Business Model Canvas (BMC) is one of the tools used by Businesses to map their processes. It gives an overall structure of the Inputs, Outputs, and other key factors that are linked with your Business. Generally a Business Model Canvas is drafted during the planning stages of the Business. It changes as your business progresses. The BMC is tagged with a date and a version number to keep track of all changes in your model. Strategyzer has created a very good PDF for printing out a blank Business Model Canvas. It can be downloaded from here. As you can see in the PDF, the Business Model Canvas contains 9 sections as follows:
- Value Proposition
- Customer Segments
- Customer Relationships
- Distribution Channels
- Revenue Streams
- Key Activities
- Key Resources
- Key Partnerships
- Cost Structure
1) Value Proposition
The Value proposition is nothing but your product. It shows what the key offering of your business is. What are the products you are offering? How will it add value to the customers? How is it different from what’s already in the market? All these questions will be answered and mapped on to the Value Proposition of your Business Model Canvas. This is the start of your BMC. All further decisions will be based around how they help in building up your Value Proposition
2) Customer Segments
Customer Segments map your potential customers. Based on your Value Proposition your Customer Segments is defined. For e.g If you sell Kids Apparel, your Customer Segment will be defined on the basis of Sex and Age.
3) Customer Relationships
Customer Relationships outline the type of relationship you want with your potential customers. It may be strictly business, But it may be an open community or It may be a paid community. It’s very important you map out how you will reach your customers as well. Customer Relationships outline the after-sale model of your business.
4) Distribution Channels
This defines the Channels you use to provide your Value Proposition to your customers. For an eCommerce Marketplace company, the Distribution channels are The Website, App, The Vendors, and the Logistics Provider. Every business will have different Distribution Channels. Make sure you find the best Distribution Channel based on your business.
5) Revenue Streams
Revenue Streams define the different types of income flows. It can be through sales, service, or commission. Defining and adding new Revenue Streams helps in knowing what your business capabilities are.
6) Key Activities
These are the huge pile of tasks you need to perform on a day to day basis. These help to provide your value proposition to your target customers. It may cover a vast variety of activities, And all sections related to it change/grow rapidly and very dynamically.
7) Key Resources
The Infrastructure, Manpower & Capital you need to perform your Activities. Kindly build your pool of Resources to sustain at least for 1+ Years. This way the business doesn’t have problems in smooth functioning.
8) Key Partnerships
These define the businesses or services you partner with, In order to get your Activities undertaken. It may help you decide which businesses will help you in your growth curve. One of the most important and the most relevant partners has to be Google. Google for Work is amazing and it works seamlessly.
9) Cost Structure
After plotting everything above, is when you can arrive at the Cost Structure of your offerings. It helps in deciding the cost of your proposition so that you may cover your operating costs and expenses.
Business Model Canvas Explained in a Video
For a brief video explaining the process you can check the following video by Strategyzer: