Back in September, I wrote about the Business Model Canvas, a powerful tool for rapidly capturing your business model. However, I have found some of the categories in the business model canvas to feel a bit abstract. So, I have found myself gravitating instead to a variant of the Business Model Canvas created by Ash Maurya called the Lean Canvas.
Read MoreGot a business idea? First choose your business model, then write a business plan using the Business Model Canvas. For some business model examples, read my earlier post, which included the multi-sided platform, the long-tail, and the ever-popular freemium models. Now, to create a business plan, I recommend the Business Model Canvas as a compact, single page planning tool that's quick, agile, and comprehensive. In contrast, traditional business plans take many hours to produce and yield long, involved documents that are really difficult to update. The Business Model Canvas is straightforward, fast to create, and easy to update as you learn more about your market, your customers, and how you are going to serve them.
The method is founded on continuous learning (as in Lean Startup Methodology) with particular emphasis on your value model (are you selling something that people want to buy) and your growth model (can you get enough people to buy it). Once the canvas is created, you can envision the business as a whole and then adjust the plan as you learn more. In the early days of starting your new business, being able to rapidly react to new information is absolutely vital to finding a final business model that you will be able to scale. The business model canvas is a key enabler of that learning cycle.
With your plan in hand, you'll have productive, meaningful conversations with your business mentors, advisers, or investors to hone your plan and drive your business forward.
The Business Model Canvas was originally presented by Alexander Osterwalder and Yves Pigneur in their book Business Model Generation. The canvas breaks your business plan into nine building blocks:
Customer Segments
Who are you serving?
Value Propositions
What customer needs are you satisfying?
Channels
How do you communicate with and deliver your value to your customers?
Customer Relationships
How do you interact with your customers?
Revenue Streams
Which customer segments pay you? How do they pay you?
Key Resources
What things (physical, intellectual, etc.) do you rely on to serve your customers?
Key Activities
What do you need to do to serve your customers?
Key Partnerships
Who must you work closely with to serve your customers?
Cost Structure
What are the main expenses involved in serving your customers?
These 9 building blocks are arranged on a one-page canvas. The template below provides a bit more detail about each building block and I'll dive deeper into each one in future blog posts (so stay tuned!).
Getting started with the business model canvas need not be intimidating! Here are some tips:
Read the Business Model Generation book I linked above. It gives a wonderful explanation of canvas as well as examples of how the canvas works for a wide variety of business models.
Get a template for the business model canvas
Print out the picture above
Sign up for a free account at www.strategyzer.com (publishers of the Business Model Generation book) and download their template
Google "business model canvas template" to find a variety of templates
Do it with a team
If you are all in the same location, print out a blank canvas, stick it on the wall, and fill it in using sticky notes generated by the team. It's simple, easy to set up, and keeps everyone involved and engaged by moving sticky notes around.
If you are not all in the same space, you can use a digital tool to create the canvas using your screen-sharing tool of choice. I found that the flowchart tool draw.io had an excellent template for the business model canvas. The picture above is based on their template, which you can find on their website.
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