The Business Model Canvas (BMC) is a strategic tool used for visually developing or displaying a business model. It was designed by Alex Osterwalder, who wrote a book about it together with Yves Pigneur. A BMC helps determine and align the key business activities and their relationship to your value proposition.
The model consists of nine building blocks which we will discuss below:
Determining the right target group is essential. Map out which specific clients you want to serve and research the needs of this target group. For more information and exercises, please refer to topic 3: Define your client/target group.
Step two is the value proposition, or: what is the distinctive or added value you offer to the customer? In Topic 4: The Value Proposition you already got started with this.
Define and describe the primary relationships you have with your customers, including how you interact with this, how these interactions differ among different types of customers, what different customer needs are, and the level of support the different customers receive.
In this section of the Business Model Canvas, you’ll find the (sales) channels through which you interact with customers. Here you describe, among other things, the marketing and distribution strategy. How do you keep the target group informed of the offer? How can they obtain your offer, in a store or online? Combine offline and online channels to reach as many customers as possible.
With the earnings model, you make it clear where your income will come from. Not only now, but also in the future. It is one of the pitfalls of starting (social) entrepreneurs. It’s about creating added value, usually money, but this can also be pleasure or satisfaction. For more information and exercises you can check Topic 6: The Profit Mechanism.
List the key resources your business relies upon or uses in order to operate and provide services. Resources are defined as the key assets required to bring about the value proposition. Here you can think of:
What are the most important core activities of your business to create the value proposition? Make between the production and quality of your product, maintaining customer relationships and acquiring new customers.
List the key partnerships your business leverages or relies upon for success. Include the resources or value your business gets from these partnerships.
For example, a text agency and a video agency can work extremely well together to create interactive websites.
Investigate how the cost structure in your company works. After you have described the eight building blocks above, it is fairly easy to determine the most important costs of these. Which operating costs are fixed (premises, machinery) and which are variable (purchase of products)?