Business Model Canvas is a blueprint with a graphic illustration for documenting prevailing business models. It helps to represent a number of variables which displays the values of an association which includes product’s value proposition, customers, infrastructure and finances. It helps companies in regulating their actions by highlighting potential trade-offs. Moreover, Business Model Canvas also evaluates the business circumstances of a prevailing company. This can be utilized as a strategic tool for the progress of a new firm.
Business Model Canvas is a considerable tool that provides flexibility, focus and transparency. You will not need dozens of pages of an outdated business plan to learn the complexities of the business. BMC helps you with the essential fundamentals that stimulate the business in a single page and ignores all the irrelevant matters. The major blocks of BMC are customer segments, value propositions, channels, customer relationships, revenue streams, key activities, key resources, key partnerships and cost structure.
Benefits of Business Model Canvas:
There are numerous of advantages of Business Model Canvas, however some of them are:
- Focus. The BMC is devised to guide ideation through the essential components of a business model. It helps to understand how every attribute relates to each-other; how they function, how the processes and activities are interlocked and interlinked. It helps to understand the business in formal and organized way which drives growth. The inputs help to spot the weak as well as strong areas.
- Centered On The Value Proposition. Business Model Canvas concentrates on the value proposition. To the left, BMC acknowledges aspects related to the products which are primarily under your authority. While the right side involves the factors that are not under your control. However, in the center, the value proposition connects both dimensions. It is the crucial pillar around which every other aspect revolves. It is the deciding element of the Business Model Canvas. This is the reason behind the existence of a business, it evaluates the activities and core behaviors of the firm, which provides assistance for all aspects. An engaging, resonant and impactful value proposition is essential for the successful execution of any business model.
- Common Language. The good thing of the BMC is that it forms a common language and reference that can be utilized to share, articulate and get feedback on every business model and its elements. It presents a transparent and straight-forward reference which can be utilized internally across the organization, and externally with investors, advisors and partners. BMC is a great tool for building, discovering, developing and ratifying a firm’s business model.
Components Of A Business Model Component:
There is a link between the components of a business model which helps in the overall success of the firm. Here are the essential components of a Business Model Component-
- Value Propositions: Value propositions mainly focus upon two attributes, at what value are you going to offer to the clients and which category of clients you want to address. It is an innovation, feature or service to attract customers and to review the cost of the product.
- Customer Segment: Customer segment majorly involves what services and products are offered to every segment of clients and for whom you are producing the product.
- Channels: The channel segment generally concentrates on the need to attract the desired customer segments. To achieve that which channels are the most cost-effective and how to integrate them.
- Customer Relationship: The customer relationship targets the kind of relationship you want to preserve with every customer segment. This also includes the expectations of your customers and how to establish them.
- Revenue Streams: Revenue streams emphasize on the growth of the revenue generation. Which segment of the clients are willing to pay, what is the preferred mode of payment and how are they paying right now are the major things to analyze.
- Key Activities: Key activities are very essential activities in accomplishing a firm’s value proposition. These include strategy, product distribution and research and development.
- Key Resources: Key resources indicates the crucial assets necessary to make a business model work. These include human resources, hosting requirements, electricity, transportation, office and financial needs. These are important to support and sustain the business.
- Key Partners: This segment focuses on your key partners and suppliers. It also evaluates the resources that you are obtaining from them and the activities performed by your partners.
- Cost Structure: The cost structure segments focus on the major cost drivers in the business model. All the activities and key sources are recognized that are most expensive. This is done to minimize the costs without affecting the prestige or quality.
Steps To Create A Business Model Canvas:
- Size the value of your solution in the target segment.
- Confirm that your product or service solves the problem.
- Test your channel and support strategy.
- Talk to industry experts and investors.
- Plan and execute a pilot or local rollout.
- Focus on collecting customer references.
- Target national trade shows and industry association groups.
A couple of examples of Business Models
- Uber- Uber is one of the high-flying platform businesses. They are appreciated by the entrepreneurs and innovators. Uber has been in the highlight because it has justified that innovation isn’t merely about technology. Uber has basically three partners, the drivers, technology and investors or lobbyists. The drivers act as a supply side and present the value proposition to the clients. Technology helps to produce helps to abolish the friction between drivers and riders which helps in the value proposition. Investors and lobbyists help to sail across the nasty waters of growing into a reputable company.
- Airbnb- Airbnb is the biggest accommodation provider who allows the customers to list, rent and find accommodations. However, Airbnb doesn’t possess a single room. Airbnb creates a link between the demand and supply as it doesn’t lend an accommodation from the owner. The business model forms on the sharing economy and the owners who are willing to lease their space to visitors.
Presenting your BMCs to Executives:
When presenting your BMC to executives, take into account that you will not display all the process. You need to describe the final BMC, the number of iterations, the important “Pivots” and finally your conclusions.
To display your ideas of a Business Model Canvas you can utilize editable PowerPoint templates. These pre-designed templates help to save time, and fits into a wide variety of business and educational presentations.