The business model canvas is one of the greatest tools for assessing and reevaluating a business idea. It can be used for both entire businesses or just a new development within a business. Unlike a business plan, the aim of the canvas model is to narrow down the business structures and plans without putting too much detail into the writing so it can be easily changed. The business model canvas goes through all the aspects of the business plan but describes the value the business would bring to customers in fewer words. This model is often called “the one page business plan”. There are a few topics in the business model canvas that will be covered below in more detail.
Customer segment
The customer segment is a list of target markets which would provide the most revenue. This segment will describe who this business is created for. There are many ways to go about making a customer segment. One way is to visualize your ideal target customer by creating a character profile. Define the characteristics of the customer and try to link it to the business idea. Who is your target market? What traits does your target customer have?
Value proposition
The value proposition can be defined by asking yourself a few questions. What are the products and services your idea will offer? What value will you bring to your customer? What will you do for your customer?
Channels
The channels are how this value is communicated to your customer. How will the value be delivered to your customer? Some examples of channels include websites, social media, and other media outlets.
Customer relationships
How will relationships be created and maintained with customers? You can either choose to automate the relationship or foster a personal relationship with your customers. An example of an automated relationship is when customers use websites with automated prompts.
Key activities
This section defines what the day to day operations of running this business will be. One question to ask when writing this section is “what will I do everyday to run this business model?”.
Key resources
This section defines the people, knowledge, means, and money required to run this business.
Key partners
This is a list of partners that will be needed to create this business: a list of partners that this business cannot function without (excluding suppliers).
Cost structure
This section is a list of all the costs that will be required to run this business. It can be made by looking at the activities and the resources needed for the business.
Revenue
This section is a list of the top revenue streams. Ask yourself: how will this business make money? All the free services offered by the business should be listed here too.
Overview
After going through each segment of the business model canvas, it becomes easier to tell a story about your business and customers. It also provides you with a springboard to start making assumptions and testing those assumptions. Because of the nature of the business canvas model, testing and retesting allows you to adjust your business idea to make it more suitable for the market. The only step left is to test your assumptions and adjust accordingly.
