Business Model Canvas
The Business Model Canvas was proposed by Alexander Osterwalder based on his earlier book: Business Model Ontology. It outlines the hypotheses that form the building blocks for your startup/businesses. The Business Model Canvas is a strategic management and lean startup visual chart that includes the nine core elements of your future business. It describe your hypotheses regarding your value proposition, infrastructure, customers and finances. The Business Model Canvas can not only be used for developing a business model for your new startup it can also be used for an existing business documenting the existing business model.
The Business Model Canvas is an important tool for you to use when you got an idea for your startup – “A business model describes the rationale of how an organisation creates, delivers and captures value”
Just spend 1/2 – 1 hour initially to register all your hypothesis, then “go out of the building” and talk to your potential customers to validate if your idea – the product or service you plan to offer – may be of interest. Or jump in “at the deep end” and just start creating your MVP right away (“fake it – until you make it”), recognizing “the ultimate best way to learn (if your startup idea is any good) is to launch!”
The nine core elements of the Business Model Canvas include:
1. Key Partners
Who are your key partners/suppliers?
What are the motivations for the partnerships?
2. Key Activities
What key activities does your value proposition require?
What activities are important the most in distribution channels, customer relationships, revenue stream…?
3. Value Proposition
What core value do you deliver to the customer?
Which customer needs are you satisfying?
4. Customer Relationship
What relationship that the target customer expects you to establish?
How can you integrate that into your business in terms of cost and format?
5. Customer Segment
Which classes are you creating values for?
Who is your most important customer?
6. Key Resources
What key resources does your value proposition require?
What resources are important the most in distribution channels, customer relationships, revenue stream…?
7. Distribution Channels
Through which channels that your customers want to be reached?
Which channels work best? How much do they cost? How can they be integrated into your and your customers’ routines?
8. Cost Structure
What are the most cost in your business?
Which key resources/ activities are most expensive?
9. Revenue Stream
For what value are your customers willing to pay?
What and how do they recently pay? How would they prefer to pay?
How much does every revenue stream contribute to the overall revenues?
Suggested tool: The FREE Business Model Canvas
Suggested good read: Business Model Generation by Alexander Osterwalder & Yves Pigneur
Short video explaining the Business Model Canvas (duration: 2min 19sec):
Long video – by Alexander Osterwalder – explaining the Business Model Canvas (duration: 42min 28sec):