Why should a founder fill out a Business Model Canvas?
Let’s set the scene!
You are a founder with an idea for a product that you believe, will solve a critical problem for your users. You are itching to get cracking on building that product, and so you do. You research, design and code away your waking nights to create it. You launch, even get a few early customers and suddenly, and before you realize, you have a living, breathing startup in your hands.
Exciting! Goosebumps inducing! Scary!
It’s when your product becomes a real deal, that the complexity of everything related increases by many folds. And, it’s then that you may realize “But wait! How do I run this startup? What do I need”, “What are its moving parts?”, “What are its building blocks?” Those are some valid and timely questions, but how do you go about answering them? Enter, The Business Model Canvas.
A Business Model Canvas is great (and quick) way to create a scalable plan for your startup that can be validated and modified based on customer needs. It was born out of the need to create a bird’s eye view of the various elements of a business.
Traditionally, businesses end up creating elaborate business plans, that take too long to create and potentially never get read. A Business Model Canvas on the contrary, is crisp, effective and quick to produce. It is also a great tool to create shared understanding of your startup idea with the team or investors.
The Canvas outlines 9 building blocks, neatly categorized in to 3 clusters: the customer (to the right), the business (to the left), and the value proposed to the customer by the business (in the center).
The Customer
- Customer Segments (Who are your customers?)
- Customer Relationships (How will you get, keep and grow customers?)
- Channels (How will the product be sold?)
- Revenue Streams (How will your business make money?)
The Value
- Value Propositions (What is the product going to do for your customers?)
The Business
- Key Resources (What people, and strategic resources are required to pull this off?)
- Key Activities (What strategic activities does our business perform to deliver the value proposition?)
- Key Partners (Who (companies or individuals) does our business need to partner with to develop the product and take it to market?)
- Cost Structure (What are the major costs involved in developing, manufacturing, distributing, and supporting the product and running the business?)
The 9 building blocks are arranged in a way that visualize the impact they have on each other.
While it’s fully possible to retrofit a Business Model Canvas into an already functioning startup, you could be much better off if you started with a Business Model Canvas and validated it through your product.
There are so many unknowns when starting up. There are some that cannot be avoided and have to be dealt with as they arise, but then there are some that can be catered to by a bit of upfront planning. A business model is one of the latter.
So, what are you waiting for?
