Often times when you research business models you come across the Business Model Canvas. This is a useful business tool created to visualize all the building blocks of a business, including customers, route to market, value proposition and finance. The Business Model Canvas was created by Alexander Osterwalder, of Strategyzer, and is aimed to lead to insights about the customers and public you serve, what value propositions are offered through what channels, and how your organization makes money. You can also use the business model canvas to understand your own business model better, or compare it to others in your sector and beyond.
In essence, the Business Model Canvas provides a structured template to order many of the business model choices you need to make as an organization. These choices have been organized into 9 different elements:
1. Customer segments
List the top three segments. Look for the segments that are of most importance to your organization (in terms of profile, revenue, etc.)
2. Value proposition
What are the packages of value that you deliver? What is the job you get done for your customer?
3. Revenue streams
List your top three revenue streams. If you do things for free, add them here too.
4. Channels
How do you communicate with your customer? How do you deliver the value proposition?
5. Customer relationships
How does this show up and how do you maintain the relationship?
6. Key activities
What do you do every day to run your business model?
7. Key resources
The people, knowledge, means, and money you need to run your business.
8. Key partners
List the partners that you can’t do business without (not suppliers).
9. Cost structure
List your top costs by looking at activities and resources.
There are many online resources where you can find out more information about how to use the Business Model Canvas. The book by Alexander Osterwalder & Yves Pigneur: Business Model Generation is also highly recommended.
