In recent years, much work and discussion has revolved around what the best way to assess feasibility is and how entrepreneurs should proceed. After the dot.com bubble collapsed, the heady days of creating business models without business plans for investors gave way to a reconsideration of the importance of business plans and viable models.
In addition, various methods of getting to a more rapid revenue stream have evolved. It is important to understand that the audiences for your business concept and the industry in which it will compete have a lot to do with what will work best. There is benefit to each of the options, and it is always a good thing to know how to create a full business plan. There is a certain value and elegance in creating a “business model canvas” to focus your thinking as you launch the business planning process.
Alexander Osterwalder and Yves Pigneur, along with hundreds of online collaborators, have created a tool for generating business models called the Business Model Canvas. A business model is a company’s plan to generate revenue and make a profit from operations. The Business Model Canvas is a visual representation of the critical components, and creating it well will compel you to think through many facets of the business. The “canvas” is intended to be created on a large scale, so that ideas and information can be posted on it to create a clear representation.
The canvas includes nine core building blocks that are intended to contain answers to critical questions. These building blocks are meant to be implemented in the company. They are:
- Customer Segments (CS): the consumers for whom the company creates value
- Mass market—large, broadly similar group of customers
- Niche market—narrow, specialized, specific
- Segmented market—groups with slightly different needs and problems
- Diversified markets—segments that aren’t related and have very different needs
- Multi-sided markets—generally are composed of supplier and customer segments that are all served
- Value Proposition (VP): the reason customers select the products/services
- Newness
- Performance
- “Getting the job done”
- Design
- Brand/status
- Price
- Cost reduction
- Risk reduction
- Accessibility
- Convenience/usability
- Channels (CN): how the company reaches and communicates with customer segments
- Own channels versus partners
- Direct (sales force, Web sales, own stores) versus indirect (partner stores, wholesalers)
- Customer Relationships (CR): types established through consumer segments reached
- Personal assistance
- Dedicated personal assistance
- Self-service
- Automated services
- User communities
- Co-creation
- Revenue Streams (R$): how funds are generated
- Asset sales
- Usage fee
- Subscription fees
- Lending/renting/leasing
- Licensing
- Brokerage fees
- Advertising fees
- Key Resources (KR): that which is critical to making the model functions
- Physical
- Financial
- Intellectual
- Human
- Key Activities (KA): critical actions for success
- Production
- Problem solving
- Platform/network
- Key Partnerships (KP): the particular suppliers and partners needed in the network
- Strategic alliances between non-competitors
- Cooperation (strategic alliances between competitors)
- Joint ventures
- Buyer–supplier relationships
- Cost Structure (C$): all costs of operations
All the above mentioned points are the most critical factors for the success of the company.
