16 / 12 / 2020
Business Model Canvas ? what is it and why it is especially valuable for entrepreneurs?
Business Model Canvas is a strategic management and a kind of a starter template for the business model. It is a visual chart consisting of nine blocks. These are elements describing the position of company or product value, infrastructure, customers, as well as finances. It assists firms in aligning their activities by illustrating potential trade-offs. The Business Model Canvas was originally proposed by a Swiss business theorist, author, speaker, consultant, and entrepreneur Alexander Osterwalder based on his previous work on the Business Model Ontology.
The Business Model Canvas, as a program and its accompanying book and working method, is a tool that has for many years facilitated entrepreneurs and coaches all over the world to think of new business models and to describe existing ones in a fast and clear way. The effect of working with this template can be presented e.g. to an investor or as a prototype, which will help us to explain the idea to other people e.g. during workshops.
This business model diagram consists of nine blocks representing different aspects of the company's functioning:
- Customer Segmentation - various groups of people and organizations to which we want to target our activities to.
- Value Proposition – A certain value which we wish to offer to our customers (whom we defined in the previous block), i.e. a set of products/services that are important to the client. The value proposition is the basic distinction between what we and our competitors offer.
- Channels - the manner in which we deliver our value proposition to the client. These are communication, distribution and sales channels.
- Customer Relationships - This area concerns the characteristics of the relationships we establish with our customers when communicating our value propositions. It can be either a highly personal relationship or a fully automatic service.
- Revenue Streams - In this category we indicate how our product or service will earn money. We may have a slightly different pricing mechanism for each customer segment.
- Key Resources - This section covers the key resources needed to generate added value and reach customers through distribution channels. Key resources can be divided into physical (e.g. machines, cars, points of sale, servers), intellectual (e.g. brand, patent, copyrights, customer data), financial and human.
- Key Activities - Here are the most important activities that a company has to carry out in order to provide added value, establish a customer relationship and generate revenue. Key activities can include, for example, manufacturing, troubleshooting or running a platform/network.
- Key Partners - It is an essential part of the description of the network of suppliers and contractors that enable the company to function. These can be the most important suppliers, joint ventures established to deliver a new product or service, strategic partnerships between competitors or a strategic alliance with a company from another industry.
- Cost Structure - All costs generated within the business model. Creating and delivering added value, maintaining relationships with the customer and generating revenue requires relative costs.