Business Model Canvas (BMC) is a management tool that helps entrepreneurs and managers design and describes their business mental model.

It gets help from it for its digital marketing strategy. In this article, we want to talk about Business Model Canvas and why this tool can help you to make a wonderful business.

Business Model Canvas: Introduction

Business Model Canvas model is a graphical representation model of some variables that show the values of an organization.

This model can be used as a strategy tool for the development of a newly established organization.

The BMC was developed by Alexander Osterwalder, a swiss information management system consultant, and professor Yves Pgneuer.

They defined some categories for the Business Model Canvas, which they named building blocks.

Business Model Canvas: Traditional Business Model approach

Most startups that fail are because the entrepreneurs put all their faith in the product they founded the organization to create.

They failed to fully live up to their business model in their loyalty to that product or service.

Usually, the business model is a well-suited model that is common in the industry, or it’s a random integration of systems and processes that are created at the moment to achieve the main goal, which can be the provision of products or services.

How to use the Business Model Canvas

Business Model Canvas is a common language for describing, visualizing, evaluating, and changing business models.

This canvas describes the logic of how the organization creates, delivers, and captures value.

High level

Start by mapping out the business at a high level and focus only on the most critical aspects of the business model.

Create blocks and link them together. In this way, every value proposition requires a customer segment and a revenue stream.

Current situation

Don’t mix ideas of a future situation with current ideas and avoid merging different parts.

Review

If each customer segment is tied to a value proposition and revenue stream, take a step back.

Make sure that everything on the left side of the canvas is provided to support the left side of the canvas, the excess can be removed.

After that

Take a picture of the Business Model Canvas, so you can easily share it with your team or colleagues.

Ask team members to discuss the business model with others.

Team members make you actively look for a blind spot or two.

Filter design criteria.

Test your assumptions.

Components of Business Model Canvas

The components of the Business Model Canvas classify the internal processes and activities of a business into different and separate categories, each representing a block in the creation of a product or service.

These categories represent the four main aspects of a business which include: customers, offerings, infrastructure, and financial viability tools.

1- Main partners

For both newly established organizations and start-ups and existing organizations, it may be important to create alliances between partners.

As such, it’s important to combine knowledge and expertise when fighting against competitors.

Essential information comes with prior knowledge about which companies might form a valuable relationship.

2- Main activities

By having sufficient knowledge of the main activities of a company, a good understanding of the value propositions of that company is obtained.

This issue isn’t only related to production but also related to a problem-solving approach, networking, product quality, and services.

When a company knows what the added value is for the customer, it may be able to establish a better relationship with the existing customers, and this is useful for the competition as well as for getting new customers.

3- Important resources

Resources mean the needs that a company has to be able to carry out its work.

The recourses can be classified as physical, intellectual or spiritual, financial, and human resources.

Physical resources may be a company’s business assets and equipment.

Intellectual or spiritual resources include a company’s knowledge, brands, and patents.

Financial resources are related to the flow of existing income.

Finally, human resources include the employees of a company or organization.

4- Value propositions

A value proposition is the core of a company’s right to satisfy customer needs.

How does an organization differentiate itself from its competitors?

On the one hand, this distinction focuses on quantities such as price, service, speed, and delivery conditions.

On the other hand, it focuses on quality, which includes design, brand status, customer experience, and satisfaction.

5- Communication with the customer

Interaction with customers is a must.

The more customers there are, the more important it is to divide customers into different target groups.

Each group of customers has specific needs.

By anticipating customer needs, the organization can invest in different customers.

Good service ensures good and stable customer relations in the future.

6- Communication channels and ways

An organization deals with distribution and sales communication channels.

This issue is not only related to customer communication and how an organization communicates with customers.

Rather, the place of purchase and delivery of the product or service provided is the determining elements in this matter.

The communication channel with customers has five different stages, which include: product awareness, purchase, delivery, evaluation, and after-sales satisfaction.

7- Customer segmentation

Since organizations often provide multiple services to more than one customer group, it makes sense to divide them into customer segments.

By specifying the needs of each specific group, products and services can be provided well to meet the needs of the customer.

8- Cost Structure

By gaining the right insight into the cost structure, an organization knows what the minimum turnover is to make a profit.

Cost structure takes into account things like economies of scale, fixed and variable costs, and profit benefits.

Costs are adjusted when it becomes clear that more investment must be made to generate more revenue.

In such a situation, an organization often decides to eliminate some of the main resources.

Business Model Canvas: The power of brainstorming sessions

All members of the management team can make good contributions to the Business Model Canvas.

Group members can enjoy brainstorming sessions with each other, think about important categories, and express their opinions using the canvas of business models on large sheets of paper.

This creates a good and objective picture of the organization and new ideas can be discussed immediately and help the company develop.

Business Model Canvas example

Google

The first thing you should know about Google’s business model is that it is multidimensional.

This means that Google is bringing together two distinct but related customers.

In the case of Google, its customers are searchers and advertisers.

This platform is only of interest to advertisers because there are searchers on it.

On the other hand, search users will not be able to use this platform for free.

Google’s key resources are the platform’s search platform. The key strategic activity that Google has to do is to manage the existing platform including its infrastructure.

We hope you enjoy this article and we would like to you share your thought with us in the comments.