Want to create a startup business model but don’t know how or what tools to use? here are 7 smart steps to create a business model canvas.
What is a Business Model Canvas?
Business Model Canvas can be described as a strategic management and entrepreneurship tool that allows you to describe, design, challenge, reinvent and change your business model. The Business Model Canvas is the pinnacle of startups, thanks to the support it brings to the business.
The business model canvas can be created and changed as often as the entrepreneur wants, or as often as the business model changes. The first outline version of the business model that a company creates is usually a starting point where the entrepreneur lists the assumptions about their business. These assumptions are assumptions that must be verified through interaction with customers.
As customers react to products, the business model canvas becomes a map of results. Rather than just posting guesses about the business, as is done in a business plan, the business model canvas allows the entrepreneur to rethink assumptions as they gather facts. to further improve its product and its customers.
The Business Model Canvas helps the company understand how to make changes. It can follow the alternatives to the current business model and show how the business model should change. Whenever a change is needed, they can paint a new canvas that shows the change. Over time, the startup model canvas will become a “notebook” showing how the startup was announced and developed.
Below is the list of standard processes that you should follow if you want to create a business model canvas for your startup. …
How to create a business model outline for a startup
The Business Model Canvas has nine elements, and these elements give a very succinct view of the key. Business Startup Engines These include:
- Customer segments
A great product will disappear if no one wants it. Once you’ve found a viable idea for a product or service, you need to define your target market. It’s also important to proactively find the geography, demographics, lifestyles, and occupations of customers who are willing to buy your products and quantify that target market.
To understand your customers, you need to understand several aspects of your target segment. Is your customer segment a unilateral or a multilateral market? You can then take a closer look at who your customers are.
Use our personalization template for a detailed analysis of your customer segments. With personas, you can research your customers’ issues and needs and use those ideas to improve your business model. You can use personas to better understand your customer segments:
- Collect and display information about the past, lifestyle and behavioral practices of your customers
- Examine the needs and wants of your customers and what they are using your product or service for
- document user path
No product can survive without customers, so it’s important to determine who your customer segments are. The web’s business model includes five customer segments: mass market, niche market, platform / segmented market, diverse and multi-sided.
- Mass market : Mass market means that your product or service attracts as many people as possible. Think of the product as laundry soap. Almost everyone uses it.
- Niche market: Niche market means that your product or service attracts a specific group of customers based on their specific needs. For example, only new parents will be interested in purchasing baby booties.
- Segmented: Many companies have multiple markets in their primary market. This is called a segmented market. So, for example, you might want to segment your market based on demographics like age, gender, or location.
- Diversified: a company serving more than one market segment. has a diverse market.
- Multilateral platform: some companies have two or more markets that they serve simultaneously with the same company. For example, if your business is a middleman for suppliers and buyers, like Amazon, then you have a multi-sided platform.
- Valuable suggestions
What does your business promise to its audience and how does your product or service stand out? Think carefully about what is unique about your value proposition and why customers prefer your product or service to alternatives. Then evaluate your proposals according to the needs of your customers.
This will help you determine which value proposition is your top priority and align your vision with the needs of your customers. Your UVP application should:
- Communicate quickly and clearly the cost of your service or product
- Explain why your product or service is better than your competition
- Talk about the benefits and features that define your product or service.
- Avoid higher qualities such as “best” or “world class”. Instead, include carefully defined and actually correct conversation topics.
For your launch to be successful, you need a variety of resources. Resources aren’t just money, they’re everything your startup needs to be successful.
Ask a question:
- Find out what financial resources do you need?
- Find out what kind of human resources do you need?
- Find out what physical resources do you need?
- Find out what kind of intellectual resources do you need?
- Distribution channels
Channels are classified as direct and indirect sales methods. Will it be necessary to hire an extended sales team, rent a physical store, or build e-commerce sites to match target market sales?
What are the most effective ways to reach your audience? What channels do you use to communicate, sell or provide services to customers? List the different channels with which you plan to build customer relationships. Remember to think about the essence of the customer journey. The channels you use to get customers’ attention will be different from how you connect or support them.
Remember, your business won’t survive if you can’t connect with your customers – so how are you going to deliver your product or service to them?
Ask a question:
- Will we be reaching out to our customers directly through our own channels?
- Are we going to connect with our customers through partner channels like Amazon, the podcast network or other big distributors?
- Or are we going to use a combination of the two?
- Customer relationship
First, determine how customers will interact with your business. Do you connect with your customers online, do your customers have a personal contact relationship or will you interact through customer service? After you have established the type of relationship, it is important to write guidelines for creating, maintaining and growing your customer base.
Start-up founders know that customer service is the key to success. Customer relationship can take the form of personal assistance, ad hoc personal assistance, self-service, automated service, communities, and co-creation. But whatever method you choose, just make sure it’s a great one.
Ask a question:
- How will my business interact with customers?
- How is it going? provide that key support and build an ongoing relationship with them?
- How customers can contact us if they need assistance with our product
- What’s the most cost effective way to provide great customer service yet?
