The Business Model Canvas is an entrepreneurial tool that enables you to visualize, design and reinvent your business model. It was developed by Swiss business theorist and author Alexander Osterwalder and has recently gained notoriety and acceptance.
For many small business startups using this tool can help determine a clear view of its value proposition, marketing and sales focus, operations, customers and finances. As a small-business owner, you can use it to identify how different components of your business relate to each other.
"Many start up entrepreneurs and small businesses are so busy trying to get started and survive that they spend little time planning. When they do try to plan, they are often confused and don't know where to start," said Bruce Gitlin, SCORE mentor and business development expert. "This tool sets an overarching framework for developing a business strategy, a detailed business plan, and/or a prioritized action plan."
The Business Model Canvas can help move entrepreneurs to address specific risks and acquire more information (about competitors or a market niche, for example). It provides an excellent starting point for a small-business owner in developing its initial business plan.
The Business Model Canvas has nine different areas of focus that make up the building blocks in a visual representation of your business.
• Key partners: Who are the buyers and suppliers with whom you need to form relationships? What other alliances will help you accomplish core business activities and fulfill your value proposition to customers?
• Key activities: What are the most important activities in which you must engage to fulfill your value propositions, to secure distribution channels, to strengthen customer relationships, to optimize revenue streams, etc.?
• Key resources: What resources do you need to create value for your customers and sustain your business?
• Value propositions: What products and services will you offer to meet the needs of your customers? How will your business be different from your competition? What is your WOW factor? What challenges will you solve for your customers?
• Customer relationships: What types of relationships will you forge with your customer segments? What are the relationship expectations of each customer segment? How are they entwined with the rest of your business model? What will keep customers coming back?
• Customer segments: What sets of customers will you serve? Which are the most important to your business?
• Channels: Through what means will you reach your targeted customers and deliver your products and services to them? Which are most cost effective? How are the channels integrated?
• Cost structure: What are the key costs your business will face? Which resources will cost the most? Which activities will cost the most?
• Revenue streams: How much will you charge for your products and services? What are customers willing to pay for? How will customers pay?
According to Gitlin, gaps in planning stand out when using the tool, making it effective for entrepreneurs who are new to starting and running a business. The visual Business Model Canvas can be viewed at https://commons.wikimedia.org/wiki/File%3ABusiness_Model_Canvas.png
"The Business Model Canvas helps visualize what is important and forces businesses to address key areas. It can also be used by a team (employees and/or advisers) to understand relationships and reach agreement."
• Fox Valley SCORE provides free confidential mentoring to clients in 17 locations throughout DeKalb, DuPage, Kane, Kendall, McHenry and Will counties. The website is: http://foxvalley.score.org/.