A business model canvas (BMC) is a strategic management template for crafting, maintaining and communicating a new or existing business concept. This method is a visual chart that outlines a series of elements relevant to the company's advancement, such as finances, value proposition and customers. Although it is a one-page document that works with the fundamental aspects of the firm, it enhances the focus, clarity and importance of your enterprise.
Indeed, a BMC will remove the unnecessary components of a conventional business plan while homing in on the meat and potatoes. Knowing how to concentrate on the core components of your infrastructure is key to your company's success. Therefore, to help guide you through this process, we have compiled a breakdown of how to make a business model canvas.
Creating a Business Model Canvas
These are the eight steps you need to follow:
1. Identify Your Key Partners
The first column of your canvas is identifying who your primary partners are. This does not just include venture capitalists or angel investors who are investing in your business; these partners could be:
- Suppliers: Manufacturers that are selling parts, components or goods to your company.
- Vendors: Retailers that want to sell your products in their market.
- Collaborators: Organisations that may be interested in partnering with you on a new initiative.
- Business Partners: Any individuals who launched the venture with you.
The second part is to outline the primary motivations for these partnerships. A supplier may have state-of-the-art production equipment, for instance, while a vendor could have a crucial demographic to sell to. Partner organisations may have a great marketing team that you can utilise. Either way, you need to document your reasons.
2. Highlight Your Value
A unique value proposition (UVP) – also known as a unique selling proposition (or point) (USP) – is a plan that clearly outlines the benefits of your product or service. This statement clarifies how you will solve your customer's needs and how you will operate differently from your competitors.
Every UVP needs to do the following:
- Identify every benefit of your good or service
- Highlight what makes these advantages valuable
- List your customer's primary problems
- Make a connection between the problem and your product's value
- Differentiate yourself and other providers of a similar service
While experts will recommend adding your UVP to every marketing campaign and web landing page, it is also important to make it clear to everyone working within the company, too. Indeed, your UVP should be the heart and soul of what drives your business.
3. List Your Top Activities
The next step in your visual chart is to list the actions or activities that you need to take to realise your value proposition. For example, you may need to determine the deliverables required for every distribution channel, customer relationship and marketing campaign. These are essentially the ins and outs of your firm, and ensure that your company reaches its objectives.
4. Identify Your Promotional Strategies
When you are in business, there are three things you need to ask:
- How will you capture an audience?
- How will you maintain your clients?
- How will you grow these customers?
Your BMC should be able to answer these three questions. For example, it might look something like this:
- You will offer incentives, discounts and rewards for new shoppers.
- You will engage with customers to retain their business.
- You will use social media and various white-hat tactics to grow a digital Rolodex of clients.
It's also important to find out what relationship your audience expects of you. Do they want email newsletters? Do they want special discounts and sneak peek offers? Do they desire incredible customer service? Find out – and prioritise – what your customers want.
5. Segment Your Target Customers
Customer segmentation is crucial to not only maintaining existing business but to growing it, too. Of course, your goods or services will not provide value for everyone. Therefore, it is crucial to identify profiles of prospects that you think would turn to you for solutions. Once there is a consensus among your team about these personas, then you can tailor any advertising campaigns or business expansions to satisfy these types of individuals.
6. List Your Main Resources
If you are just starting, what is needed to establish and operate your business? If you have been trading for some time and want to take a new approach to managing your company, then what are the resources you need to promote your value proposition and grow the enterprise?
A new company may need to open a facility and require five employees to run the machines. A business that has been in operation for three years, however, may need to expand into eCommerce to survive the brick-and-mortar slaughter that is taking place today. You need to identify outright what exactly it is that your company requires.
7. Identify Your Distribution Channels
Do you have a distribution network besides just a website? If so, it is essential to identify how you will reach your audience regarding your developments and services. If not, then it is time to highlight your distribution channels through the most cost-effective mediums to tap into your audience.
You may leverage your Facebook presence, for instance, or you might utilise a mobile search engine optimisation campaign. You might even explore the benefits of investing in things like white papers, ebooks and webinars. Either way, know your distribution channels and learn to utilise them.
8. Measure Your Proposed Costs
How much will it cost to open and run your business? What resources are needed to maintain your company? Your BMC will look at each stage of your company, including the costs of:
- Incorporating your business
- Launching a website
- Generating leads
- Producing goods or offering services
- Building your workforce
After this stage is complete, you need to examine what monetary sources are necessary to keep your company in full operation and expansion mode. This is accomplished by establishing a pricing model for the goods that you sell or offer. Moreover, you can highlight any other revenue streams, such as advertising sales or subscription fees.
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While your rivals are engulfed in the complexities of their business plan, your BMC has enabled you to visualise your company and its success. As a result, you have an advantage over everyone. There is no reason why you cannot succeed and eat away at market share.
Indeed, after a couple of years, you will discover that your focus, flexibility and transparency, which were lacking in your initial entrepreneurial pursuit, is the result of a business plan canvas. Therefore, it is time to paint your masterpiece and put the above steps into action.
What else needs to be taken into consideration when creating a business model canvas? Let us know your thoughts in the comment section below!