Optimize your business model with the Business Model Canvas
Every self-employed person will recognize that running their own business can be extremely difficult at times. Keeping your customers and your suppliers satisfied, improving your products, optimizing your own processes, getting and retaining the right people and then keeping a profit somewhere in between - it's not always easy. It can therefore greatly help every entrepreneur to get a good view of all these kinds of forces that play a role in your daily business. A tool that is extremely suitable for this is the Business Model Canvas.
Your entire business at a glance
The Business Model Canvas was introduced in 2008 by consultant and (business) author Alexander Osterwalder. In his book The Business Model Ontology from 2004 he already did preparatory work. With the canvas, Osterwalder wants to offer both existing entrepreneurs and new starters a practically applicable, comprehensible tool to gain insight into the entire business operations of any company at a glance.
The canvas consists of nine segments, which are sorted in a well-arranged manner. At the center of the canvas is the value proposition: the value that you add, or what you have to offer to your customers. This can vary from hot dogs to life insurance and everything in between; the canvas can be used in all markets.
To the right of the value proposition are the elements that have to do with your customers. At the far right in the canvas we first find the different ones customer segments, or your target groups. This can be several, for example private individuals versus entrepreneurs, or single people versus married parents. We find the link between your value proposition and your customer segments contact channels (through which ways do you have customer contact and deliver your products?) and the customer relationships (how do you deal with your new and existing customers?). These two elements form the bridge between your product and your buyer.
To the left of the value proposition are all things that are needed to realize your product. All the way on the left are you suppliers: everyone from whom you purchase products. We find you between suppliers and your value proposition assets (including your devices, personnel and patents) and you business activities (everything you must to continue to manufacture your product).
Finally, at the bottom of the canvas, we find the last two elements: bottom left the cost structure (where do you spend your money?) and at the bottom right revenue model (where does your profit come from?)
Strategyzer explains the various components in this short video:
How do you get started?
As a rule, your target group is the ideal starting point when you want to use the Business Model Canvas. After all, the wishes of your target group largely determine the characteristics of your value proposition. From there you can slowly but surely start filling the other building blocks of the canvas.
It helps to explain the canvas in the 'old-fashioned' way - on a large whiteboard or sheet of paper. You can also use yellows in different colors and stick them on a wall - as long as your canvas really becomes visible and comes alive with it. It is useful to use different colors for different target groups - for example, a different color for seniors than for young people. You may want to use different sales channels for young people than for seniors. By making this visible, you get a better insight into how your business model is actually structured.
It is of course possible that you do not know how to fill in certain elements. Because what does the customer relationship actually look like? How do you deal with your customers? Get creative when you don't know the answer immediately. Just ask your customers, for example, or get input from the shop floor. The canvas is also intended to gain new insights, so don't run away from it.
Different buttons to turn
When the canvas is complete and you have a good idea of your daily business model, it becomes easier to make informed choices when you decide to make changes to your business. You will see that changing - for example - a product or service has a direct impact on other building blocks of your business. You may also have to make the necessary adjustments there.
The canvas can also give you directions when you want to solve certain problems. If your income decreases, the canvas can, for example, help you to see what that is about and which buttons you have to turn to get the profit back to the right level. You may have to save in your business activities - by outsourcing something - or change something in your value proposition so that you better meet the wishes of your target group (s).
Responding to trends with the Business Model Canvas
It is an extremely beautiful application of the Business Model Canvas can respond to new trends in your market. The emergence of a trend forces all providers in a certain market segment to make adjustments to their business operations. Often the laws of the survival of the fit test: whoever adjusts best and fastest, is the buyer.
If you want to respond to a new trend, it will often mean that you have identified a new customer wish. You want to respond specifically to that wish. This leads to a new value proposition, after which you coordinate your sales channels and customer communication. This way, you can go through your entire canvas and weave in responding to the trend you have found slowly but surely in your business operations. It may be that it becomes a new product, with all the new processes and suppliers involved ('a new color in your canvas'), or perhaps you can already suffice with a small adjustment to the existing elements in your canvas.
Whatever application of the Business Model Canvas you strive for, completing and applying it is a warm recommendation for every entrepreneur. If only to get a clear picture of your own business operations and to be able to discuss this with each other in a substantiated manner.