We give you the reason to start using a business model canvas in your decision processes. With a structured document, it helps you focus on the key elements of the decision, reduce risks and identify the true business potential. Presenting a business canvas to decision makers and stakeholders adds clarity and increase the chances of a go-ahead with the project.
Essentially, use the business model canvas whenever you need to document and support your decision process. In complex cases, many thoughts flow around in your mind and arguments contradict each other.
Making the best decision seems difficult and filled with unknown factors and increased risk. The most typical result is no decision at all. This leads to status quo and a missed opportunity of improvement, innovation and new business development. Rest assured that when you miss out on an opportunity, someone else is going to grab it.
A business model canvas normally consist of 9 elements.
If this is familiar to you, skip the boring part, and jump straight to the point.
Start off by explaining your value proposition. This will be the initial guide for the business canvas and help define other key elements.
It may be the hardest part; identifying and be clear about the value you provide to your customers. If you can’t really get it right, try moving over to the customer segment section and identify your market.
The process of developing the canvas often results in adjustments, also in the initial idea and value proposition. You have to work with it as one integrated process.
A key part of new business development is to have a clear market definition and customer segmentation. This is defined by describing your market and segments with various attributes.
You are developing a new sorbet ice cream to supplement your ice cream product range.
Your current customer base consist of a widespread demographic segmented by age, gender and possibly location.
Since your current product range consist of regular ice cream only, your customer base excludes people with lactose intolerance and milk protein allergy.
The sorbet will introduce a new, additional customer segment to your audience; those with allergies and lactose intolerance. This will be a key market expansion for your business canvas.
Customers can also be internal if they are a natural part of your value chain. If so, put them into the canvas and build your business case around it.
How are you planning to market your solution? How will your customers evaluate and purchase your product?
The answers have to come from a marketing strategy. Your marketing plans also affects the cost structure, the required investments, your ROI.
If you don’t have a clear and definitive answer on this part, I recommend performing a market validation test to decide the best strategy for your value proposition.
Your business is part of a larger value chain. You depend on vendors and suppliers to deliver value to your customers. Add applicable key partners that is important for your business.
You should also add the business model between partners. As the transactions and incentive programs can vary a lot between different partner types, they also affect your financial reporting and revenue stream. Having a good cash flow plan is important for your stakeholders.
Describe all key activities required to deliver the value proposition. The activities can also include both internal activities and external activities from partners, supply chain etc.
Don’t describe all the activities in the value chain. Just emphasize on the KEY activities to achieve your goal.
Describe how you are planning to let customers interact with you as a supplier. Some offer premium services like personal assistance while others offers a dedicated self-service experience. In other cases the customers can join a community and help each other.
In another business model, the value is created in co-creation between the suppliers and customers and imply a different type of customer relationship.
Providing the proposed customer value may require investments, people with a specific competence, tools etc. All of which proposing a risk. When you identify gaps this early in the planning phase, you can plan ahead and reduce the risk. This can be investing in personnel training, expanding your workforce, get investors or stakeholders onboard to mention some.