Business Model Canvas Overview

Business Model Canvas

• The Business Model Canvas is a tool used to map out a business idea
• It allows for better understanding, testing, and improvement of a business idea
• The canvas is a single page with nine connected boxes
• This illustrates how all parts of a business work together for success

Components of the Business Model Canvas

• Key Partners: Who will assist in the business?
• Key Activities: How the business operates
• Value Proposition: What value does the business offer?
• Customer Relationships: How the business interacts with customers
• Customer Segments: Who are the target customers?
• Channels: How the business reaches its customers
• Revenue Streams: How the business generates income
• Key Resources: Essential resources needed for operation
• Cost Structure: Expenses and costs associated with the business

Business Idea Example

• Creating a bamboo toothbrush that is stylish and environmentally beneficial

Step 1: Purpose

• Identifying the purpose of the business
• Example: "To reduce the amount of plastic that goes to landfill."

Step 2: Customer and Value Proposition

• Understanding the customers and their needs
• Businesses are focused on the customers who are motivated to try new products or services
• Customers seeks solutions to current problems and want their lives to be easier
• Identifying customers, target customers, their jobs, aspirations, and core beliefs
• Understanding each customer and which value propositions best suits them
• Examples of gain creators: increased social status, wellness, professional credibility, or indulging in guilty pleasures.
• Examples of pain relievers: fear of exclusion, social shame, regaining wasted time, or reduced anxiety

Step 3: Channels and Customer Relationships

• Identifying the channels and mechanisms for reaching customers and communicating with them
• Defining how to engage and communicate with the target market to deliver the value proposition
• Possible ways to reach customers: offline and online transactions, and how they want to be engaged and reached
• Describing various phases in the customer journey, from initial awareness to after-sales support
  • Awareness, Evaluation, Purchase, and Delivery, and After-Sales support

Step 4: Key Resources, Key Activities, and Key Partners

• Determining the crucial operational components required to make the value propositions a reality
• Identifying vital ingredients, processes and alliances that keep the business running
• The key resources are the people, places, machines, patents, and other assets used in the business every week
• Identify the activities critical to servicing customers, such as sales calls, workshop delivery, meal preparation, and report writing
• Key partners: groups important for the success of the business, such as manufacturers of bamboo brushes

Step 5: Cost Structure and Revenue Streams

• Understanding the financial aspects of the business
• Analyzing incoming and outgoing money
• Determining the expenses
• Cost structures are the biggest expenses in the business: rent, wages, raw materials, advertising, or commissions to other parties
• Revenue streams are the prices each customer type pays and how often they return
• These differentiate the business's top customers and one-time shoppers, noting upfront verses months-long purchasing habits. Distinguishing revenue stream based on different customer types.

Step 6: Linking the Boxes and Tidying Up

• This step helps connect the different elements of the business model
• Simplifying and clarifying the model for both internal and external use
• Highlighting potentially overlooked activities and resources for success

Step 7: Telling the Story

• Presenting the business model using simple descriptions in each box
• This makes the model easier to understand and appreciate
• Short descriptions and limited words in the boxes, taking 6-8 minutes to explain
• Simplifying the understanding of the full concept and reducing misconceptions

Explore the essential components of the Business Model Canvas, a valuable tool for mapping out and improving business ideas. Understand how elements like Key Partners, Value Proposition, and Customer Segments interact to create a successful business model. Learn through a practical example of an eco-friendly bamboo toothbrush.