- Income stream
The risk of concentration is greatest when a startup relies on a customer or sales segment for traction and scalability. To ensure continuity, a startup must first set realistic prices for customer requirements. Take a close look at different customer segments and value propositions and mentally map the options.
For example, Persona 1 can interact with value propositions 1 and 2, or Persona 2 can interact with value propositions 2 and 3. Take a close look at where your business is generating revenue and if it matches your value proposition. Your startup can have one or more sources of income, and this is where you can identify them.
Ask a question:
- How much are your customers currently paying for similar products?
- How do they pay for these products?
- Do they like this method of payment? Do they prefer the other?
- How much are they willing to pay you?
- How much does each separate revenue stream contribute to the total business income?
- Main activities
A startup or any business will have many internal and external activities that need to be addressed; sourcing of co-founders and sponsors, product development, technological and commercial team building, team management, etc. Key activities refer to priority activities that directly add value to the customer.
All actions can be listed. However, focus on activities such as product development, logistics, and supply chain marketing, to name a few. In this regard, these actions help to strengthen the customer relationship.
What actions or actions does your value proposition require of you? Identify the key steps you need to take to ensure your business delivers on its promises and grows smoothly. For a product-driven business, learning about users and creating a better product can be a key activity. It would be important for the infrastructure sector to maintain this infrastructure and explore ways to improve efficiency.
- Key resources
Ask yourself what strategic assets do you need to start and run your business? Take advantage of these proven systems to identify your key resources and differentiate yourself from the competition. For product-oriented companies, key resources include talent with expertise in critical areas of expertise and intellectual property.
For goal-oriented businesses or businesses that create synergies around a specific customer segment, it is important that key resources include knowledge of your target audience and a standard set of interaction and support procedures. with the group. For infrastructure-focused businesses, strategic assets can include physical or virtual infrastructure associated with the business.
Ask a question:
- What financial resources do we need?
- What human resources do we need?
- What physical resources do we need?
- What kind of intellectual resources do we need?
- Key partnerships
The first step in developing your business model is to identify the key partners you need to run your business. Who would you like to have as partners, suppliers or employees for your business idea? It’s helpful to be guided by specific examples, but it’s also helpful to have general business areas that you want to focus on.
Startups need strategic partners to:
- Make basic activities easier. This is where supply chain suppliers fit in perfectly.
- Collaborate to deliver maximum customer value. An example is the partnership between a company and the scientific community.
- Grow your business. Venture capital firms, venture capital firms, non-profit organizations, B2B clients converted to corporate sponsors are considered strategic partners. These partnerships increase prestige, visibility and access to start-up capital.
In the key partners section, you try to determine the other people you need to make your startup successful. Who is traveling with you and your team?
Ask a question:
- Who are our main partners?
- Who are your suppliers, if any?
- Who are your investors, if any?
- The cost structure
Now that you have defined the key activities, and have a better understanding of the actions your business needs to take, it is time to take a close look at how your key activities are increasing costs and to analyze if those costs match your value proposition. . It is also important to consider the type of costs your business will incur. Are these costs fixed or variable? When scaling your business, will the costs be linear or fixed?
In this section, you will explore the different costs and financial implications of your model.
- Is your business value driven or value driven?
- What are your recurring costs?
- What are the most important costs for your startup?
- What are the most expensive key resources?
- What are the most expensive key activities?
- What are your variable costs?
- What are your economies of scale? ?
- What are your savings in coverage?
Benefits of having a Canvas business model
- The ideas are categorically ordered . The Canvas business model helps companies organize their ideas according to their goals. When you come up with a new idea, you can easily post the idea where it should be to add more value.
- Help generate ideas : When you share your canvas with your team, it can help with brainstorming. Innovative ideas are generated through collaboration.
- Photography helps : Creativity is enhanced as imagery and segregation stimulate your right brain, triggering a spontaneous flow of thoughts.
- You will see a large image at the beginning : The canvas idea template shows a large image of the flow of your ideas, so there are various possible implementations as well as side effects that will provide better results than the previous idea.
- Help to follow the work flow : Canvas is very useful to follow the work flow.
- This makes it easy to change: Customer feedback can be shared and changes as needed will be easier if the process is streamlined through the canvas.
How the business model canvas differs from the traditional business plan
It is a fact that a business model outline is very similar to a business plan. In fact, a business model outline is a miniature version of a business plan. But despite the similarities, the business model canvas is very different from the traditional business plan.
A traditional business plan can take months and can be up to 100 pages long. It’s about planning all possible eventualities for your business, from your five-year profit forecast to your cash flow, limit chart, market size, product, solution, it’s a static document designed to convince to both entrepreneurs and investors that the business will be successful.
On the other hand, a business model canvas can be created in a day. It should be a dynamic document that helps provide structure for a startup, with the understanding that this is just a starting point. This fits well with the Lean Startup model, because it’s about building the model quickly so that entrepreneurs can start testing their assumptions and assumptions. A small startup focuses on quick moves and frequent rotations when necessary, which a traditional business plan simply won’t allow you to do.
Again, the business model canvas is more flexible than the traditional business plan because it is not. voluminous and contains provisions for easy modification.