hierarchically.
Finance : Show budget allocations by division or project, with color-coded subcategories to highlight differences.
Sales : Visualize sales structure, territory responsibilities, and targets with group field indicators showing performance status.
IT : Visualize IT assets by category and availability with detail.

Key features:

Color-code cards using a legend.
Adjust card (i.e. box) size, borders, and corners.
Customize the appearance of the links connecting each card.
Interact with cards to control levels and cross-filter visuals.
Zoom and reposition the visual with ease.

Try out the features of the Hierarchy Chart by MAQ Software today on the visual’s sample report .

Learn more about our Power BI custom visuals on our website .

https://powerbithemegenerator.bibb.pro/

BIBB recently released its take on the Power BI Theme Generator, aiming to streamline the theming process for users. This new tool offers a user-friendly interface, allowing for an easy selection of colours and generation of JSON themes. Within BIBB’s generator, users can choose colours in various ways, from manual selection to trending combinations and even importing from images or external sources like Coolors.

Power BI JSON Report Theme Generator by BIBB

That is all for this month! Please continue sending us your feedback and do not forget to vote for other features that you would like to see in Power BI! We hope that you enjoy the update! If you installed Power BI Desktop from the Microsoft Store, please leave us a review .

Also, don’t forget to vote on your favorite feature this month over on our community website.

As always, keep voting on Ideas to help us determine what to build next.

We are looking forward to hearing from you!

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IMAGES

Business Model Canvas Explained: Examples And Structure
Business Model Canvas: Complete business model on a single sheet of
Business Model Canvas Explained
Quick Guide to the Business Model Canvas
Business Model Canvas
DesignABetterBusiness.tools

VIDEO

Introduction to Business Model Canvas
Business model canvas 2.1
Business Model Canvas: Keskeiset kumppanit ja sidosryhmät
Workshop on Business Model Canvas
Writing a Business Plan (Lesson 10): Business Model Canvas Overview
Business Model Canvas

COMMENTS

What is the Business Model Canvas?
A business model canvas provides a high-level, comprehensive view of the various strategic details required to successfully bring a product to market. The typical use case for this tool is to outline the fundamental building blocks of a business, but it can be used effectively for individual products as well.
Business Model Canvas: Explained with Examples
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.
Business Model Canvas
The Business Model Canvas is a strategic management template used for developing new business models and documenting existing ones.
What is Lean Canvas?
The Lean Canvas is a business modeling tool created to help deconstruct a startup idea into its key and most risky assumptions. Deeply influenced by the lean startup methodology, the Lean Canvas servers as a tactical plan to guide entrepreneurs navigate their way from ideation to building a successful startup. The methodology has been developed ...
The 9 components of the Business Model Canvas
The business model canvas is a guideline for putting your business model on paper. It allows you to get a picture of your activities and your earnings model in a quick and convenient way. A good understanding of your own company and your USPs are the starting point for marketing in a cost-effective way. Without insight into your USP, it is ...
How To Use The Business Model Canvas
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. Sections of the Business Model Canvas. 1.
What is a Business Model Canvas?
Business model canvas is a tried and tested methodology not only for startups but also for innovating in large enterprises. Nespresso, a fully owned daughter company of Nestl., is a great example of a powerful business model. It changed the face of the coffee industry by turning a transactional business (selling coffee through retail) into one ...
What is a Business Model Canvas and what is its purpose?
Published Sep 14, 2022. + Follow. Originally created by Strategyzer's Cofounder Alex Osterwalder, the Business Model Canvas is a strategic management tool that helps visualize and lay out the ...
The Business Model Canvas Explained, with Examples
Example 2: Skype. In the diagram below you can see the Business Model Canvas for Skype. From the Business Model Canvas we can see that Skype has two key value propositions: The ability to make calls over the Internet, including video calls, for free. The ability to make calls to phones cheaply.
Business Model Canvas: Pengertian, Elemen, dan Tips Membuatnya
Pengertian Business Model Canvas. Elemen Business Model Canvas. 1. Key Partnership (Mitra Kunci) 2. Key Activities (Aktivitas Kunci) 3. Key Resources (Sumber Daya Kunci) 4. Value Propositions (Proposisi Nilai) 5. Customer Relationships (Hubungan dengan Pelanggan) 6.
What Is Business Model Canvas and Why You Need One (with templates)
Business Model Canvas is a strategic management and lean startup template for developing new or documenting existing business models. It is a visual chart with elements describing a company's or product's value proposition, infrastructure, customers, and finances. It assists companies in aligning their activities by illustrating potential ...
What is a business model canvas? Overview with template
The business model canvas outlines nine crucial elements of a business model in an easy-to-understand visual template: customer segments, value proposition, channels, customer relationships, revenue streams, key activities, key resources, key partnerships, and cost structure. Various companies, including startups, scale-ups, and large software ...
Business Model Canvas In A Nutshell
The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.
How to Use the Business Model Canvas for Strategic Thinking
The Business Model Canvas (BMC) is a visual template that consists of nine building blocks that represent the key elements of any business. The nine blocks are: value proposition, customer ...
Business Model Canvas (BMC)
The Business Model Canvas (BMC) is a strategic tool for organizations. It is also known as the BMC model. It is a graphic representation of a number of building blocks that represent the elements of an organization. The Business Model Canvas can be deployed as a strategy tool for the development of a new organization and business model innovation.
How to Map Out Your Digital Transformation
Going back to the business model canvas, this step starts introducing changes and updates into your canvas. 3. Derive the necessary changes. Once you've sketched out the goal in the second step ...
14 Ways to Apply the Business Model Canvas
14 Business Model Canvas applications. Strategic Planning/Development - One of the primary ways we've seen organizations use the BMC is in their regular strategic planning and development cycles. They use it to create a blueprint of their strategy. The BMC provides a very clear foundation and direction for the conversation at hand, whether done ...
The 20 Minute Business Plan: Business Model Canvas Made Easy
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. The following diagram describes how Key Activities drive the accrual of Key Resources:
What is a business canvas model? (Definition and examples)
A business canvas model is a document that business leaders use to illustrate all the important aspects of their operation and how they fit together. This includes all the important strategic elements that work together in the delivery of a product or service. Knowing how a business canvas model works and looking at some examples of successful ...
What is a Business Model with Types and Examples
Business Model: A business model is a company's plan for how it will generate revenues and make a profit . It explains what products or services the business plans to manufacture and market, and ...
Build Your Business Model with the Business Model Canvas
The Business Canvas is an excellent tool to use at different stages of your entrepreneurial journey, whether you are starting out or seeking strategic improvements. By working on each building block of the model, you gain an overview of your business, allowing you to identify areas for improvement, innovation, or cost optimization.
Business Model Canvas (BMC)
The Business Model Canvas is a strategic management and lean startup template for developing new or documenting existing business models. It is a visual chart with elements describing a firm's or product's value proposition, infrastructure, customers, and finances. It assists firms in aligning their activities by illustrating potential ...
What is a Business Model Canvas?
A business model canvas will help streamline planning, development, and execution. It should align everyone's objectives and cut inconsistencies. It syncs the various people who contribute to your business objectives. Thus, it is imperative to prepare a business model canvas in the ever-changing market.
Choosing the Right Channels for Your Business Model Canvas
Mapping out your channels will tell you where and how to interact with your customers at every stage of their journey. Before you dive into filling out the Channels component of your Business Model Canvas, make sure you've laid out your Value Proposition and defined your Customer Segments. Customer channels describe how you reach your target ...
The 15 Minute Business Plan: Business Model Canvas for ...
Step 4: Customer Relationships. This is an important block of the Business Model Canvas and helps you engage with customers in one or several ways. Customer relationships block mentions all the ways in which a company chooses to maintain relationships with the customers.
Business Model Canvas: Importance, Benefits & Examples
The business model canvas is the ideal tool to analyze and plan your new business venture. Learn what it is & how its elements can benefit your business. Business Model Canvas: Importance, Benefits & Examples | Boldare - Digital Product Development & Design Company
please help and create business model canvas for any type of
6. The business model of Bite Me! affects the value proposition in that it provides a convenient, hassle-free way for people to enjoy fresh, made-to-order meals. The delivery focus also makes it easy and convenient for customers to get their meals without having to cook or clean up afterwards. Answer to please help and create business model ...
Power BI September 2023 Feature Summary
This new capability provides the ability to test how buttons, slicers, and visuals will behavior on the app before publishing the report. But that's not all. With this canvas interactivity, users can now interact with visuals directly and adjust Table and Matrix column headers to align perfectly with mobile screens.

