Why Business Model Canvas!?
Business Model Canvas is a strategic management and lean startup template for developing new or documenting existing business models.
Sooo in English... It’s a single page document designed to replace 301 pages of WASTE in traditional business plans. As a start up you have two things on your side FLEXIBILITY and SPEED! This document allows you to play into both of those strengths! The first few version’s of the canvas are supposed to be sketched quickly. The canvas is not meant to be a rigid document but rather a work in progress to be filled out, revised, and evolved!
The job of a startup is to be a factory for creating happy customers!
There is no correct order to fill this out in, but there is a method that helps make it easier for you, below is the order that you would use if you don’t have anything. The right side, where we are going to start, are all the customer facing parts of the equation. They let you tell the one-half of the business the other side is how you are going to make money to support this.
Step 1: Customer Segments
These are all the people or Organizations in which you are creating value. This includes simple users and paying customers. For this document everyone is not the correct answer, yes you would like everyone to use it one day, but you need to be specific!
Step 2: Value Propositions
For each Customer Segment, you have a specific Value Proposition. These are bundles of product and services that create value for your customer. Three ways to think of this are, The gains the customer gets, what job it does for her or what pain it takes away.
Step 3: Channels
Are touch points you’re interacting with customers and delivering value. How do you customer find you, how do they buy and how do you deliver.
Step 4: Customer Relationships
These outline the type of relationships you are establishing with your customer. Think of this from the customer POV, you might want to have am amazing relationship with your customer but if you run a gas station the customer wants a low-friction relationship.
Step 5: Revenue Streams
These make clear how and thought witch pricing mechanisms your business model is capturing value. The first four boxes (steps) all sum up in this box, how do you extract value from them.
Step 6: Key Activities
Show which things you really need to be able to perform well. What things MUST you do to deliver that customer experience on the other side? These are essential things only, office space is not one of them!
Step 7: Key Resources
Describe the infrastructure to create, deliver and capture value. This shows what assets are indispensable in your business model. Describe the infrastructure (people, skillset, access to certain tech, patent, algorithm) to create, deliver and capture value.
Step 8: Key Partnerships
Who could help you leverage your business model? What is essential to your business, things that could kill your business if they go away. As much as you might love your Lawyer they don’t belong here, you can get a new one.
Step 9: Cost Structure
Once you understand the infrastructure, you will be able to determine the cost structure. How much does it cost to operate this, based on steps six to eight? There has to be a value exchange, most of the time cash, but in early stages, it could be stock options to an advisor or mentor.
Now that you have most of it filled in, it’s time to test all these boxes to make sure the assumptions that you have made are correct, you do this by going out in the real world and doing customer research for one box at a time.
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