Business Model Canvas: A tool for illustrating your Business Plan
What is business model canvas, the map that has conquered the business world?
Get to know the business model canvas, a tool that allows you to view all business strategies on just one page. Learn what it is, what its benefits are, how to make one, and download our template to print and customize with your business data.
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The importance of a Business Plan
Building a business plan is the best way to start your strategy. To set up a business and make your ideas a successful project, you need to have a comprehensive and detailed view of the market, your product or service, and your entrepreneurial attitudes.
It functions as a travel map, which describes the route by which the organization will travel to reach its destination – the global objectives – showing the logic of how an organization intends to generate value.
Its Business Plan is a scheme that must be built so that the strategy can be implemented successfully through the organizational structures of the processes and systems that make up the organization.
Business Model Canvas explained: What is it?
The Business Model Canvas methodology is a strategic management tool that allows the development of a company’s business model. Its structure has nine preformatted blocks that provide the basis for creating a model or adapting an existing one. Because it is a visual tool, the Canvas methodology is a strategy facilitator that illustrates all organizational structures.
Although a Business Plan is very important, it is usually a long and detailed document that does not allow such dynamic changes, mainly due to the constant validation of these changes. In this way, the business model Canvas becomes a very useful tool, especially for companies that are starting and that are always undergoing structural modifications.
The use of the business model Canvas is not a substitute for a Business Plan, but a tool that facilitates its understanding. It is a visual map that contains a summary of the main points in the plan, illustrating the characteristics of your Business Plan. The business model Canvas is a visualization tool created in the 2000s.
Its founder, the Swiss theorist Alexander Osterwalder, aimed at helping companies to design their ventures and visualize the future in a simplified way. Osterwalder and Yves Pigneur summed up in their book, Business Model Generation – Innovation in Business Models, the concept of the business model Canvas along with several successful business models.
The business model Canvas has an easy description, which facilitates discussion between a team. Its concepts are simple, relevant and understandable. At the same time, it can pass on the essence of planning and the complexity that an organization has in its operation. Some of its benefits are:
- Streamlines and facilitates the strategic process;
- A flexible and easy-to-understand tool;
- Its strategic visualization increases competitiveness;
- It brings organization and objectivity to the company;
- Stimulates creativity and simplifies communication.
A business model, represented in Canvas, is best described with nine basic components, which we will explain below. They encompass four main areas of the organization: customers, supply, infrastructure and financial viability.
Get to know its nine main components:
Who are we creating value for? Who are our most important consumers?
This component defines groups of people / organizations that the company has as its target audience. Because these groups are distinct, their needs are as well. By targeting them, it is easier to develop actions to serve each one in the best way. They differ in the type of relationship, profitability, distribution channels and other characteristics.
2) Value offer
What value do we deliver to customers? What problem are we helping solve? What needs are we satisfying? What set of products and services are we offering for each customer segment?
This component is about why customers choose your business. The value proposition should solve a problem or satisfy some customer need (according to their segmentation). In this way, increasing the performance of products / services is a way of creating and adding value.
By what channels do our customer segments want to be contacted? How do we reach them now? How do our channels integrate? Which works best? Which are most cost-effective? How are they integrated into the customer routine?
Channels refer to the way your company communicates with customers, from the moment you purchase the product to the support after purchase. They can be direct (sales time, website) or indirect (resale stores). The phases of channels are:
- Knowledge: When the public will know your brand.
- Rating: How your company evaluates.
- Purchase: How your customers make purchases.
- Delivery: How your company delivers value to customers.
- After-sales: How your company provides support after purchase.
4) Relationship with customers
What kind of relationship do each of our customer segments expect us to establish with them? Which ones have we established? What is the cost of each? How do they integrate with the rest of our Business Model?
Customer relationship needs to be defined according to a company’s motivations regarding its acquisition, retention and sales expansion. For example, the relationship can be automated (bots, automated messages) or it can be based on human interaction (representatives, call centers).
5) Sources of Revenue
What values are our customers really willing to pay? What do they currently pay for? How do they pay? How would you prefer they pay? How much does each revenue source contribute to total revenue?
Your company’s revenue streams represent money generated from each customer segment. To calculate revenue, costs must be subtracted from income to generate profit. Revenue sources may include the sale of resources (physical products), usage fees (the more the service is used, the higher the profit), subscription fees (for continuous use), loans, rentals, and licensing.
6) Main Features
What major features does our value proposition require? Our distribution channels? Relationship with customers? Sources of revenue?
These are the resources that the company needs to create its value proposition. They can be physical resources like factories, machines and vehicles. They can be intellectual, such as specific knowledge and patents; human, such as reputable and efficient staff, or financial, such as money and shares.
7) Key Activities
What key activities does our value proposition require? Our distribution channels? Relationship with customers? Source of revenue?
Key activities are the activities that can not fail to happen for your company to function well. They are the most important actions to take. Depending on the type of business model they can be categorized as: production (product development, manufacturing, delivery); problem solving and platforms / networks (necessary for the operation of the business).
8) Key Partnerships
Who are our main partners? Who are our main suppliers? What major resources are we getting from our partners? What key activities do partners perform?
They are the suppliers and the partners that allow the business to develop optimally and economically. With these alliances, it is easier to get resources and reduce competitiveness.
9) Cost Structure
What are the most important costs in our Business Model? What major features are more expensive? Which key activities are more expensive?
This structure may involve fixed and variable costs. Some companies focus on cost-driven business models, so they tend to minimize it in their activities to the fullest. In this way, they use proposals of low value. Others focus on creating value in products, which makes their activities more complex. Consequently, the price of final products / services is higher. How do I deploy the business model canvas in my company?
How do I deploy the Business Model Canvas in my company?
Now is time print the picture, stick it on the wall, fill it with your business model and simplify your planning!
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