The Business Model Canvas (BMC), is the visual map of a business model.
This model was created by Alexander Osterwalder of Strategyzer (Discover the original model here).
It is ideal to get a quick, simple, and effective perspective of a business.
At Growth Hacking School we advise each client to fill out a Canvas to understand what the crucial points of their business are.
In addition, we always end up thinking about new visions of the business that had never been imagined before.
In a few minutes before starting to fill out the Canvas, we are immediately full of ideas on how we can innovate, where we are stagnating, or even what is missing in our business.
What are the advantages of BMC?
BMC is a tool that goes much further than allowing us to reflect on our Business.
BMC has 3 advantages that we would like to highlight:
Focus: it helps to focus on the essential points of a business in a very objective way. Also, instead of having to write a +50 page business plan, we are only working on general topics to better detail the business.
Overview: every business is unique and innovative in its own way. Every founder always starts with the idea of doing something different. This model allows anyone involved to quickly understand what the idea is that the business is based on.
Flexibility: it is easier to adapt quickly to new changes with a visual and flexible model.
Where to start?
Before we start filling out the Canvas for our business, we need to make sure we have everything in order.
This template can be filled out in physical format, so we recommend digital format.
It’s faster, requires less labor, and doesn’t require as much logistics.
If you want to download the digital format just click here (we don’t ask for an email subscription, it’s 100% free).
If you want to fill it out in physical format we recommend collecting the following materials: a printout of the template in A3 format (instead of the usual A4), post-its of various colors, and lots of candy 🍬 (Sugar increases the will to work, boosts ideas and provides energy spikes).
How to Fill the Canvas?
Always start by the right ➡️
Normally, we read from left to right, but in the case of Canvas, it is filled from right to left.
It may take a little while to get used to this change, but after you do it a few times, it becomes simple.
Think about dividing the Canvas into 2 large areas: The Right Side and the Left Side.
The Right Side is the representation of the business that the Customer will see.
Think of it as the storefront of your business, product, or service.
The Left Side is the representation of what the Business will offer the Customer.
As an example, it is everything that is in the warehouse before it gets to the store.
The BMC: section by section
There are 9 tables that must be filled in, in order, in the Canvas:
- Customer Segments
- Value Proposition
- Distribution Channels
- Customer Relationships
- Revenue Sources
- Key Resources
- Key Activities
- Key Partnerships
- Cost Structure
We will then go step-by-step through what kind of questions we should answer in each one.
Filling out the Business Model Canvas step-by-step
The BMC Right Side
A business without customers does not exist.
So our Customer Segment is going to be the structural point where we start.
We will define here who is the type of customer that feels that our product or service is beneficial for their daily life.
This Customer Segment can be filled out based on the methodology of detailing a Persona.
Creating a Persona will help you answer this section more accurately.
By creating a persona, you are not only answering basic questions such as: what is the Gender, Age Group and Profession, but also going into psychological questions about your customer such as: what is their greatest desire, objections, daily tasks, etc.
After filling out our Persona, filling out this section of the Customer Segment will be very simple.
If you don’t feel like using the Template, then you need to answer the following questions:
- What does our client look for when he wants to buy our product/service?
- What are the main goals in this search?
- What holds you back from getting this kind of service? What are the objections?
At the end of answering these questions we have to be clear about who we are, or are going to create our products/services for!
The Value Proposition is what differentiates our business.
It is the idea that got us started and pushed us forward in this adventure!
In the Value Proposition we will detail what really makes us different, what makes our customers come to us instead of the competition.
This is not only related to what it is that we sell, but to WHY.
Why it is so special and differentiating.
This is the main advantage that our business offers over the competition.
For example: in the automotive industry all cars are able to transport us from our Point of Departure to our Destination.
But why do some choose to go by Mercedes and others by Opel?
This is what makes the Brand Value Proposition different.
If we can’t highlight the social, or emotional points we offer, we are not building a differentiated Value Proposition.
At Growth Hacking School, we use the Value Proposition Map as a method to help detail this section.
If you want to learn more about Growth Hacking, sign up in our 5 Day Free Growth Hacking Course.
Our business vision is starting to take shape.
We already know what differentiates us and who we are building value for.
Now we need to know how we are going to get our product, or service, to these customers.
This is where the Distribution Channels come into play.
Our Customers interact with countless businesses every day, whether physical or digital.
It is therefore the Channels that we will use to get our product to them.
Think of this phase as the promotional part of your business.
Then in the next phase, you will go into more detail about how you are going to maintain and nurture your relationship with the customer.
This is where you define the type of strategy you want to apply.
Do you want to apply a more inbound or outbound strategy?
How have you been promoting your business?
Is it working well? Then continue on the same path.
If not, you will have to rethink your current channels
Promoting is cool.
But retaining customers is much better.
First it helps you dilute your initial acquisition investment.
Then you build relationships that can last a lifetime.
Who knows if your customers don’t become your “friends”?
The big issue here is that 90% of businesses don’t want to establish a Relationship with their Customers.
If they did, they wouldn’t try to make a sale at the very first contact, or interaction.
This is the same as going out in the middle of the street to approach people to buy your product in 30 seconds.
“Buy my mattress NOW.”
Let’s sound crazy, shall we?
In this section we will outline what is the best way to create a lasting relationship with our customer.
