WHAT IS A (BMC) BUSINESS MODEL CANVAS?
BMC is a visual way to identify the highlights of your business and how they relate. Alexander Osterwalder developed the concept. By using BMC, you can develop a clear view of your customers, operations, value proposition, and finances. You can use it to identify target market areas and appeal to those segments. The BMC gives people a common language through which they can evaluate traditional processes and innovate in their business models.
When should one develop a Business Model Canvas?
BMC’s are created a the get go during the initiation of the project.
How to Develop a Business Model Canvas?
The BMC consists of nine building blocks. you brainstorm and research each of these topics when you fill out the business model canvas. The collected data can be placed in each relevant section of the BMC. So, the BMC is made when you start exercising.
| 8Key Partners Who are our key partners? Who are our key suppliers? Financial partners Technology partners Investors | 6Key Activities Maintain a platform Collect and analyze data What key activities our value proposition require? | 2Value proposition Which one of our customers? What we deliver values to our customers? Are we satisfying customer needs?Rating system | 5Customer Relationship Personal with derivers when needed. Relationship between customer & organization | 1Customer Segments Most important customer Business travelers For whom the organization is creating value? |
| 7Key Resources App for drivers & riders | 4Channels Social media Words of mouth App stores | |||
| 9Cost Structure Platform maintenance Advertisement | Research & Development | 3Revenue Streams | ||
| What values arecustomer willing to pay? | How would they prefer to pay? | Percentage of a transaction fee |
- Customer Segments
In this building block, you serve different customer segments. If you can, create one or more segments for each section. A reliable description of every customer you serve is entering here. They try to highlight the motivations of your customers, their problems, and capture their “summary” of who they are.
- Value proposition
This is the heart of the business model canvas. And it represents your unique solution to the problem facing the customer segment or creates value for the segmented customer. Value proposals can be qualitative or quantitative. The value proposition must be unique or different from your competitors. If you are delivering a new product, it should be disruptive and innovative. And if you are offering a product that is already on the market, it stands out with new features and specifications.
- Revenue Streams
Revenue streams are defined as the way your business turns your value proposition or solution to a customer’s problem into a financial gain.
- Channels
The channel contains the units you use to communicate your proposal to your department, as well as the units where you sell products and then serve the customer. Through what medium do you reach your target customers and make your products and services available to them? Which ones are more expensive? How do channels merge?
- Customer relationships
Here, you need to establish the type of relationship you have with each of your customer segments or how you will deal with your company on their journey. There are many types of customer relationships such as dedicated personal support, personal support, community, and automated services. Through a customer travel map, you can understand how your customer relates to your company. This will help you identify the different steps your customers will follow when communicating with your company. And it helps you to increase your understanding of how to earn, retain, and nurture your customers.
Important steps that are key to building an organization’s value proposition. An entrepreneur should start by listing the major activities related to his business. These activities are very important processes for business activities to be effective. Major activities are similar to revenue streams. It is important now to assess what activities will have their impact by adding or removing anything.
Resources can be classified as financial, physical, intellectual, and human. These are the resources of the company that provides value to the customers of the company. For an entrepreneur, it is important to start listing your resources. This will give you a clear idea of what end product or service your company needs for the customer and what resources can be delivered, resulting in cost savings for your company. Once the final list of resources becomes available, the company can decide how much to invest in these key resources to maintain a sustainable business.
- Key Partners
The main partner is a list of other external companies, you need to achieve your core operations and provide value to the customer. If my business value proposition alone cannot be achieved, who should I trust to do this? For example, ‘If I sell foodstuffs to customers, I may need a local baker to supply fresh bread to my shop’. They are an important partner in achieving my business promise to the customer.
- Cost structure
In this block, you will identify all the costs associated with maintaining your business model. You need to focus on creating and distributing your value proposals, generating revenue flow, and maintaining customer relationships. And it becomes easier to do so when you define your core resources, activities, and partners. The business focuses on minimizing costs (cost-driven) and delivering maximum value (value-based) to the customer whenever possible.
Final Thoughts
Finally, it is important to stay ahead of the curve rather than the business plan and develop a business model canvas. Nine key elements of a BMC help to define the depth, concise, and clear definition of your business. It gives you the competitiveness to start a profitable startup, focusing on things other than product development.
