The Business Model Canvas - 9 Steps to Creating a Successful Business Model - Startup Tips
The Business Model Canvas, is a strategic management and entrepreneurial tool. It allows you to describe, design, challenge, invent, and pivot your business model.
The Business Model Canvas is comprised of 9 key segments:
The left hand section of the Business Model Canvas is the Infrastructure section and comprises three key areas:
Key Activities: The most important activities in executing a company's value proposition.
Key Resources: The resources that are necessary to create value for the customer.
Partner Network: In order to optimize operations and reduce risks of a business model, organization usually cultivate buyer-supplier relationships so they can focus on their core activity.
The middle section of the canvas describes the business offering and is the value proposition delivered to different customer segments.
Value Propositions: The collection of products and services a business offers to meet the needs of its customers. According to Osterwalder, (2004), a company's value proposition is what distinguishes itself from its competitors. The value proposition provides value through various elements such as newness, performance, customization, "getting the job done", design, brand/status, price, cost reduction, risk reduction, accessibility, and convenience/usability.
The value propositions may be:
Quantitative – price and efficiency
Qualitative – overall customer experience and outcome
The right hand side of the Business Model Canvas describes the customers, the channels through which you deliver services and and the relationships you have with your customers.
Customer Segments: To build an effective business model, a company must identify which customers it tries to serve. Various sets of customers can be segmented based on the different needs and attributes to ensure appropriate implementation of corporate strategy meets the characteristics of selected group of clients.
Channels: A company can deliver its value proposition to its targeted customers through different channels. Effective channels will distribute a company’s value proposition in ways that are fast, efficient and cost effective. An organization can reach its clients either through its own channels (store front), partner channels (major distributors), or a combination of both.
Customer Relationships: To ensure the survival and success of any businesses, companies must identify the type of relationship they want to create with their customer segments.
The bottom section of the canvas describes the finances.
Cost Structure: This describes the most important monetary consequences while operating under different business models. A company's DOC.
Revenue Streams: The way a company makes income from each customer segment.
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What I enjoy most about this presentation is the illustration -- I'm a visual learner, and in fact, I draw out the same little icons when I'm working on the plans for my greeting card startup. I'm in the program sponsored by the Kaufman Foundation called Fast Trac New Ventures, and they include a section of their curriculum on the Business Model-- and this was EXTREMELY HELPFUL in helping me to iterate my ideas! Thank you for sharing this!
LOVE THE CANVAS as a tool. However...I think #1 should be the identifying the customer segment. Who is your customer(s) (in theory, the archetype)? Followed by Customer Value Proposition (based on your hypotheses around the customers). CVP shouldn't #1 IMO. Logic, right? Also the video text suggests at the beginning that a business model describes how a company "creates value for itself by delivering products and services for customers." But really the innovators behind this methodology say it a bit differently. A business model prototype describes how a company creates value for its customers, delivers the value, and captures value ($$ for itself). Small difference but an important mental model, I think.
Thanks for sharing this informative and interesting video.
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I partially agree on the point where you said some customers don't care about technologies.. well I have worked with some customers who were technical sound. Our talk started from technology only. It was great fun to work with such customer.
Great, great resource. I just wrote an in-depth guide for small businesses (https://www.strattex.co/local-business-tools) and linked to this video within that guide. It's linked under #18. It's just THAT good of a resource. Thanks so much for putting this out there.
I am working backwards....I started my company, now I'm doing the actual business model canvas......and YES this probably shoulda been done before I got started, not 4 years in...BUT I'm discovering as I go along....I've done a lot the "right" way....the rest, let's just say, "Math is easier when you already have the right answer and this presentation really breaks it down in plain simple, understandable terms. Thanks...sign me better late than never.
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