The Business Model Canvas is a business planning tool I share with my clients. It is a one-page planning document that enables you to consider your strategy and model. This one-page planning document gets you to consider nine critical business building blocks.
It is a tool I also use for my work with the Oxford Brookes Enterprise Support ‘Scale up Programme’, which I will share with you now.
Your business model on one page
The page consists of a series of boxes. These contain various considerations of your business, including your customers, offering and cost structure to name a few. I use different colour pens and post it notes which represent categories of action; green for good, amber for something that needs action, red for something we can put a stop to, but you can manage it how you feel best.
Value Proposition – the central box that underpins your whole business model.
Your value proposition underpins your entire business model. For me it is a promise of value to be delivered, communicated and acknowledged. A belief from your customer about how your value will be delivered and experienced. It paints a picture of your brand and tells your customers why they should do business with you and makes the specific benefits of your products or services crystal clear from the outset.
This is your first impression!
What is it that you’re offering, to whom and why? How are you going to solve their problems and improve their situations? It is your unique selling point that gives you the differentiation in your market place and creates your value.
On the right-hand side of your page – People
Customer segments – who are your ideal customers?
Here is where your buyer personas appear. Who are they and why would they buy from you? What are their pains, problems or fears? What do they care about? Do they make emotional or financial decisions with regards to your product or service?
This box leads succinctly into the customer relationships area of our business model.
Customer Relationships – What do your customers expect from you?
Do they expect to speak to you in person, or on social media, for example? At which points of your customers’ journey can you build the relationship? Does the relationship change during their journey with you? Here is where you can gain feedback, which helps you to develop that all important value proposition.
Channels – Where do your ideal customers spend time?
What channels or platforms will you use to take your value proposition out to your customer segments? Where do they hang out? How will you reach them and engage with them? Do they come from recommendations, are they likely to type their question into a search engine, or will they come across your service on social media?
The channels you choose will help your customers understand your business, distribution and sales. It helps raise awareness of your services or products, allows your customers to evaluate you before purchase and to find post-sales support.
And finally, on the right-hand side of your page at the bottom, is your revenue streams box.
Revenue Streams – Your business income as a result of sales of products or services.
Often referred to as turnover, your revenue streams will be driven and developed by all the activities in the right-hand boxes. Think about these three main things.
Source – who is paying you?
Reason – why are they paying?
Method – how are they paying? In advance with specific payment terms, one upfront payment, upon delivery?
Do you have more than one revenue stream? You may have clients on a contractual agreement at the same time as having short-term or one-time only customers. Perhaps you run a training business and sell advice manuals on your area of expertise, but also offer a done-for-you service. I always help my clients consider secondary revenue channels for their business.
The right side of your page is concerned with people – that is, you and your customers.
On the left-hand side of your page – Delivery
This side is for the key elements you need to help you deliver your promise, your value proposition…
External Partners & Internal Resources – who and what makes up the structure of your business?
Personally, I include the wider team of people that are key to your business, so not just the ones on your payroll, but also people who are external from your business that still need to be communicated with; suppliers, support networks etc. and that makes up your partners. Everyone has to be crystal clear of their role and how they contribute to your value.
We look at what they can bring to our business and what would motivate them to work with you.
We also look at how your business would continue to run if you were to step away. Considering your people, your systems and processes, business assets, lines of credit, intellectual property? These are your internal resources.
Warning: if you are heavily reliant on one key resource or partner and something happens to that one, you could find a stumbling block that is detrimental to your productivity.
Cost Structure – important costs to operate your business model
What are the most expensive things that make your business run effectively? Reviewing your expenditure list can help you make sure that the things on that list are considered to be an investment not a cost. Some costs can be stripped out from your expenditure list so you can focus on the things that you need to make a return on.
For example, paying an accountant is considered more of an investment than a cost, because the benefits of using an external partner for this service offsets the cost of doing it yourself. Renting an office is another cost that can be considered an investment if you have a team or meet clients regularly, but could be a cost that can be removed if you work remotely.
And that’s the basic structure of your one-page business model. It allows entrepreneurs like you to visualise your business and the key elements within it that shape your strategy. Once you have completed it, you can begin the next step of the Business Plan – to map out your key activities and start to drive change and growth. Find out how to write your One Page Business Plan in my blog.
If you prefer, you can listen to my explanation of this Canvas in the Entrepreneurs Mentor podcast.
As always, I hope this has been useful and thought provoking for you, and if you’d like to discuss your thoughts during a complimentary call, with no obligation, book some time with me here.