You may have a great idea you are planning to build on, but success is far from assured. For every distinguished idea, there are thousands of similar ideas that are also flooding into our world. In order to succeed, a great business idea needs a great business model.
Readers beware, these concepts are not the same thing. Once your idea meets and greets the adult world, it will be exposed to customers, and if they don’t care about the problem that your idea is meant to solve, it’s pretty much game over. A business model canvas, pioneered by Alex Osterwalder, visually describes a firm’s value proposition, infrastructure, customers, and finances, and is of course an integral part of your business strategy. It’s mapping out your business structure.
Entrepreneurs can think of the business canvas model like a story; a narrative of how your enterprise will create, deliver and capture value. To design a business model canvas, you only need 9-building blocks that describe any business idea:
1. Customer segments
Getting to know who will be likely to use your product.
2. Value proposition
What you are going to offer to each customer segment.
They describe the means of reaching each customer segment.
4. Customer relationship
DTR or defining the relationship with your customers.
5. The Revenue Streams
They document the profits and what is produced overall.
6. Key Resources
Showcases which assets are indispensable in your business model.
7. Key Activities
The to-do list of tasks that will generate value.
8. Key partners
The ones that will help you link your idea to the world.
9. Cost Structure
How much money you would direct to each building block of the business model.
Here is how it should look like:
Even if customers may love the value proposition, keep in mind that you can face problems if the business model is not scalable and financially sustainable. Such a thing can be achieved by finding reliable channels to reach and secure customers and building up strong infrastructures that won’t collapse once your business grows. Failing to do one of these things can be detrimental to your idea.
That is why an entrepreneur’s first task is to search for the right business model. This helps to map this world of challenges, so they can be detectable and organized. A Business model canvas is the tool that will help entrepreneurs visualize future hurdles so they can be prepare to dodge some bullets.
It’s also beneficial to test business ideas. This is why it’s important to avoid falling in love at first sight with your idea. In order to compete in a world where the best model wins, it is fundamental to think harder and explore alternatives. For example, think about giving away your “valuable-proposition” for free. It might sound crazy, but it could get you ahead of your competitors!
As an entrepreneur, you may be thinking about your model 24/7, and now there is a tool to structure these ideas and prototype them. The beauty about business models lies in its flexibility, which allows you to twitch and change until you have the perfect business model for your idea.
Here’s a great explainer video about business canvas models, check it out!