A tool for mapping out your business model, easily

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All right, so let's have a look at the business model canvas and its key components. 

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As you can see, there are nine key building blocks to Alex Osterwalder's business model canvas. On your left-hand side, is the Product-facing side of the business model. Here, we look at the resources that we need, the partners we can work with, and also our cost structure.

On the right-hand side, you can see the Market side. This is where the model focuses on what is delivered to the customer and how.


We’ll look at all the sections in some more detail:

Value Proposition

Right in the middle, between the Product and Market side, lies your Value proposition. This is a key component of any business model. This is what makes you unique and is the reason why customers want to purchase from you.

Customer Segments

This is the next key component after defining your value proposition, this is where you need to figure out who your customers are, what they do, and rather than just looking at demographics, you really need to dig into psychographics to help you choose your niche, choose your segment of the market. This is where your customer persona will fit in.

Channels

This is how you deliver your value proposition to your customer segments. In some instances, this might be online, through your website. It could be through an app, it could be through intermediaries, retail, etc.

Customer Relationships

This is how you get your customers, keep your customers, and grow your customers, whether it’s one-on-one, high-value, face-to-face service, or an automated service.

Revenue

This is how you get compensated and capture value for yourself. You could look at recurring revenue streams, a monthly fee, perhaps even consultation or retainer fees.


Key Resources

These are the resources that you need in order for you to create your value proposition and deliver them to your customers. These could include staffing, these could include intellectual property, these could include, perhaps, facilities, retail areas, properties, and other forms of assets.

Key Activities

This is what your business does on a daily basis. It’s really important is to understand what your core competencies are, and what your strengths are, and weaknesses.

Key Partners

Once you've identified the key resources that you need, the key activities that you do on a daily basis, you need to figure out where your weaknesses lie and who you can team up with to help strengthen those weaknesses. This could be partners that can help you to deliver certain manufacturing plants; it could be partners that help you with sales.

Cost Structure

This is really the sum of all your variable and fixed costs that we'll experience in creating and delivering your services or products to your customers.


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Initially, when you first start, what you need to understand is that each one of these is more like a wild guess. You haven't started your company yet, you don't know who your customers will be, and the specific what sort of features and benefits they're looking for. So on the business model canvas, initially, it will be just a whole bunch of wild assumptions, which you can later, then, go and test, and validate.

 

Learning

Business model has a Product-facing side which focuses on your resources, activities, partners, and costs, and that is really what is going on behind closed doors. This is what customers do not see. On your other side, you have the Market-facing side. This really focuses on who your customers are, what you deliver to them, how you deliver it to them, and how you maintain your relationship. And, at the bottom of it, how you create revenue from your customers.

And this is it. These are your nine key building blocks that you're going to dive deeper in now, and which will help you to create a successful company.