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Using the Business Model Canvas (BMC)

Can you summarise your business model in one page?  

If not, you may be missing the "big picture".

Adam D 24 November 2014

You’d be surprised if you knew just how many business founders jumped in at the deep end without coming to a clear understanding of their business model.

If terms such as “revenue streams” and “customer segments” produce vague nods from you at best, you might be in need of the Business Model Canvas.

Forget about stacks of printouts or confusing spreadsheets. The Business Model Canvas makes it easy to outline your business model, all on one nifty page.

Why do businesses need to understand their business models anyway?

Every business has a business model, whether incidentally or because they’ve consciously outlined it.

Businesses that understand their business models have an advantage over those that don’t, as they are able to identify problems much more swiftly and redesign, reinvent or pivot their strategies efficiently.

On the other hand, businesses that are still in the dark are often slow to identify problems until they start seeing significant falls in revenue or profits, and by then it might be too late.

How Business Model Canvas works

Business Model Canvas, the brainchild of Strategyzer, is an application that breaks the business model down into 9 elements, namely the following:

  • customer segments: groups you divide your target market into based on shared characteristics
  • value propositions: the ways in which you meet your customers’ needs
  • channels: how you distribute your goods and services to customers
  • customer relationships: how you communicate and build bonds with your customers
  • revenue streams: the various ways in which your business makes money
  • key resources: the resources you need in order to satisfy your customers’ needs
  • key activities: the activities that are crucial to your business being able to satisfy your customers’ needs
  • key partners: other businesses or individuals you work closely with
  • cost structure: your business’s approach to spending money

This is incredibly useful for businesses that have been muddling their way through thus far, as the app forces you to think about elements in your business model you might not have considered previously.

All 9 elements are then displayed using a building block-like layout on a single screen. Users are free to add or edit information as they please.

If you have so many details they can’t all fit on the screen, you have the option of adding post-its, which can contain links, more detailed descriptions or other little snippets.

You can create multiple canvases, so the application can help not only masterminds of existing businesses but also consultants who have to review multiple enterprises and aspiring entrepreneurs who are still playing around with ideas.

The BMC has become exceedingly popular and is used by some of the world’s biggest companies such as Deloitte, Michelin and Adobe. Thankfully, it doesn’t take a rocket scientist to figure out how to use the app, and anyone who’s able to operate a computer can start playing around with it in a matter of minutes. 

As part of Salsa's "Strategy" offering, we help clients step through the process of completing their own BMC - it's heaps of fun.

Read more, and get access to the apps, examples and everything else you need to know about the BMC here.

Image courtesy of Cloud Beatsch.

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