Revolutionize Your Startup Planning with Business Model Canvas: Exploring Its Benefits

You have come up with a great product idea that have got you really excited. But you don’t know how do you realize this idea. What will it take for you turn this idea into reality? What’s the next step you need to take? All this excitement has filled you with whole set of thoughts which now you don’t know how organize and turn them into actions . You are overwhelmed with the same idea that excited you in the first place.

lf you have ever felt the same way , the Business Model Canvas is the savior that can rescue from misery of un organized and overwhelming thoughts on where to begin.

What is business Model Canvas ?

Business Model canvas is a strategic management template that enables you to visualize various aspects of a business idea in a structured format. This template helps you outline the overview on how the proposed business would function or document the already running business. It was initially proposed in 2005 by Alexander Osterwalder  and  Yves Pigneur.

It comprises of total 9 sections:

1. Value proposition

2. Customer segment

3. Channels

4. Customer Relationship

5. Key activities

6. Key resources

7. Key Partners

8. Cost structures

9. Revenue streams

1. Value Proposition

Here you define what are you offering to your customer. What problem(s)are you solving? Why is it different from existing competitor? Your unique value proposition could be single or a set of offerings. It is important that you write these down in the Value Proposition block so that everyone is your team is on the same page on what you believe and how you are serving your end customer.

For example, you are a brand new mobile company which builds phones for the minimalists. Your decide your value proposition is that your device -

1. empower these minimalists to take back control of their time.

2. Your user experience helps them to declutter their life from distractions so that they can finish work faster and spend their time with families or pursuing hobbies.

2. Customer segment

Here you define what your customer would be. Following are the questions to keep in mind while defining this.

1. Who is in the need or want of your value proposition?

2. Who should be interested in buying your product and services?

3. Are the above two parties same or different?

4. How your potential user fall under categories such as demographical, economical, professional, geographical?

5. What are their behavior patterns? (What’s their day look like and where and when they are likely to use your product)

Idea is to put your foot in end user shoes to learn more about their needs.

3. Channels

Here, you answer questions such as how do your customers get to know about your value proposition. In other words, how do you reach out to your customer with your value proposition. How do you acquire customer. Simply put, your Go-to-Market strategy. Here marketing channels into the picture. You marketing channels can depend upon factors such as industries, domain ( B2B Or B2C), budget.

extending the previous example of mobile company which builds phones for the minimalists; because this is a B2C market, you promote your product on social media channels, groups, events, which discuss more about minimalism instead promoting on channels where Fast Fashion is theme.

Some examples of channels could be- social media marketing, partnership with distribution channels, SEO, so on.

4. Customer Relationship.

Now, you have acquired customers through your successful sales & marketing channels. In order to retain your customers , you need to build trust and grow a long term relationship with them. You need to ensure that both you and your customer are easily accessible to each other. Hence, you need a customer relationship policy to be communication with each other. In this section you need to define how you will be in constant touch with your customer?

Some of the examples are- having customer support, newsletters to reach out to them with updates, social media channel, review and feedback system.

5. Key Partners

Extending the “minimalist mobile” example, since you are mobile phone startup and expertise in designing a mobile phone (how should it look? how powerful it needs to be? What function it needs to perform for its users). However, you don’t have the expertise in manufacturing or marketing ; nor you have huge funds to setup your own plant or advertisement dept. Hence, you need to partner with people who have such expertise, so that you can focus on your value proposition.

In this section, you define what partners do you need in order fulfil your business idea. These partners could be anything from being hardware suppliers, software component/service (AWS, AZURE, GCP), marketing partners, retail distributors law firms, etc.

6. Key Activities

You have a clearer picture of what you wanna build and whom you wanna sell it to. To turn these ideas into reality, you need to take tangible actions on daily basis. Here, you define what key activities you need to perform on daily or regular basis in order to achieve your goals. What would be you and your team’s Day look like as an company? This section must answer these questions.

Let’s take the “Minimalist mobile” example again. As a mobile company company, you need to have following activities on daily basis.

1. Hardware design, R&D and prototyping

2. Software development

3. Testing

4. Marketing and advertisement.

7. Key resources

Now that you have identified what activities you need to perform on daily basis. You need resources to accomplish them. Hence, you need to note down all the resources are required to to fulfil these activities.

for eg: based upon the key activity, The “Minimalist mobile” company need the following things:

1. Hardware design engineers

2. Appropriate lab apparatus for prototyping

3. Software engineers

4. testing and analysists

5. software tools - UI/UX, testing, Admin tools

6. work space (including utilities like chair, table, internet, etc.)

7. marketing and sales professional(s)

8. Cost structure

By estimating all the resources that you will be needing, you have identified where you will be spending money. The Cost Structure section helps you to list down the overview of the total expenditure around the business idea. This section helps you gain clarity how you money will be spending and even re-evaluate certain offering if it doesn’t fit into business model.

For “Minimalist Mobile”, cost structure some elements of cost structure would be-

1. Salaries of team

2. workspace cost

3. advertisement

4. Work space cost

5. one time lab setup cost

6. Admin and legal costs (if any)

9. Revenue streams

Lastly comes the aspect upon which the whole business is envisioned- Revenue streams. No business can survive without revenue. In this section, you are going answer the question- How will the company will make money? . Your revenue streams could be single or multiple. This is entirely dependent upon your value propositions and market.

For eg. Apple has multiple sources of revenue- Iphones, Macs, Apple TV, Watches, Icloud+ , etc.

Conclusion

Business Model Canvas has always helped me at professional level whenvever I want to visualize a product idea from operation pov even before actively pursuing it. It has greatly helped me plan size of team and