HOW TO FILL IN A BUSINESS MODEL CANVAS? The Structure of A Business Model Canvas The business model canvas is a great tool to plot your business idea. You can understand, evaluate, and improvise the idea to...
The Structure of A Business Model Canvas The business model canvas is a great tool to plot your business idea. You can understand, evaluate, and improvise the idea to achieve your business goal. So, filling in the key building blocks in a business model canvas requires a lot of research, survey, and innovative approach. The Business Model Canvas contains nine connected boxes that depict the key building blocks required for making your business a success. All these blocks interdependently work together in order to generate profit from the business.
Guidelines for Filling In Business Model Canvas Here are the guidelines for filling in the nine boxes in a Business Model Canvas:-
Step 1: Specify the Purpose of Business You need to have clarity on what exactly the purpose of your business is. For example, if you are starting a business of real estate agency then your purpose could be ‘To provide assistance to people looking for a home or a shop to purchase or on rent in reasonable budgets’. Or for a placement consultancy, the purpose could be ‘To help job seekers to get jobs’.
Having clarity on your purpose would help you assess your business concept and find out the creative ways to achieve the purpose.
Step 2: Identify Target Customers and Value Propositions Although there is no specific sequence to be filled in, it is recommended that you should start from the target customers and the value you are providing to them. Your business revolves around the customers who will likely buy your product or service and generate revenue for your business. So you should have a better understanding of the buyer’s persona, their problems and what their expectations are. To fill in the Customer Segments box we should follow these steps:
Create different groups of target customers having some common characteristics like working professionals, students, senior citizens, etc.
Add a description to each group based on demographics(age, gender, location) or their interests.
To fill in the Value Propositions box we mention what value will the customers gain from your product or service. This gain could be in terms of:
Health and wellness
We highlight the point of how customers’ needs or expectations are satisfied with your product or service so that they would happily buy it.
For example, the Real Estate Agency would have the following customer segments:
Working professionals having income slabs to afford homes to purchase or on rent
Small businesses or entrepreneurs looking for shops
Professionals located in urban areas, using smartphones, etc.
Real estate listing websites
Value Proposition: The customers get an affordable home/ shop with all amenities in their preferred location. Whereas the customer segments for Placement Consultancy would be:
Demographics: (age in range 20-40, all genders)
Location: (within India or within the city)
Job boards or job posting sites
Value Proposition: Job seekers get the best suitable job as per their skillsets in their preferred locations and good companies.
Step 3: Channels and Customer Relationships Once identified the target customers, the next job would be to identify what channels are the best to reach and grow those customer base and how you will establish the relationship with customers to retain them. In the Channel box, you can define what methods or media you would use to reach customers as well as how you would deliver the value proposition to customers.
The channels could be like Google Ads, Social Media (Facebook, Instagram, Twitter, YouTube) or face-to-face meetings and/or workshops, seminars, etc. In the Customer Relationships box, you should describe what type of relationship you would establish with your customers as in whether it would be the long term or short term relationship or whether it is just one time till the purchase happens. You can also mention how you would retain the customers. A Real Estate Agency would use channels like Website, Social Media, Newspaper ads, Flyers, T.V. ads, or even word of mouth. Whereas Placement Consultancy would use channels like Personal visits in the office, Website, Social Media, Newspaper ads, Email / SMS Marketing, Career guidance seminars in colleges and Job fairs. In both cases, the customers would be short term relationship but they can recommend your service to others so that you acquire customers from word of mouth.
Step 4: Key Resources, Activities, and Key Partners
These three boxes describe how your business functions backstage. These are the important components that operate your business successfully to deliver the value proposition. Key Resources are the people, machines, places, banks, or intellectual property that are used for your business functioning. Without these resources, your business will not function. Key Activities are the processes or tasks that need to be carried out for customer service. These could be making calls, writing reports, maintaining registers, handling marketing tasks, etc.
