The BUSINESS MODEL CANVAS is a one -page framework for understanding how businesses work. It's useful if you're thinking about building your own startup or just want to get more familiar with what goes into running a business—so it applies whether your plans are little or big!
What is Business Model Canvas?
Do you like to build things with Lego blocks?
Imagine you have a box of different Lego pieces, and you want to create something awesome with them. You start by putting together the pieces that fit together, right?
The Business Model Canvas (BMC) is like a Lego set for creating businesses. Just like how you start with a base and build on it, BMC provides a one-page framework to help you build a business step by step. It's like a puzzle with different pieces that show you the most important parts of a business, like who your customers are, what you sell, how you make money, and how you reach your customers.
When you put all the pieces together, you have a complete picture of your business. With this understanding, you can make better decisions about how to run your business and make it successful. These pieces are called the blocks of BMC
Let's say you want to start a sugarcane juice stall. With BMC, you can figure out:-
1) Who your customers are? (Maybe hot and thirsty people walking by)
2) What you'll sell? (Sugarcane juice, of course!)
3) How you'll reach your customers? (a sign or social media)
4) How much you'll charge? (Maybe Rs.10 per cup).
Business Model Canvas VS Lean Business Model Canvas
BMC is a comprehensive framework that helps businesses create a detailed and complete picture of their business model.
On the other hand, Lean BMC is a simplified version of BMC. It has the same nine blocks as BMC, but it focuses on the key aspects of a business that are most important for testing and validating a business idea quickly and with minimal resources.
What does the Lean Business Model Canvas look like?
The Business Model Canvas is a blank canvas with nine blocks. Each block represents an element of the business model, and you can start by filling in your idea or concept for that specific element. You’ll then be able to see how it fits into place on the canvas and get an overview of all your options for building your new startup idea.
The Nine Blocks of Lean BMC
Problem: The first step in developing a business model canvas is to identify the problem that you're solving. This block helps you identify a problem that you want to solve with your business. "Problem" refers to the challenge or issue that your customers are facing, and that your business aims to solve.
For example, if you have a juice stand, your customers might be hot and thirsty, and looking for a refreshing drink.
Your problem might be that your customers are struggling to find a quick and convenient way to satisfy their thirst.
Solution: Once you've identified the problem it`s time to brainstorm on the solution. This block defines your solution to the problem you've identified.
For example, if you have a juice stand, the problem your customers are facing is that they're hot and thirsty, and looking for a refreshing drink.
Your solution is a delicious and refreshing cup of juice that your customers can buy from your stand.
Unique Value Proposition: This block helps you define what makes your business unique and why people should choose your solution over others.
In this case, you want people to buy your juice instead of going to another juice stand. Your UVP is what makes your juice stand special and different from other juice stands. Your UVP could be that your juice is the cheapest, the tastiest, the healthiest, or the most convenient to buy. Whatever it is that makes your juice stall stand out, that's your UVP.
In the same way, businesses need to have a UVP to convince customers to buy their products or services instead of going to a competitor.
Unfair Advantage: This block defines what sets your business apart from competitors and gives you an advantage over your them.
For example, maybe you have a background in nutrition and come up with ideas like using fresh lemons or having a catchy sign, and offering different flavour’s of juices.
Customer Segments: This block helps you identify and understand your target customers.You need to figure out who your customers are so you can make a plan to sell to them. Your target customers are the people who are most likely to buy your juice.
Here are a few examples of target customers for your lemonade stand:-
1) Kids who are playing outside and are thirsty. They might be riding bikes, playing tag, or just hanging out with friends. Your juice is perfect for them because it's refreshing and delicious.
2) Adults who are walking or jogging in the park. They might be trying to stay healthy, and your juice is a better option than soda or other sugary drinks.
3) Families who are having a picnic. They might want to buy a bunch of juices to share with everyone.
Channels: This block defines how you'll reach your customers and deliver your value proposition.
For example, you might use social media, email marketing, or advertisement to reach your target customers.
Key Metrics: This block helps you define how you'll measure the success of your business. By paying attention to these key metrics, you can make sure you're selling enough juice to make a profit, and that you're not spending more money than you're making.
It's like keeping score in a game - you want to make sure you're making progress towards your goals of selling lots of juices and making a profit.
For example, you might measure success by the number of customers you have or the amount of revenue you generate.
Cost Structure: When you have a business, you need to figure out how much it costs you to make and sell your product or service. This is called your cost structure.
For example, if you have a juice stand, your cost structure might include the cost of the fruits, sugar, and cups you need to make your juice, as well as the cost of the table, umbrella, and any advertising or marketing you do to promote your lemonade stand.
Revenue Streams: Once you've identified the problem and its solution, and all the other blocks it's time to think about how you're going to make money from this new venture. When you have a business, you need to make money to keep your business running. The money that you make is called your revenue. Your revenue stream is how you make money from your business.
For example, your revenue stream is the money you make from selling juices. You might charge Rs.10 for a cup of juice, and if you sell 50 cups of juices, your revenue for the day would be Rs.50.
In BMC, you need to identify your revenue streams and figure out how you're going to make money from your business. This might include things like selling products or services, offering subscriptions, or charging for access to premium content.
By understanding and filling out each of these nine blocks, you'll have a clear and concise picture of your business idea and how it fits together. This will help you make better decisions, identify areas for improvement, and set yourself up for success.
Now that you've read this, I hope you feel more confident in your ability to create your own Business Model Canvas! With the knowledge and understanding you've gained, you're ready to take the next step in developing your business plan and turning your idea into a reality. Good luck on your journey, and don't hesitate to seek out additional resources and support along the way.
The BMC is a great way to think about how you can start your own startup. It’s not just a business model canvas, but an interactive tool that will help you and your team come up with ideas of how you can create value in the marketplace. We hope this post has been helpful in giving you some insight into what are the fundamental steps of running a business. If there are any questions or comments, please feel free to reach out!
If you want to learn more about how to create a Business Model Canvas for your own business idea, be sure to check out the comprehensive course offered by GDIOT. This course provides a detailed step-by-step roadmap for building your BMC, and can help you turn your idea into a successful and profitable business. Don't miss out on this valuable resource - sign up for the Business Model Canvas course today!
Download your own BMC template which is created to help you plan and analyse your business model