Why use the Business Model Canvas? Every startup not only needs a good business idea but also a strategy on how to best realize that idea. The usual way is a written business plan which is also something that investors usually expect you to have. In the early stages of a startup launch, however, the Business Model Canvas is the better choice. The poster-sized tool conceptualizes the most important criteria for a successful into nine areas. It’s quick and uncomplicated to use.
Business Model Canvas – The Standard for Visualizing Business Models
The Business Model Canvas was mainly developed by Swiss entrepreneur Alexander Osterwalder in 2008. Since, it has become the standard tool for visualizing business models and a staple of the lean startup method. It can be used for companies who so far only exist as an idea in the minds of their prospective founders as well as for those already on the market wanting to do a reality check. This requires finding succinct answers to the questions implied by the nine success factor areas.
In the order shown in the image above, from top left to bottom right, the following aspects are defined:
- Key Partners
Many business models are not viable without competent partners – for example, this includes companies delivering subproducts or resources, or experts for both sales via online or shipping channels. The question is: which partners are indispensable?
- Key Activities
Developing and optimizing products, developing marketing strategies, or expanding customer service – which activity is best for helping your startup proliferate?
- Key Resources
Financial means, qualified team members, workshops, and materials are examples for resources which are, depending on your product or business idea, more or less crucial for your startup’s success.
- Value Propositons
Central questions: What am I offering my customers? Which problem do I help them solve?
- Customer Relationships
How do I win over customers? Which service am I offering to ensure customer loyalty and generate even more sales?
This refers to distribution and communication channels and the related questions: How do my customers receive my product (through shipping, retail or by download) and how do they learn about my offer?
- Customer Segments
Whether they are providing a niche or a mass market product – every company needs to know its target group (or target groups) perfectly.
- Cost Structure
Which investments are unavoidable to be able to run the business successfully?
- Revenue Streams
Single sale or subscription contracts, licensing proceeds, affiliate programs, or advertisements – there are many ways to earn money. You should know right from the start which ones you are going to use.
By the way, the Business Model Canvas can be downloaded for free. Either here: http://www.businessmodelgeneration.com/canvas/bmc, or here http://fa.ltings.de/geschaeftsmodell-canvas/ (German version).
Do you know the Canvanizer? We will show you how to make the best use of the tool.