Key Partners are the external people and organizations to whom you can outsource some of the responsibility which is not your core skills. They might be suppliers of raw material and goods, or agents sending prospective customers to you or even sponsor your services. For Real Estate Agency, The necessary Key Resources are the office, website, and sales channels. Key Activities would be advertising, maintaining a database of residential and commercial properties, interviewing prospective clients, showing the site to clients, researching, marketing activities. Key Partners would be Builders and construction companies, Personal bankers, financial planners, insurance agents, property listing websites, etc. For Placement Consultancy, The Key Resources are the office, website, staff, and sales channels. Key Activities would be advertising, maintaining a record of registrations, sending the matching job offers to candidates through email, conducting workshops/seminars, etc. Key Partners would be HR at small, medium or large scale companies, job listing websites.
Step 5: Cost Structure and Revenue Streams These boxes represent the most crucial part of the business: Money. The expenses incurred, revenue generated and profit are the three things that are explained in these blocks.
Cost Structure describes how much money your business spends on what and what is the frequency of spending money. This includes rent, salaries, commissions, raw materials, marketing, purchase and maintenance of machines, etc. Revenue Streams are the payments made by customers and also the frequency of returning customers. These boxes can help you to smartly decide the pricing so as to make a better profit and also facilitate to make forecasts such as contribution margins and breakeven points. Real Estate Agency: The main costs incurred are office rent, salaries of staff, marketing, and traveling costs. Revenue streams are commissions from builders or from customers. Placement Consultancy: The costs would be office rent, staff salaries, and marketing costs. Revenue streams are commissions from the tied-up companies for hired candidates, registration charges paid by the candidates.
Step 6: Connecting Organizing
The nine blocks in the business model canvas are interdependent. Hence for every goal, we need to have a link to it in the proper block. For example, if we claim to have satisfied customers then that should link to Revenue Streams. If we claim to establish and maintain the relationship with each customer, then it should link to Key Activities and Cost Structure. This helps in showing up the neglected activities and resources that are essential for success and makes us review the expenses indirectly contributing to Value Proposition.
The Business Model Canvas should be as clear as possible so that we can effectively explain our business concept to the audience. The best way is to color-code each customer segment highlighting which value proposition satisfies each customer and which revenue streams they provide.
Step 7: Telling Your Story Putting forward the whole canvas at once to a new person would only confuse him as there is too much to grasp. Instead, it would be a good way to take step by step approach and go on filling in each box while explaining your idea. This would make it clearer and easier to understand. You can just list the main keywords in each box so that it will take lesser time and also avoid any delusions.
Step 8: Testing Your Idea
A well designed and smartly written Business Model Canvas does not guarantee its successful implementation in reality. That is why we should consider all the words as assumptions and should verify them. This can be done by research or survey with real people from the customer segments. Asking them simple questions to fill in each box on the canvas would help you assess your concept.
Step 9: Versions
In order to sustain in the competitive market, we should not stick to our first idea. We should always look for making new options so as to increase your customer base and maintain our brand. For example, you should explore for identifying:
New Customer Segments
New Value Propositions
New Products / Services
Turning Services into Products
Turning Products into Services
New Delivery Formats
Real Estate Agency can explore to expand its business for new locations and can also tie-up with new promising builders and construction companies. Placement Consultancy can explore to open new branches in different locations and tie-up with new companies.
So, after the design and development of your Business Model Canvas, you have reached the stage of making your future even clearer by using the following tools:
Customer Journey Mapping will give you more clear ways on how to attract, serve and retain your customers better.
Financial Models will uncover what factors make your business financially feasible and also highlight the most sensitive areas that would make or break the idea.
Value Proposition Canvases will facilitate thorough research on customers and buyer’s persona with their hidden interests, creating more convincing messages that will appeal to them.
HOW TO FILL IN A BUSINESS MODEL CANVAS?
HOW TO FILL IN A BUSINESS MODEL CANVAS? The Structure of A Business Model Canvas The business model canvas is a great tool to plot your business idea...