What is the Business Model Canvas and how to use it?

The Business Model Canvas framework is a strategic management tool that can help you define and present your business idea to others, including VCs, financial institutions, employees, and other stakeholders [1]. It has become an essential document for showcasing the business idea to the stakeholders and others who are interested in understanding the basic foundations behind your business.

Photo by Estée Janssens on Unsplash

This one-page document evolves around the nine segments that represent different areas of your business and should include a summary of each item defined as a bullet point list [2]:

• Customer Segments — This module represents the starting point of this framework and all other sections are related to it. It should describe your customer in the most specific way.
• Value Proposition — The Value Proposition module explains our service offering to previously defined customers and how we resolve their problems and pain points.
• Distribution Channels — This module defines the process of delivering our value proposition to the customer segments. It may include partnership agreements, distributors, direct delivery, and other channels.
• Customer Relationships — The Customer Relationships module describes our relationship with the customers and includes our assumptions about expectations, preferred delivery of status updates, and other communication preferences.
• Revenue model — Within this module, we define the revenue streams for our business and how we earn the money via software licensing, subscriptions, consulting hours, or other ways.
• Key Resources — In this module, we define the key resources we need to provide our service to the customer. It may include specific knowledge or skilled employees, technology access, and other resources.
• Key Activities — The Key Activities module defines the direct actions that we are executing with our resources and thus represents our main body of work that ensures the successful operation of the business model.
• Key Partners — The Key Partners module defines our closest allies that help us accomplish our key activities and business goals. They can be other service providers from our industry, independent contractors, marketing agencies, and other similar organizations.
• Cost Structure — In this module, we define our costs for doing business and executing on this model which may include employee salaries, product inventory, infrastructure costs, software licenses, and similar things.

The Business Model Canvas Template — Source: Strategyzer [1]

Bonus

Use ChatGPT to create a Business Model Canvas template, and while it’s not perfect, it offers a good starting point that you can use for further refinement and adjustments. Just start a prompt with “Please create a business model canvas for [insert type of a business here]”

Here you can find an example Business Model Canvas prompt result from OpenAI ChatGPT for a ride-sharing startup [3].

Generated with OpenAI, ChatGPT (2024). [3]

Works Cited

[1] Business Model Canvas — Download the Official Template

[2] How To: Business Model Canvas Explained | by Sheda | Sheda | Medium

[3] OpenAI. (2024). ChatGPT [Large language model]

Additional Resources

• How To Use the Business Model Canvas
• Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers (The Strategyzer series)
• Innovating with the Business Model Canvas [Coursera]