Why it is best to start with a Business Model Canvas

“A business model describes the rationale of how an organization creates, delivers, and captures value”

        – Osterwalder & Pigeur

 

The Business Model Canvas has the structure and the relevant questions required for a solid, well thought out business plan, but the ease of use and sense of improvisation of a ‘back of a napkin’ business idea.

Why do it this way?

  • See it all. Right here. Right now. This format makes it easier to focus on the nine building blocks of all businesses without getting lost in the endless pages of a business plan that doesn’t bring the interdependency of each silo to light, nor ask the core, impactful questions
  • Flexible – as you are seeing it all laid out in one image, it is easier to make adjustments, to tweak, to learn and adapt
  • Show and Tell – a one pager showing the layout, concepts and interconnectedness is an easier way to relate the story of your business to an investor and to get buy in from all of your team

What is the Business Model Canvas?

An organisation’s business model can be described with nine basic building blocks;

  • Customer Segments
  • Value Proposition for each segment
  • Channels to reach your customers
  • Customer relationships you establish
  • Revenue streams you generate
  • Key Activities to create your unique selling point
  • Key Resources you require to create value
  • Key Partners
  • Cost Structure of the business model

Mapping each segment out on the Business Model Canvas will give you the structure to create, design, discuss and invent new business models.

What are the pertinent questions to ask under each segment?

1. Customer Segments

Who are my customers? What tasks do they want to get done? What do they do? Feel? See? Think?

List all of the people and organstions you are creating value for. This includes single users and paying customers. It can be one person or a few.

2. Value Proposition

For each of these segments you have a value proposition. These are the products and services that create value for your customer. What are you offering them? Why your organisation? Why would the customer you have outlined in Customer Segments buy or use your goods or service?

3. Channels

How are these products or services delivered to your customer? Promoted? Sold? Distributed?

Channels describe the touch points you interact with customers through and delivering value

4. Customer relationships

How do you and the people in your organisation interact with your customers throughout their journey?

Customer relationships outline the type of relationship you are establishing with your customer. Think about which of these are personal? Automated? Acquisitive? Retentive?

5. Revenue Streams

The revenue streams make clear how and through which pricing mechanisms your business model is capturing value

6. Key Activities

From understanding your revenue streams, you will be able to describe the infrastructure required to create, deliver and capture value. What uniquely strategic things does your business do to deliver it’s goods or service to your customers?

7. Key Resources

This is where you show which assets are indispensable in your business model to ensure that you and your organisation perform well

8. Key Partners

Key partners shows you who you can leverage to help you create your business as you may not have all the key resources yourself nor perform all key activities. In other words, is there anything that you can have a partner do or create that is not a key activity and frees your organisation up to focus solely on delivering the key activity with passion?

9. Cost Structure

Once you understand your business model’s infrastructure, you will have an idea of it’s cost structure. Always know your figures. What are your businesses major cost drivers? How are they linked to revenue?

At Polymorph, we advise that before you enter into app development or product development, you use the Business Model Canvas to truly understand your organisation, business idea and how you will bring this to market. We work best as a partner to creating the world changing solution you envision.

Download a blank Business Model Template

 

About the Author
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Richard Barry

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CEO of Polymorph

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