What Is a Business Model Canvas and Why You Need One | The Journey
Channel: GoDaddy
Date: 2020-01-23

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⏰TIMESTAMPS⏰
01:19 – Key Partnerships
02:03 – Key Activities
02:31 – Key Resources
03:00 – Value Proposition
03:55 – Customer Relationship
04:41 – Customer Segments
05:40 – Channels
06:13 – Cost Structure
07:33 – Revenue Streams

Fail to plan, plan to fail. Anyone who has started a business has heard that statement before. Mention creating a business plan and most folk’s eyes will glaze over! While formal business plans can be complicated and downright intimidating, using a business model canvas approach is a visual alternative to help you determine and acknowledge the necessary variables to your business’s viability.

By using a business model canvas, you can visually target the key areas that need to be discussed in advance, and used, for future plans as your business grows. Sound complicated? It really isn’t!

Look at your business model canvas as the building blocks for your business plan. You will be able to visually see each “block” and know where you stand, what you need to do, and any concerns that need to be addressed. By putting down this data, you can get a good idea if your business model is viable, as well as what you need to plan for.

You can do this online or have your business model canvas displayed on a large whiteboard (or blackboard) so that you can outline your chart and be able to add comments, make adjustments and correct assumptions.

Your business model canvas allows you to visualize key value proposition elements at the heart of your business model. Let’s look at each of those in a bit more detail:

Key partners
Round up your key partners and suppliers. You would also include the resources you acquire from your partners and the activities they perform that contribute to your business. Detail every partner’s responsibility and prioritize your dependency on their roles, including what you need them to accomplish to reach your goals.

Key activities
List the activities in your business model canvas required to contribute to your value proposition such as revenue streams, distribution channels, and customer relationships.

Key resources
Note the resources in your business model canvas needed to back up key activities. With these in mind, what is your minimum viable product? Your minimum viable product is a product has just enough features to satisfy your initial customers but will provide feedback for future product development.

Customer relationships
How do you plan on acquiring, keeping and growing your customer base? What type of customer relationships have you already established and at what cost? What campaigns have produced the best results, and why?

Customer segments
Segment customers in your business model canvas based on which are most important, what value you have created for each and how you can cater to them further. Next, define your customer archetypes. Customer archetypes are created by using the data you already have available to better understand customer behavior.

Channels
Which channels work best and are most cost-efficient? Determine the channels your customers prefer to use. Then look at what your competitors are doing. How can you work these preferences and information into your workflow?

Cost structure
This is where you determine your cost ratios and should include your fixed and variable costs. Your cost ratio will show you how well you are doing in regard to managing your profits and the associated costs. What are your most and least profitable expenditures?

Revenue streams
In this part of your business model canvas, determine your revenue model, a framework for generating revenue. Your revenue model needs to guide what you should pursue based on established revenue sources. Determining what value you offer and how to price that value as well as who is willing to pay for that value helps you determine your target market and create the most effective marketing strategies.

By consistently referring back to each module in your business model canvas, you can address new developments and change strategies as needed. This approach allows you to visualize and address each variable on the road to profitability.

Why not create your own business model canvas today? You might be surprised at what you discover that you might not have thought about before!

Resource: https://www.strategyzer.com

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