SVIA primer on the Business Model Canvas
One of the most important tools you can use as an entrepreneur is the Business Model Canvas. Building startups is difficult, and the BMC makes life easier. Why? Because it helps you do three important things:
1) lay out all your hypotheses about an idea you have for a business
2) show the logic of how your idea would function as a business
3) allow you to easily update your idea as you talk to customers
You are here to learnMore than anything, though, the BMC will save you time as you learn. And time is precious when you and your team are trying to build a company.
During the class we will go over the BMC and ask your team to fill it out. We will also let you explain your BMC to other teams to immediately get feedback. After class, you will be able to go through the BMC more systematically.
There are critical questions to ask as you fill out each section. The value of the BMC is a function of the quality of your hypotheses and the number of customers you talk to. Why customers? Because they are the ones with the problem you are trying to solve, so they are the only ones who can validate your hypotheses.
Value of BMC = [Quality (hypotheses)] * [# customer interviews]
So, with that in mind, let’s go through the sections of the canvas, and the questions you need to be asking. The better the questions you ask, the more accurate your hypotheses will be as you start.
Customer Segments
For whom are we creating value?
Who are our most important customers?
Are we going after mass market or a niche market?
One industry or diversified?
Value Propositions
What value do we deliver to the customer?
Which of one our customer’s problems are we helping to solve?
Which customer needs are we satisfying?
Which products/services are we offering to each Customer Segment?
Channels
Through which Channels do our Customers Segments want to be reached?
How are we (and our competitors) reaching them now?
How are we addressing each phase of our Channels to the customer?
- Awareness, Evaluation, Purchase, Delivery, Follow-up
Customer Relationships
What type of relationship does our Customer Segments expect?
- Personnel assistance, Self-service, Automated service, Co-creation…
Which ones have we established?
How costly are they?
Key Resources
What Key Resources do our Value Propositions require?
Our Distribution Channels? Customer Relationships?
- Physical assets, Intellectual assets, Human assets, Financial assets
Key Activities
What Key Activities do our Value Propositions require?
Our Distribution Channels? Customer Relationships?
- Making the product, Solving problems, maintaining platform/network
Key Partnerships
Who are our Key Partners? Key suppliers?
Which Key Resources are we acquiring from partners?
Which Key Activities do partners perform?
- Optimizing and economies of scale, reducing risk/uncertainty
Revenue Streams
For what value are our customers willing to pay?
For what do they currently pay?
How are they currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to overall revenues?
Cost Structure
What are the most important costs in our business model?
Which Key Resources are most expensive?
Which Key Activities are most important?
Head back to Slack with any questions and ask them in #general or your team’s channel.
