Designing a business strategy used to be a stressful and time-consuming task. The plan was difficult to tweak for the entrepreneurs and required a ton of documentation. Alex Osterwalder created a business plan in 2005, making it simple for businesses to change their approach and developing a structure detailing how to build a business model canvas.
The founder explained in an interview that the concept came from architects sketching out the blueprints on a single page. He created the Business Model Canvas, a one-page model consisting of 9 blocks joined end-to-end and displaying the entire business plan. According to Strategyzer, 36% of the new entrepreneurs use this model for developing their business and more than 15% renovate their business model through it.
1. Design Customer Segments
The first block to be filled out is the “customer segments” section. It is the only independent element in a business plan, all other elements are driven through it. Divide all of your target customers into segments depending upon their age, gender, location, etc. Design a persona for each segment and proceed accordingly.
For a multi-faceted business, these personas need to be classified on a macro level depending on the number of dimensions your business has. For example, Amazon is a multi-dimensional platform with two major dimensions: the buyers’ side and the sellers’ side. Each will have its own target persona, so you can either split these sides into two separate BMCs or you can separate the notes on one.
2. Relate to Value Propositions
Filling out the value proposition section is similar to an exercise of “putting yourself in the customer’s shoes”. This step is about the analysis of your customer’s needs and how you will create unique value to meet and exceed those needs. It will describe how your products or services will benefit them and why they should choose you over the other competitors or alternatives.
All you need to do is map your value propositions to your customer segments. Be clear in your statement and avoid unnecessary slogans. For example: for an e-commerce platform like Shopify, it is a really clear value proposition: “Anyone, anywhere, can start a business.” Develop your value proposition deeply, and try to reflect it as a digestible slogan.
3. Determine Channels to Promote Propositions
List out the important channels you need to communicate your value proposition to your customer segments. The purpose of these channels is to let them know the services or products you offer, and ultimately the value you can offer.
These include a distribution channel from which your customers have access to your products; this can be a website, a retailer, or a marketplace. The second one is a communication channel which includes billboards, TV, or social media. If you are using Google AdWords to promote your business online, this can be a channel too. Think about the ways you will reach your customers either on an individual or mass scale.
4. Ways To Build Customer Relationship
The next step in learning how to build a business model canvas is to pin down the ways through which your business can maintain positive interactions with the customers throughout their buying journey. It will determine the duration of your customers’ retention with your business and the pace at which your business will move forward, as “79% of the customers only consider purchasing from brands that show they care about earning their business”.
5. Decide Revenue Streams
Understanding your revenue streams involves mapping your specified personas to your value propositions to understand where they will buy and why they buy. Of course, the ultimate goal of every business is to generate the maximum possible revenue. This step is extremely important, especially if you are re-engineering your existing business. During this step, think about how your channels prompt your users to buy.
6. Focus on Key Activities
Drafting the key activities as a means to deliver your value propositions is the first step in building your business infrastructure. The activities should be listed in the order of importance with the most important ones at the top of the list.
Each business has its own key activities. The major ones include research and planning, development of the product, launching product updates, inventory control, marketing, sales and customer service, and more.
7. Figure Out Key Resources
Identify the resources you need to perform your key activities. This component of business infrastructure mainly consists of 5 categories:
● Financial resources (money and stocks)
● Physical assets (equipment, capital, raw materials, etc.)
● Intellectual resources (minds behind the business)
● Human resources ( e.g: labor)
● Digital resources (e.g: marketing platforms)
8. Certify Key Partners
Decide on what partners can help you perform your key activities. These can also include the tasks which lie outside your business’s scope and need to be done by some partners so that you can focus on your key activities in a better way.
For example: Hiring a marketing company to handle the marketing of your business, or collaborating with a service company to handle your business’s customer service. These are important delegations and can not only improve efficiency in those areas but can help improve your efficiency as well.
9. Work Out Cost Structure
Last but not least, work out the total cost structure of your business. It includes the cost of resources, cost required to perform the key activities, cost to higher a partner, cost needed to make amendments, etc.
When building a business there are a ton of things you have to worry about, but one of them shouldn’t be how to build a business model canvas. Using a BMC template on Fresco is super easy and through this guide, you should better understand how to build a business model canvas. Check out our recent post here if you want to learn some advantages to using a business model canvas.