How to create a Business Model Canvas
In the business world, creating a clear and structured business model is essential to the success of any company, whether it is an emerging startup or an established corporation. Over the decades, we have seen numerous theories on how to understand the structure and functioning of a company. From the famous ‘4 P's of marketing’ of the 1970s, to more recently, the Business Model Canvas (BMC), a more graphic and simple approach that allows us to see at a glance all the key aspects of a business.
The Business Model Canvas, developed by Alexander Osterwalder, has gained popularity as a visual and practical tool for designing, analysing and improving business models. In this article, we will explore what the BMC is, its components, how to create one step-by-step and the tools that can facilitate this process.
What is a Business Model Canvas?
The Business Model Canvas is a visual tool that allows entrepreneurs and managers to quickly and effectively understand the key elements that make up their business. This model presents a graphical representation of nine essential building blocks that together describe how a company generates value and operates competitively in its environment.
Unlike traditional business plans, which are often lengthy and detailed, the BMC provides a comprehensive and simplified view of the business. This not only facilitates decision-making, but also makes it possible to visualise how the different elements of the model interact. The value proposition is at the heart of the BMC, reflecting that the essence of any business is not simply products or services, but the ability to deliver benefits and solutions to customers.
Components of the Business Model Canvas
The Business Model Canvas is made up of nine blocks that together provide a comprehensive view of the business. Below, we explain each of them:
Customer segments
This block identifies the groups or types of customers at which the business is aimed. They can be individuals, companies or any entity that will benefit from the products or services offered. Clearly defining your customer segments will allow you to better focus your efforts and maximise the value you offer them.
Value proposition
The value proposition is the heart of the BMC. This block describes what problem your company solves for customers or what need it uniquely satisfies. It is about how your product or service is different from the competition and why customers should choose you.
Channels
Channels refer to the avenues through which your business reaches its customers. They can be physical channels, such as shops or distributors, or digital channels, such as websites, apps or social media. It is essential to determine how customers prefer to access your products or services.
Customer relationships
This block defines the type of interaction your company will have with each customer segment. It can be a closer and more personalised relationship, or more automated. The relationship you establish will directly impact customer satisfaction and loyalty.
Revenue streams
This describes the ways in which your business generates revenue. This includes all forms of payment that customers make, from direct sales to subscriptions, licensing, service fees and so on.
Key resources
Key resources are the assets necessary for the business to function. These can be physical, intellectual, human or financial. For example, equipment, facilities, technology or know-how are part of key resources.
Key activities
This block identifies the most important actions that the company must undertake to make the business model work. These activities vary by industry and type of business, but can range from manufacturing to content creation to customer relationship management.
Key partners
This block defines the strategic allies that help make the business work. They can be suppliers, distributors, business partners or any external entity that helps create value.
Cost structure
Finally, the cost structure refers to all the expenses necessary to operate the business. This includes fixed and variable costs, as well as investments in resources, activities and key partners.
How to create a Business Model Canvas step by step
Now that we know the components of the Business Model Canvas, let's see how to create one in five key steps. It is important to remember that it is an iterative process and that there are no recipes in the business world.
Step 1: Preliminary research and analysis
Before you start filling out the canvas, it is important to do a preliminary analysis. Research the market, the competition and your potential customers. This will give you a solid basis for making more informed decisions in each of the blocks of the canvas.
Step 2: Defining customer segments and value proposition
Start by defining who your customers are and what they need. Then describe how your product or service meets those needs. The value proposition should be clear and focused on solving problems or improving the lives of your customers.
Step 3: Identifying customer channels and relationships
Determine how you will reach your customers: will you use a digital or physical approach? What type of relationship will you seek with them: personalised, automated or community-based? These elements should align with your customers' expectations and your value proposition.
Step 4: Determine revenue streams and cost structure
Next, define how you will make money and what costs you will need to cover. Make sure your revenue structure is sustainable and aligned with operating costs. This step is crucial to ensure the financial viability of the business.
Step 5: Identifying key resources, activities and partners
Finally, identify the resources, activities and partners that are essential to make your business work. Make sure you are clear on what you need to create and deliver your value proposition effectively.
Additional tools and resources for building a Business Model Canvas
One of the advantages of the BMC is that it is a very visual and easily adaptable tool. There are numerous templates and software that can help you create your own canvas quickly and easily.
Recommended templates and software
- Canvanizer: This online tool allows you to create collaborative canvases with teams in real time.
- Strategyzer: Developed by the creators of BMC, this platform offers advanced templates and additional resources for developing business models.
- Miro: A popular option for creating visual canvases and collaborating with teams remotely.
In addition to these tools, many universities and business training programmes offer resources to dive deeper into creating effective business models.
Conclusion
The Business Model Canvas is an indispensable tool for any entrepreneur or manager who wants to clearly and efficiently visualise the key elements of their business. Its ability to simplify the complexity of a business model makes it a valuable resource for strategic decision making. It should be used with care and in combination with other methodologies to visualise not only those elements that add value directly to the market, but also those that are mandatory and could be ignored.
At Broward International University (BIU), part of Planeta Formación y Universidades, we understand the importance of these tools for the success of our students in the business world. Through our training programs, we provide our students with the skills and knowledge necessary to use tools such as the Business Model Canvas in business creation and management.
If you are interested in learning more about this and other business models, we invite you to get to know our programmes and train with the best in the business world.
