Business Model Canvas

Business Model Canvas is a breakdown of several key elements about your business,
or intended venture, and how it plans to make money.
Each piece of the canvas is a tool that lets you visualize the assets you bring with
your business, idea, or concept.

Business Model Canvas Breakdown

The Right Side
Focuses on the customer market and the external factors that are typically out of
the control of the business owner.
The Left Side
Focuses on the internal aspects of your business that are mostly within your control.
The Center
The value propositions that represent the value your venture holds for your customers.

Click here to download the editable version of the Business Model Canvas

business model canvas

VALUE PROPOSITION

Your value proposition is the unique solution that your venture provides to your target
market or customer base. Your proposition should be unique and different from your
competitors. If your product is new, your statement should be innovative. If your
venture already exists in the market, your proposition should highlight unique features
from what already exists.
Questions to ask yourself: What’s compelling about the proposition? Why do customers
buy, use?

CUSTOMER SEGMENTS

Customer segments are the groups of people or companies you’re trying to reach to
promote or sell your venture. By creating customer segments, you’re grouping your
potential audience into similar categories, such as age, gender, location, interests,
etc.
Questions to ask yourself: Who are the customers? What do they think? See? Feel? Do?

Types of customer markets:

Mass market: Focuses on the general population or a large group of people, and doesn’t
group its audience into segments.
Niche market: focused on a specific group of people with unique qualifications. Interactions
for this market need to be customized to meet particular requirements.
Segmented: One leading group, but each audience is created based on their different
needs.
Diversified: this type of market segment includes customers with very different needs.
Multi-sided markets: this includes interdependent customer segments. One segment depends
on or utilizes the other segment.

CUSTOMER RELATIONSHIPS

Depending on your venture, you’ll establish different relationships with your target
markets or customer segments.
Questions to ask yourself: How do you interact with the customer through their ‘journey’?

Types of customer relationships:

Personal assistance: you directly interact with the target audience member through
various personal interactions.
Dedicated personal assistance: you assign a dedicated customer representative to interact
with a member of the target market.
Self-service: There is no direct relationship with the customer, but you provide solutions
for the member of the customer segment to help themselves.
Automated services: the creation of automated processes that helps members of your
target complete the services themselves.
Communities: the utilization or creation of digital communities where audience members
can help each other find solutions to issues.
Co-creation: you invite your audience members to get involved in product design or
development of the product.

Key Partners

Key Partners are relationships forged with external companies or suppliers to reduce
risks and acquire resources and complete your key activities.
Questions to ask yourself: What can the company not do to focus on its Key Activities?

Types of Partnerships

Strategic alliance: the partnership between non-competitors
Coopetition: the strategic collaboration between business partners
Joint ventures: partners developing a new business
Buyer-supplier relationships: ensure reliable supplies

Key Activities

Key activities are objectives that must be completed to fulfill your business purpose,
reach targeted customer segments, generating income, and maintain customer relationships.
Questions to ask yourself: What uniquely strategic things does the business do to
deliver its proposition?

Key Activity Categories:

Production: delivering, manufacturing, and designing a product in substantial quantities
and/or of superior quality.
Problem-solving: finding alternative solutions to problems faced by your target market.
Platform/network: Creating and maintaining platforms.

KEY RESOURCES

The key resources are the pieces that you need to progress with or complete your venture.
Questions to ask yourself: What unique strategic assets must the business have to
compete?

Types of key resources:

Human resources- (employees)
Financial – (cash, lines of credit, etc.)
Intellectual – (brand, patents, IP, copyright)
Physical – (equipment, inventory, buildings)

Channels

Channels play a role in raising awareness of your venture and value proposition to
your customer base. They can also be used to show customers the avenue to purchase
your products or services and offer post-purchase support.
Questions to ask yourself: How are these propositions promoted, sold, and delivered?
Why? Is it working?

Owned channels: company website, social media sites, in-house sales, etc.
Partner channels: partner-owned websites, wholesale distribution, retail, etc.

Cost Structure

In the cost structure section, you’ll need to identify any and all costs associated
with moving forward with your venture or business. Don’t forget to evaluate the costs
of creating and delivering value propositions, maintaining customer relationships,
and generating revenue streams. It’s easier to define your essential resources, partners,
and activities before examining the expenses associated with your cost structure.
Questions to ask yourself: What are the business’ major cost drivers? How are they
linked to revenue?

Businesses cost structures:

Cost-driven: focus on minimizing costs whenever possible
Value-driven: focuses on providing maximum value to customers and members of the target
audience

Revenue Streams

You can earn income through two revenue models: transaction-based, which occurs when
a customer makes a one-time payment or the reoccurring revenue model. The customer
makes ongoing payments for continuing or post-sale services.
Questions: How does the business earn revenue from the value propositions?

Of the two forms of revenue types, you’re able to generate income in the following
ways:

Asset sales: by selling the rights of ownership for a product to a buyer
Usage fee: by charging the customer for the use of its product or service
Subscription fee: by charging the customer for using its product regularly and consistently.
Lending/ leasing/ renting: the customer pays to get exclusive rights to use an asset
for a fixed period
Licensing: customer pays to get permission to use the company’s intellectual property.
Brokerage fees: revenue generated by acting as an intermediary between two or more
parties
Advertising: by charging the customer to advertise a product, service or brand using
company platforms

Reference:
Author Amanda Athuraliya Amanda Athuraliya is the communication specialist/content
writer at Creately, et al. “Business Model Canvas Explained: A Step-by-Step Guide
with Templates.” Creately Blog, 7 Nov. 2019, creately.com/blog/diagrams/business-model-canvas-explained/.