Business Model Canvas for StartupsBefore you go out and create your business, you need to have a clear course of action. While writing a business plan will help you get investors, an adaptable business model will help guide you toward startup success.
The Business Model Canvas, is a strategic management and entrepreneurial tool. It allows you to describe, design, challenge, invent, and pivot your business model. Alex Osterwalder initially proposed the idea based on his earlier work on Business Model Ontology. Elements of a Business Model The nine startup building blocks addressed in a business model:-
Value proposition – the products and services that create value for your customers
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Customer segments – who will be using and/or paying for your product or service
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Customer segments – who will be using and/or paying for your product or service
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Distribution channels – how you will reach customers and offer them your value proposition
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Customer relationships – the type of relationship you plan to establish with your customers
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Revenue streams – what people will pay for your product and how they will pay for it (transaction fee, subscription, etc.)
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Resources – what you need in order to deliver on your business proposition
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Activities – what you need to do to implement your business model
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Partners – who will participate in the business and why
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Cost structure – the costs involved in delivering on your business model
You can keep track of these nine building blocks by using a business model canvas. A business model canvas is a visual overview of the nine building blocks of a business model, all laid out on the same page. Instead of just listing the components that you need to keep track of, a business model canvas is a tool that allows you to map out and discuss your business model. (See business model below that accompanied this description from the excellent article, The Startup Business Model.
The first version of your business model canvas will be a starting point where you list the guesses about your business — assumptions that need to be proven through interaction with your customers. As customers respond to your product, the business model canvas becomes a scorecard. Instead of just posting the guesses about your business like you would in a business plan, a business model canvas allows you to revise the guesses as you gather facts about your product and customers. Customers will probably reject parts of your business model, and the business model can be changed to meet the needs of the customer.
A business model canvas helps you figure out how to make those changes, since you can keep track of alternatives to your current business model and how your business model needs to change. Every time a change is required, you can draw a new canvas that shows the changes. Over time, the startup model canvas will become a “flip book” that shows how your startup has evolved. There are many resources below that guide you to books, software, etc. to develop your own canvas.
Resource links related to Business Model Canvas for Startups
1. The Tools and Website of Alexander Osterwalden, who started the movement of Business Model Canvas. It provides access to the books, training etc. 2. Business Model Canvas vs. Lean Canvas-Great chart to see the differences. 3. How to Build a Startup The Lean LaunchPad Learn the key tools and steps to build a successful startup. An 8 session course by Steve Blank to teach how to build a startup. 4. Startup Business Model 5. Lean Startup Solutions Applying Business Model Canvas to Lean Startup 6. Startup Tools by Steve Blank —As one of the creators of the Lean Startup, Steve Blank’s website provides tools and blogs for startups.7. How to Create the Business Model in Google Docs
8. Business Model Canvas for Startups–A webpage with the many picture formats of the Business Model Canvas for illustrations.
9. Why Lean Canvas vs. Business Model Canvas by Ash Maurya–Great article explaining the develop of the business model canvas to lean startup. 10. Lean Canvas-How I Documented my Business Model Canvas by Ash Maurya]]>