Business Model Canvas

How do product managers use the business model canvas?

Tips for using the business model canvas

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Business Model Canvas: Explained with Examples

What is a Business Model Canvas

What Are the Benefits of Using a Business Model Canvas

How to Make a Business Model Canvas

What are the Key Building Blocks of the Business Model Canvas?

Customer Segments

Value Propositions

What to Avoid When Creating a Business Model Canvas

What Are Your Thoughts on the Business Model Canvas?

FAQs About the Business Model Canvas

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Business Model Canvas Explained with Examples

What is a business model?

Advantages of the Business Model Canvas

Using the Business Model Canvas

Left/Right Split

1. Customer Segments

2. Value Proposition

3. Channels

4. Customer Relationships

5. Revenue Streams

Taking a Step Back

6. Key Resources

7. Key Activities

8. Key Partners

9. Cost Structure

Business Model Canvas Examples

Example 1: Google

A Word on Color Coding

Example 2: Skype

Example 3: Gillette

Key Takeaway

Creating Your First Business Model

Cite this article

Related Tools

Porter’s Generic Strategies

The Balanced Scorecard

Horizontal vs. Vertical Integration

CAGE Distance Framework

The Ansoff Matrix

Porter’s Five Forces

Porter’s Value Chain

Diffusion of Innovation Theory

VRIO Framework

In our course you will learn how to:

Business Model Canvas: Pengertian, Elemen, dan Tips Membuatnya

Pengertian Business Model Canvas

1. Key Partnership (Mitra Kunci)

2. Key Activities (Aktivitas Kunci)

3. Key Resources (Sumber Daya Kunci)

4. Value Propositions (Proposisi Nilai)

5. Customer Relationships (Hubungan dengan Pelanggan)

6. Channels (Saluran)

7. Customer Segment (Segmen Pelanggan)

8. Cost Structure (Struktur Biaya)

9. Revenue Stream (Aliran Dana Masuk)

Zulhas Borong Bando-Bros di Tanah Abang, Pedagang: Makasih Pak Menteri

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The Essential Guide to the Business Model Canvas (with Templates)

The Essential Guide to Understanding and Using the Business Model Canvas (with Templates)

Why the canvas model is an important startup tool

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﻿Revenue streams

Key resources

Revenue streams