Business Model Canvas overview with Brandy Nagel
Channel: Brandy Nagel
Date: 2022-04-17

Overview of the Business Model Canvas. Recorded April 2022.
Partial transcript: 
Hi, I’m Brandy Nagel. I'm an entrepreneur educator, project manager, and faculty researcher at Georgia Tech. Today, I want to give you a quick overview of the Business Model Canvas.
The BMC came from Alex Osterwalder. It's a simple tool. It's a simple language that teams can use to describe where their business is right now or the business that they envision for the future.

If you'd like to follow along, search on your favorite search engine for “business model canvas editable.” 

Always begin on the right side with customer segments. It's because a business can't survive without customers. It seems counterintuitive to have it on the right, when typically, in the English language we begin with the upper left. But in this case, the entire business model is pushing toward the customer.

The first question is who is your customer? It's tempting to say everyone, but that's not realistic. When you're building a startup, you have to decide which people to focus on and which to ignore.
Who are your most important customers? Which group of customers takes priority over all the others? Because it's the person or the group of people that have the strongest need or the strongest want. Another way to look at this would be to evaluate which customer is the easiest to get to first, or who has the most money to spend.

Next, we go to the middle of the canvas. The value proposition. This is not about the value you offer. This is the value that the customer wants. This is where we put in the customers’ voice and what they value. As you start to fill this out, if you notice that you're talking about your company or your product, pause and ask, how would the customer express this? how have I heard the customer talk about this need? 

Next, let's look at distribution channels. How does the customer want to receive the value? Do they want to go to a big box store like Walmart and make the purchase? Do they want a subscription?
Whether it's a business-to-business transaction or business-to-consumer, there are different ways customers want to receive value.

Think about your sales and marketing. On the BMC, we call it customer relationships. How will you GET customers? How will you KEEP their business? and how will you GROW your relationship with them? These three questions are the basis of all sales and marketing, customer acquisition, and customer retention.

Next, how will you make money? What are the revenue streams? This isn't a place to talk about pricing. It's more about are we going to sell units or provide a service? Are we going to lease or license? What are the different ways that you can make revenue? And often there's more than one revenue stream in a customer segment. You may have two customer segments as in a double-sided market. 

Steve Blank described the BMC as having a front stage and a backstage. The front stage faces the customer. That's what we've just been talking about. Now we're going to flip to backstage. This is the operations of the business. 

Start with what key resources do you need to have to deliver value to the customer? Here are a few examples. You might need an office, a manufacturing plant. It might be that you need recipes for food products or other intellectual property. These are key resources. The things that you can't make the business work unless you have.

Key activities are the things you must do to make the business work. This includes the big categories like sales, marketing, distribution, and production. And a few other things that are unique to your business like partnership development or pursuing new product lines, managing relationships with certain key influencers, or maybe lobbying is a key activity. Make a note of the big categories that are common to all businesses, and then include those special activities that are unique to your business.

Key partners and key suppliers go over here. Keep partners are the people or the organizations that can help you because they perform the key activities that you can't do, or they offer one of the key resources that you don't have. If you don't have all of the knowledge and expertise that you need to be successful in the business, then you pull in a partner to help you with that.
Key activities and key resources drive your cost structure. Here, in the cost structure, include only the big costs, not every expense. Include rent on a facility, salaries for staff, insurance, and more.