A Business Model Canvas is a short but comprehensive chart that provides essential details about getting a product or service into the market. The contents of this generally one pager report vary according to the nature of the business and the market segment to be targeted. It is more of a visual tool that Alexander Osterwalder first introduced in 2005. Its first version was derived from his professional works in ontology.
Since its introduction, the tool has been modified and altered according to the changing business needs and preferences.
What is a Business Model Canvas?
A Business Model Canvas is an organizational tool that helps visualize the strategic development of a business plan.
It defines the key components essential to effectively launch a product or service into a given market.
The primary purpose of this productive tool is to achieve a better understanding and comprehensive picture of the targeted market segment.
It highlights elements that drive profits, delivery of the unique selling proposition, and competitive advantage over other players.
It outlines all the necessary aspects to successfully launch a product or service into the market.
Why Is A Business Model Canvas Useful?
The Business Model Canvas helps substitute the need for writing long multiple pages of text-rich business plans.
It reduces the dullness of the traditional business plan representation model and makes it easier to comprehend and palatable to review.
The quick and pleasant, visually powered information can be used for both existing organizations and startup ventures.
Established companies can use the Business Model Canvas to highlight new initiatives and opportunities for growth. Start-up companies can use it to attract investment and plan out their launch activities.
Essential Components of a Business Model Canvas
This is the group of potential customers using the product or service.
Product or Service Value Proposition
What problem will the product or service solve for the potential customers, and how?
Ways the company plan to generate revenue from this proposition.
The ways and means the product or service will be sold or distributed to potential clients.
Ways and means of supporting and developing customer relationships and reaching out to new clients.
List of companies or individuals that support the process of product or service development and its launch in the market.
All the company’s goals and activities must be completed to launch the product.
Human capital, materials, and financial budget are required to complete the go-to-market strategy.
Expenses and cost breakdown of the development, manufacturing, distribution, and support processes needed to complete the product release.
Things to Keep In Mind While Using a Business Model Canvas
Challenge the Assumptions
A Business Model Canvas is created while the product is in the “theoretical” stage.
There are no facts, data, or information available that you can base your findings on. The model is built on philosophical assumptions and knowledgeable forecasts in most cases.
As a manager or viewer of this tool, one should always be ready to challenge and critically evaluate these assumptions.
Avoid Biased Reviews
When showcased internally in your organization, the viewers will likely be biased towards this model.
Let an outside third party review the canvas and provide unbiased feedback for quality validation and testing.
Keep It Updated
Being a short and precise document, it should be updated continuously with the latest information.
Make adjustments, changes, and additions regularly.
Ensure the Order of Business
A Business Model Canvas should always start from the what, why, and whom of marketing the product.
The opportunity should be highlighted before how and how much will be generated.