That is, what will help increase our interactions and create an emotional bond.
What are the media we already use?
What are the means of communication we may use in the future?
Right now, do customers communicate with us via phone?
What is the most natural process?
After answering these questions, I’m sure we already have a business with a Value Proposition that is increasingly unfair to our competitors.
Fontes de Receita
90% dos empresários, ou empreendedores são experts em definir como é que vão gerar receita.
Vender está-nos no sangue, mesmo que não queiramos.
Sem vendas, não temos receita que nos possibilite ter um negócio aberto.
Por isso, a nossa Fonte de Receita é a porta de entrada para garantirmos que o negócio vai funcionar.
Sem receita, não temos capacidade para comprar recursos, ou contratar parceiros que nos permitam continuar a escalar o nosso negócio.
Esta secção é importante para começarmos a ver quais são os pontos de venda que estamos a estabelecer para o nosso negócio.
Não é importante entrar em grandes detalhes.
Quantos mais produtos, mais abrangentes devemos ser.
Se operarmos com um modelo SaaS, podemos entrar em detalhe sobre as várias gamas, ou tipologias do produto, mas se formos um retalhista, com milhares de produtos, não adianta estarmos a detalhar tudo.
O que é importante é percebermos quais são as principais fontes de receita atuais.
What Resources does your business need to get off the ground?
As resources, we are not talking about partners, nor are we talking about activities.
Although there is a big difference between resources and activities, most professionals filling out the Canvas for the first time are always torn between one and the other.
Key resources are the people, labor, machinery, patents, and intangible assets that are used to put your business on the map for customers.
This is not a general inventory of the company, but rather the key operational sectors.
Activities depend entirely on Resources to function.
It’s the processes and tasks that will make it possible, with your Resources, to reach your Customers and present your Value Proposition.
The Canvas is starting to make more and more sense, don’t you think?
In Activities you can detail any tool, or process that you are dependent on in your business.
Practical examples are:
- Operational Processes: Machine Maintenance, Team Schedules and Scales, Accounting.
- Consultants, or External Agencies.
- Internal Processes: Agile Meetings, or Daily Meetings, Reports.
- External Processes: Webinars, Sales Calls.
Consider, in this field, that the Activities you will detail at this stage are the essential ones to get your business running at 100%.
If your business depends on third parties this is where you will list who they are.
Your key partners are all those businesses, partners, consultants, that you depend on to stay in operation.
In the B2B sector, most of these partners are those who supply you with raw material, or to whom you supply the raw material.
In B2C businesses, often the key type of partners are companies that provide services that we can’t get in-house, such as:
Logistics, Marketing, Communication.
On the one hand, these kinds of partners take stress off your shoulders and take care of everything for you.
On the other hand, you are always dependent on the service provided by them.
This section is very important to help us understand if we have any bottlenecks within our business that we need to address, or if we are comfortable with the current solutions.
Detailing what the costs of doing business are is a pain that everyone goes through because no one likes to see money coming in going out.
Plus, most businesses forget that if they sell a product for $9.99, they’re not making $9.99 profit.
You have to deduct expenses for several things:
Production, Logistics, Labor, Communication and Advertising, Rent, Purchase of Raw Material and so on.
In the end you can be left with pennies on the dollar.
Many businesses have no idea whether they are at a loss or not, because they have never calculated the costs involved.
And this is where the Cost Structure is important.
What are the costs that we currently have to charge to the product?
If we are producing Footwear, where do we spend most of our capital?
Here we should detail what the main cost focuses are.
This will help us understand if we have too much on the table, allowing us to better deliberate on our current pricing strategy.
Dusting the House
At the end of filling out our first Business Model Canvas, the reaction is usually always the same:
“What a mess!”
It’s perfectly natural.
I bet your Canvas is full of lots of valuable ideas.
This is when we’ll really start putting everything beautiful and organized so it’s easy to read for everyone.
The purpose of the Business Model Canvas is to be a simplified Business Plan, allowing you to quickly read and iterate your business.Pedro Talaia – Growth Hacking School
The best way to start organizing the Canvas is by groups.
Start turning processes, or sectors into groups.
Example: the Marketing Department and the Sales Department become Marketing & Sales.
The Value Proposition of a Product that differentiates it in 3 different ways can be on one post-it.
For example, if we are selling a Beverage and say our Value Proposition is: no sugar, no coloring, no preservatives, all this can be on the same post-it instead of 3 different post-its.
If our Media is Facebook, Instagram and Website, this can all be considered Digital Communication.
You get the angle, right?
It is also very important to work with different colored post-its for different segments.
If you operate in the B2C market, all those post-its that are customer-related should be one color.
For example, for Customers the post-its can be Green, for Internal Business Structure they can be Yellow.
In the end you should end up with something like this:
Easy to read.
If at the moment you are analyzing your business through BMC, you feel that you lack some relationship with the market, we advise you to work on your Product/Market Fit.
This methodology will help you understand if you have the right product/service for your market, and if you are ready to start growing your business.
Now that you are equipped with a tool that allows you to have an overview of your business, transforming and collecting ideas will be easier and easier.
If you want to download the Business Model Canvas to fill out in digital format, 100% free of charge and without asking for your e-mail address in return, you can do it here: Template Business Model Canvas.