What’s a Business Canvas?
The Business Model Canvas gives you a simple structure of a business plan without taking all the time and cost to produce one. The Canvas delivers three things:
- Focus: Stripping away the 40+ pages of ‘stuff’ in a traditional business plan. It will help you improve clarify and focus on what’s driving the business (and what’s non-core and getting in the way).
- Flexibility: It’s a lot easier to tweak the model and try 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 into your vision when it’s laid out on a single page.
The Canvas has nine elements and together these elements provide a coherent view of a business’ key drivers:
STEP 1: Customer Segments: Who are the customers? What do they think? See? Feel? Do?
STEP 2: Value Propositions: What’s compelling about the proposition? Why do customers buy, use?
STEP 3: Channels: How are these propositions promoted, sold and delivered? Why? Is it working?
STEP 4: Customer Relationships: How do you interact with the customer through their ‘journey’?
STEP 5: Revenue Streams: How does the business earn revenue from the value propositions?
STEP 6: Key Activities: What uniquely strategic things does the business do to deliver its proposition?
STEP 7: Key Resources: What unique strategic assets must the business have to compete?
STEP 8: Key Partnerships: What can the company not do so it can focus on its Key Activities?
STEP 9: Cost Structure: What are the business’ major cost drivers? How are they linked to revenue?
How to get started?
The first time you engage with the canvas, I recommend printing it out and going to town. Fill out the elements for your business and then ask yourself ‘Does this make sense?’ ‘What are the most important linkages and components of the model?’
Step 1: Customer Segments
For purposes of using the canvas you should make sure you can answer these questions:
- Segment Dimensions – Do you have a single or multi-sided market? B2B and B2C or just one?
- Segment Composition/Personas – You should be able to visualise these Personas – and you should understand what they think, see, feel, and do in your product area. Be sure to list both buyers and users of your product.
- Problems, Needs, Habits & Current Alternatives – What job are you doing for the customer? What need are you fulfilling? Identify an existing need/problem and identify specific alternatives that your customer uses today.
Step 2: Value Propositions
Which of the Problems or Needs that you identified in your Personas are you fulfilling? What is unique about your Value Propositions and why does your customer prefer them to their current alternatives? What things do you do that actually cause a customer to pick you over a competitor or alternative?
Step 3: Channels
Channels include entities you use to communicate your proposition to your segments, as well as entities through which you sell product and later service customers.
Step 4: Customer Relationships
How does the customer interact with you through the sales and product lifecycle? Do they have a dedicated personal contact they see? Call? Is all the interaction over the web? Do they never see you at all but instead talk to a Channel? A few litmus test questions you may want to ask yourself at this point:
- Can the Value Proposition be delivered to the Customer this way? All the way through from promotion, to sale, to post-sale service?
- Can you make the numbers work?
- Is there a premium support product you need to create/test?
Step 5: Revenue Streams
A list of Revenue Streams, linked to Personas (or Segments if the mappings are the same within a set of Personas) and Value Propositions.
Step 6: Key Activities
These are the crucial things the business needs to do to deliver on its propositions and make the rest of the business work. For a product-driven business, this probably includes ongoing learning about users and new techniques to build better products. If you’re focused on doing a bunch of things for a particular set of customers, 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.
Step 7: Key Resources
Key resources are the strategic assets you need in place, and you need in place to a greater or more targeted degree than your competitors. There are three core business types: product, scope, and infrastructure.
Step 8: Key Partnerships
What Activities and Resources are important but not aligned with what’s a unique strategy for you? What’s outside of your business type? Could partners do some of those? Why? Which?
Step 9: Cost Structure
You’ve worked to understand how your Key Activities drive your propositions and hence your revenue. How do they drive costs? Are those costs well aligned with the key Value Propositions? Are the costs more fixed or variable as you test different business models? Are they more linear with your scaling or more fixed? You’ll want to have these in mind as you tweak your model.
Step 10: Applications, Analysis & Next Steps
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
If you need help with any of the steps or mapping out your business canvas get in touch: Cherie Stevenson 0212161103 or firstname.lastname@example.org I’m a Regional Business Partner so we can see if you qualify for some funding to help get your business started or take it to the next level.