Business Model Canvas – The Business Plan on One Page
With the Business Model Canvas, the key factors of a business model are examined and presented. The aim is to develop or revise innovative and complex business models. The method was developed by Swiss entrepreneur and lecturer Alexander Osterwalder in 2004 as part of his dissertation. His practical help in the form of the handbook “Business Model Generation” has been translated into 30 languages. The method has established itself internationally as an analysis and planning tool for start-ups as well as for SMEs and large corporations.
The Business Model Canvas is developed on a large sheet of paper. First, nine fields are drawn in, each representing a key factor of the business model. For the key factors, ideas are now noted in bullet points. The ideas can also be noted on post-its and pasted into the corresponding fields. This makes assignment more flexible and makes it easier to make changes. The individual ideas are then put into relation with each other – thus gradually a business model is created.
The nine key factors:
- Customer segments: Which target groups should be addressed? In this field you define for which persons or organizations the company should create value. Ideally, buyer personas are used and customer segments are defined. It is also recorded whether the product range is aimed at masses or niches or on which customer segment the focus lies.
- Value propositions: What is the main benefit of the product or service for customers? Every product or service should solve a problem or satisfy a need. Here it is stated what the customer benefit consists of. The value offers are sorted by priority and assigned to the personas or customer segments.
- Channels: How can customers be reached? The best product has no value if customers do not know it or do not have the opportunity to buy it. This field records which channels are used to reach the personas and customer segments. The time at which the channels are to be used in the Customer Journey should also be specified.
- Customer Relationships: How to win new customers and retain existing ones? The customer relationships can be personal, automated or digital. If required, you can also differentiate between personas and customer segments in this field.
- Revenue Streams: How is money earned with the business model? There are often different models for making money with a product or service. For example, you define which prices are called and whether one-time payments or subscription offers are used. The competition is examined and the willingness of the customer groups to pay is taken into account.
- Key Resources: What infrastructure and resources are essential? Important resources can be facilities or personnel, for example.
- Key Activities: What are the most important activities for implementing a business model? To produce a product or offer a service, many activities are necessary. This field is intended to record which are of particular importance in order to create customer benefit.
- Key Partners: Who can be a partner? In some cases, it makes sense to enter into a strategic partnership. Through a partnership, completely new possibilities can be opened up. In addition, effectiveness can be increased and risks can be spread across several parties. Partners can be connected to key resources and activities.
- Cost Structure: Which are the biggest cost drivers? This field documents the costs which are essential for the model to work. Financial planning also identifies relationships with key resources and activities.
The Business Model Canvas is a very good precursor to the business plan. If you formulate the key factors and add a financial plan to them, you have already ticked off most of the components of a business plan. The special thing about it is that you get an excellent overview due to the presentation on one page and you can recognize connections between the key factors.
Business Model Canvas in Practice
The method of the Business Model Canvas is particularly suitable for start-ups in the process of writing a business plan. With the model, ideas can be structured and constructive discussions can be held. Established companies can also work with the Business Model Canvas: It is very well suited for product development and optimisation. It is important that the canvas is not treated like a checklist that you just fill in. The better you prepare the key factors, the more solid and helpful the results. The result should be checked again and again and revised if necessary. General conditions are changing and with increasing knowledge, all assumptions should be updated.