Building Your Business.. And Making a Plan
The Business Model Canvas is a simple, effective tool to create a plan for your business, no matter which stage you are in. It will help you describe, design, assess, and change your business model.
By creating a simple one-page document covering your business's critical aspects, you can become more aware of your business’s current strengths and where its possible weaknesses can be addressed. In this post, we will go over how you can start building your business.
Building Your Business: So what is a Business Model?
A business model describes the rationale of how an organization creates, delivers, and captures value. It is the real underlying workings of your business. It describes whom you are selling to and buying from, and includes your marketing strategies, company attitude, and underlying beliefs.
There are nine building blocks in the Business Model Canvas:
1. Customer Segments: An organization serves one or more different customer segments, from the mass market to niche markets – smaller, specialized markets – and anywhere in between. Each segment has characteristics that define it and set it apart from other segments.
2. Value Proposition: Businesses seek to solve customer problems and satisfy needs with value propositions. Your value proposition is comprised of the product or service you are offering, and beyond that, the additional value and benefits your product or service provides to your customers.
3. Channels: Channels describe the way or ways in which an organization communicates, distributes, and sells its value proposition to its customers.
4. Customer Relationships: Customer relationships must be established and maintained with each customer segment you serve. What types of relationships will you establish with your customers, how will you establish them, and how will you maintain these relationships in the future?
5. Key Resources: What tangible or intangible assets are required for you to offer and deliver your value proposition to your customers? These include specific knowledge, equipment, employees, and more.
6. Key Activities: What are the important actions you must engage in to make your business model function?
7. Key Partnerships: Often in business, it is in your best interest to create advantageous, mutually beneficial alliances with various people and organizations. With whom can you connect and network to make our business model successful?
8. Revenue Streams: In what way or ways will you generate income, or revenue, from each customer segment with which you do business?
9. Cost Structure: The cost structure of your business is comprised of the various costs you incur in order to operate your business. This includes manufacturing costs, marketing costs, selling costs, and others.
All of these building blocks, once in place, come together to create a functional business model for your venture, something you can build off of and continually refine as your business evolves. It is fluid and often changes as the business environment around you changes.
See the video below for an introduction to the Business Model Canvas, and download the document to follow along and create your own:
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Overall, the Business Model Canvas is an invaluable tool to start building your business as it is a unique and compact methodology to understand the critical aspects of your business. To understand more in-depth about the complex intricacies of the value proposition, click this link to read up on the Value Proposition.