A business model Canvas is a management tool with
elements describing a company’s business model. A business model describes the
rationale of how an organization creates, delivers and captures value. Every
business has its own unique model it follows. With growing need a uniform
template was established on which all businesses today base their models. This
is what is referred to as the Business Model Canvas. The BMC simply allows you
to share your business model with anyone the easiest way possible.
Why use a business model canvas
- It breaks down your business model into a more understandable format so you can recognize and act on necessary areas that need improvement
- It reveals clear paths on which to build organizational innovation strategy
- It helps communicate your goals to your team
- It helps align focus.
Checkout: Free Sample Business Plans
The canvas is made up of 9 blocks which represent the major areas of a business; customers, value, infrastructure and viability.
The canvas is made up of 9 blocks which represent the major areas of a business; customers, value, infrastructure and viability.
Customer
Segments
The key to ensuring that the product and its features
meet customers is understanding the market. Customer segmentation allows a
business to understand who its customers are, their needs, future prospects,
etc. As a business you can go ahead and choose a segment whose needs you can
satisfy fully depending on resource constraints and other factors?
Who are your customers? Are u targeting the;
Value
prepositions- General market (Mass Market)
- A Small group (Niche Market)
- Multiple groups of similar individuals (Segmented)
- Etc.
After establishing your market, your next concern
should be the problem you are trying to solve with this value you are
providing. Why is your product valuable to the above segments? Does your
product or service improve performance, does it get the job done, does it stand
out in design, is it of lower price, etc. The value is usually something unique
that customers have to relate too or remember after interacting with your
business.
Checkout: Free business model canvas examples below. Continue reading
Checkout: Free business model canvas examples below. Continue reading
Channels
After establishing the value and the segments, the business
now has to connect these two. How your intended value reaches your customer
segments is through a channel. Is it an in person sales force, do you own
distribution stores, do you sale online, whole sale, etc. Evaluate the pros and
cons of each of these channels and choose one appropriate for your business.
Customer
Relationships
Now that blocks 1, 2 and 3 are linked, your next area
of concern should be how to keep this channel connected. This is done through
establishing customer relationships. How do you relate to your customers?
This could be;
Priority should be given to establishing loyal
customer relationships who tend to yield steady revenue year in year out. The
value of a customer is usually evaluated basing on how much he/she spends on
the organizations products/services and how often he/she utilizes them.- Self-service: provides for customers to serve themselves.
- Personal assistance: provides for the business employees providing assistance.
- Automated services: provides for computerized self-service based on data.
- Etc.
Revenue
Streams
A revenue stream is simply a methodology through which
a business gets its revenue from the customer segment. How do customers
purchase your products? Or how to you get money from them? This can be in any
of the following ways:
Key
resources- Asset purchase: exchanging ownership of a product.
- Usage fee: charging a fee for product or service usage
- Subscription: charging for timely usage/consistent usage e.g. pay-tv businesses
- Renting: charging temporary exclusive access for a time period.
- Licensing: charging the use of intellectual property.
- Etc.
What resources do you need in place for your business
to work or to put the business model into action? These could be Human i.e. key
people involved in business activities, Physical assets like facilities, buildings,
vehicles, etc. List all the resources your business model depends on and the
most important will be the ones to focus on.
Key
Activities
Consider the most important activities that have to
occur in order for your business model to work. Key activities move all the way
from making the business’ value preposition to the revenue stream i.e. from
production to designing to delivery of the value. What actions must your
company take to operate successfully?
Key
Partnerships
Partnerships are a network of people who complement
each other in helping the business provide its value and extract revenue. Who
are your suppliers and service providers? What partnerships has your business
forged? These could be; strategic alliances, competition, buyer supplier, joint
ventures. Etc. A business needs to establish its relationships, strengthen
bonds and look for future partnerships to ensure continuous existence and
growth.
Cost
Structure
A business can be Value-driven i.e. focused on providing
maximum value to customers or Cost-driven focusing on reducing costs. An
entrepreneur should establish all costs involved and establish plans for each
of the costs. What are your most important costs? These costs can be; fixed costs
that don’t change or variable costs that vary with output.
Below are links to some examples of practical business
model canvases. You can view them and make one tailored for your business. If
you need any further assistance or questions specific to your business, contact
us at service4businessweknow@gmail.com or simply use our contact us page
here
Conclusion
The above sectors should be the main focus of your
business to survive and ensure continuous growth. Always remember: a
well-designed/detailed business model canvas alone isn’t sufficient for your
business, you need to put it into action and ensure every business personnel
understands each of your listed areas accurately.
This above article is written by Arthur Kakande and is
subject to criticisms, suggestions, or any kind of compliments to help improve
it. drop us an email on service4businessweknow@gmail.com
with BMC as the subject and your submissions will be much appreciated.
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