Discuss and describe business
model canvas
Discuss on how to identify
sound business idea and
business plan
According to Alexander Osterwalder and Yves Pigneur,
the authors of Business Model Generation, a business
model “describes the rationale of how an organization
creates,
delivers and captures value.” Nevertheless, there is no
single definition of this term, a
In standard business usage, a business model is a plan for
how venture will be funded; how the venture creates
value for its stakeholders, including customers; how the
venture’s
offerings are made and distributed to the end users; and
the how income will be generated through this process.
The business model refers more to the design of the
business, whereas a business plan is a planning
A canvas is a display that would-be
entrepreneurs commonly use to map out and
plan different components of their business
models.
There arebusiness
with the severalmodel
different types
canvas and of
thecanvases,
lean canvas
being the most commonly used.
there are hard-copy canvases modeled after an art
canvas
as well as digital versions.
the original physical canvases are meant to serve as
visual tools, used with sticky notes and sketches.
BMC is a strategic management tool to quickly and easily
define
and communicate a business idea or concept.
It is a one page document which works through the
fundamental elements of a business or product, structuring an
idea in a coherent way.
As developed by Osterwalder and Pigneur, the business
model canvas has nine components
The right side of the BMC focuses on the customer
(external), while, the left side of the canvas focuses on the
business (internal).
Both external and internal factors meet around the
value proposition, which is the exchange of value
between your business and your customer/clients.
To quickly draw a picture of what the idea
entails.
It allows us to get an understanding of your
business and to go through the process of
making connections between what your idea is
and how to make it into a business.
It looks at what kinds of customer
decisions influence the use of your
systems.
It allows everyone to get a clear idea of what
the business will likely be.
Value Proposition:
The Value Proposition is foundational to any business/product.
It is the fundamental concept of the exchange of value
between your business and your customer/clients.
Generally, value is exchanged from a customer for money
when a
problem is solved or a pain is relieved for them by your
business
Value Proposition:
Good questions to ask when defining your
business/product:
What is the problem I am solving?
Why would someone want to have this problem solved?
What is the underlying motivator for this problem?
Image source: strategyzer
Customer Segments:
Customer Segmenting is the practice of dividing a customer
base into groups of individuals that are similar in specific ways,
such as age, gender, interests and spending habits.
Things to consider when determining your
Customer Segments:
Who are we solving the problem for?
Who are the people that will value my value proposition?
Are they another business?
If so, what are the characteristics of those businesses?
Or, are they other people?
Does my value proposition appeal to men/women or both?
Does it appeal to young adults aged 20 to 30 or teenagers?
What are the characteristics of the people who are looking for
my value proposition?
Customer
Customer Relationships is defined as how a business interacts with
Relationships:
its customers.
So, do you meet with them in person? Or over the phone? Or is your
business predominantly run online so the relationship will be online
too? Some examples are: In person (one-to-one), Third party
contractors, Online, Events (one-to-many), & Phone
Channels
: Channels are defined as the avenues through which your
customer comes into contact with your business and
becomes part of your sales cycle.
This is generally covered under the marketing plan for your
business.
Good questions to ask when identifying the channels
to reach your customers are:
How are we going to tell our customer segment
about our value proposition?
Where are our customers?
Are they on social media?
Are they driving their car and listening to the radio?
Are they at an event or conference?
Do they watch TV at 7pm on a Friday night?
Examples of
channels:
Social media
Public speaking
Electronic mail (email marketing)
Networking
SEM (Search Engine Marketing)
SEO (Search Engine Optimisation)
Engineering as marketing
Viral marketing
Targeting blogs
Sales and promotions for commissions
Affiliates
Existing platforms
PR Social media is just one of many channels
Unconventional PR where your customer comes into contact
Social advertising
with your business.
Trade shows
Content marketing
Community building
Offline advertising (billboards, TV,
radio)
Key Activities:
The Key Activities of your business/product are the actions
that your business undertakes to achieve the value
proposition for your customers.
Questions to ask:
What activities does the business undertake in
achieving the value proposition for the
customer?
What is the resource used?
Time?
Expertise?
Distribution of product?
Technical development?
Strategy?
Offer resources (human/physical)?
What actions does it take you and/or your staff
Examples of Key
Activities:
Consulting
Designing
Web development
Baking
Driving
Shovelling
Key
Resources:
Practical resources needed to achieve the key activities
(actions) of the business
Key means the resources your business requires to do
business.
These resources are what is needed practically
to undertake the action/activities of your
business:
Computers
Office space
Hosting
People (staff)
Internet
connection
Car
Bike
Oven
Electricity Key resources could include office
Car Parts space, computers and staff
Key
Key Partners are a list of other external companies/suppliers/parties you
Partners:
may need to achieve your key activities and deliver value to the
customer.
An example of this is ‘if I sell groceries to customers, I may need a
local baker to supply fresh bread to my store’.
They are a key partner to achieve the value my business promises to
the customer.
Cost Structure:
Your business cost structure is defined as the monetary cost
of operating as a business.
Questions to ask:
How much does it cost to achieve my businesses key
activities?
What are the cost of my key resources and key partnerships?
How much does it cost to achieve the value proposition for
my customers/users?
Are there additional costs to running a business?
Legal?
Insurance?
What is the cost of my business?
It is important also to place a monetary value on your time
as a cost.
How much would it cost you to hire you?
What is the opportunity cost of running your business?
Revenue Streams:
Revenue Streams are defined as the way by which your business
converts your Value Proposition or solution to the customer’s
problem into financial gain.
It is also important to understand pricing your business accordingly
to pain of purchase in exchange for the pain of solving the
problem for your customer.
Different revenue
Pay per product (pay per
models:
view)
Fee for service
Fixed rate
Subscription
Dividends
Referral feeds
Freemium
Equity gain
