What is a Business Model Canvas?

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What is a Business Model Canvas?

 The Business Model Canvas is the world’s most popular visualization tool for creating business models. It was invented by Alexander Osterwalder, author of the book Business Model Generation. It is used to answer 9 basic business questions to start a business. If you can answer all the questions clearly, it may result in your business growing.

The Business Model Canvas consists of 9 parts.

1. Who are the customers (Customer Segments)?

Customer groups are divided into 5 groups:

  • 1.Mass Market A broad, non-specific target group.
  • 2.Niche Market A specific target group
  • 3.Segmented Target Groups 
  • 4.Diversify different target audiences
  • 5.Multi-sided Two related target groups

2. How will you reach your customers (Channels)?

There are three types of channels to reach customers:

  1. Paid: Channels where you pay for exposure, like Facebook ads.
  2. Owned: Channels where you get publicity without paying, such as when influencers or popular pages talk about your product.
  3. Earned: Channels you own, like your website, Facebook page, or physical storefront.

3. How do you manage relationships between your organization and customers? (Customer Relationships)

  • Personal Assistance: A relationship where customers receive support from a personal assistant.
  • Dedicated Personal Assistance: A very close and personalized assistant relationship.
  • Self-Service & Automated Services: A relationship where customers manage tasks themselves through automated systems.
  • Communities: Relationships based on networks, where customers interact with each other.
  • Co-Creation: A relationship where the company and the customer collaborate to create a product or service.

4. Where does income come from and how can it be earned? (Revenue Streams)

  • If a business’s income is lower than its costs, it can face problems. However, if the income is very high, the business is performing well. The sources of income include:

    • Asset Sale: Selling physical goods.
    • Service Fee: Charging for services in different forms.
    • Usage Fee: Charging based on customer usage, like internet packages.
    • Subscription Fee: Selling products or services on a monthly or yearly basis.
    • Lending/Renting/Leasing: Earning from lending or renting assets.
    • Licensing: Charging for licenses to use products or services.
    • Brokerage Fees: Earning from facilitating transactions.
    • Advertising: Selling advertising space or channels.

5. What are the organization's values ​​(Value Propositions)?

  • Anything delivered to customers, whether it’s a product or service, should provide value to them. A business that focuses on genuinely benefiting customers, rather than exploiting them, will be able to sustain itself in the long run.

6. Where do costs come from? (Cost Structure)

  • A business delivers products or services that benefit customers. When a business focuses on providing value to customers instead of exploiting them, it is more likely to succeed and thrive in the long term.

7. What are the required costs (Key Resources)?

  • The main resources used to produce goods or services include:

    • Physical Resources: Tangible assets like equipment or materials.
    • Human Resources: People involved, such as employees or freelancers.
    • Intellectual Resources: Non-physical assets like copyrights, patents, or software.
    • Financial Resources: Money from investments, loans, or investors.

8. What are the organization's key activities?

  • The key activities required to deliver products or services to customers include:

    • Production: Designing, producing, maintaining, and ensuring product quality.
    • Research and Development: Developing new products, improving processes, and conducting R&D.
    • Marketing: Planning marketing strategies, running campaigns, and purchasing media.
    • Sales & Customer Service: Selling products or services and providing customer support.

9. What kind of partners are needed (Key Partners)?

  • Information about the people or companies you work with in business can be categorized as:

    • Strategic Alliances between Non-Competitors: Collaborating with individuals or companies that are not competitors.
    • Coopetition: Cooperation with competitors.
    • Joint Ventures to Develop New Businesses: Combining the strengths of different companies to create new opportunities.
    • Buyer-Supplier Relationships: The relationship between buyers and sellers.

Principles of writing a Business Model Canvas

1. Write in order from right to left.

Here’s a brief explanation of each topic:
  • Customer Segments: The different groups of people or organizations you aim to serve with your products or services.
  • Value Propositions: The unique value or benefit your product or service provides to solve customer problems or meet their needs.
  • Channels: The ways you deliver your value proposition to customers, such as through physical stores, websites, or social media.
  • Customer Relationships: The type of relationship you establish with your customers, like personal assistance or self-service.
  • Revenue Streams: The ways your business earns money, such as through sales, subscriptions, or licensing.
  • Key Resources: The essential assets (physical, human, intellectual, financial) required to create and deliver your product or service.
  • Key Activities: The main actions or processes needed to deliver your value proposition, like production, marketing, and sales.
  • Key Partners: Other individuals or companies you collaborate with to help your business succeed, like suppliers or strategic allies.
  • Cost Structure: The costs involved in running your business, including fixed and variable costs related to resources, activities, and partnerships.

2. Gather groups to help think, write and consult together, which will help collect more complete information.

This involves bringing together a team or group of people to collaborate on brainstorming, writing, and providing expert advice. Working in groups helps gather diverse perspectives, leading to more comprehensive and accurate information.

3. Learn from others.

This means gaining insights, knowledge, and experience from other people, whether through observation, mentorship, collaboration, or research. Learning from others helps expand your understanding and improve your approach or decision-making.