The business model canvas is a powerful and simple strategic management tool to help you create and understand your small business or startup in a clear and concise manner.
A great way to quickly communicate a business idea, the business model canvas can lead to useful insights about your customer segments, value proposition, and revenue streams.
You can use the business model canvas to understand your own small business, communicate how your business operates to investors, or to take a closer look at what your competitors are doing.
Show your mentor what you hope to do by creating a draft of the business model canvas to share when reaching out to potential mentors. Mentors can be a great resource for feedback that will help you fine tune your canvas to best communicate your idea.
What Is a Business Model Canvas
The business model canvas is a one page document that showcases the fundamental elements of your business.
The right side of the canvas focuses on external features, like customer segments, while the left side focuses on internal structures, like key activities.
Why Do We Use the Business Model Canvas?
A business model canvas can help you to deepen your own understanding of your business or business idea. It’s a useful tool for fleshing out the practical details and turning your idea into a real, operational business.
It plays an especially important role for idea stage businesses.
The business model canvas can quickly give investors, partners, and other key stakeholders a picture of what your business does and how it operates.
It can help you better understand what types of customer segments and customer decision making will influence your business approach and outcomes.
How to Use the Business Model Canvas
Your canvas should explain the rationale your organization uses to create, deliver, and capture value.
The business model canvas contains these 9 elements:
- Customer Segments
List your top customer segments. Choose these segments based on who provides or will provide your business with the most revenue.
- Value Proposition
What products and services are you offering? What value do they hold for your customers?
- Revenue Streams
List your top revenue streams. If you are doing work for free, be sure to include those services here as well.
How are you communicating with your customers or clients? How do you share your value proposition?
- Customer Relationships
What do your customer relationships look like? How do you maintain them?
- Key Activities
What are the key activities that keep your business running every day?
- Key Resources
Who are the people and what are the knowledge, means, and money you need to run your business?
- Key Partners
What partners are essential for your business to run?
- Cost Structure
List your top costs. This information can be found by looking at your activities and resources.
A Bird’s Eye View of Your Business
Even if you have a business plan in place, the business model canvas is a useful exercise that can help to summarize all of your business activities on one sheet of paper.
It will help you and your mentor step back and analyze what you are currently doing and brainstorm possible solutions to the challenges you are facing.
The business model canvas is also a great tool for approaching new mentors that you might want to work with.