Business Model Canvas Order – The Business Model Canvas is a great way to sketch ideas, get them understood, tested and improved.
The tool is a single page containing nine connection boxes that show how all the parts of your business work together to be successful.
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Filling out one can take 15 to 30 minutes, and this guide will make the process clear.
Understanding Your Business Through The Business Model Canvas
We’ll watch how some entrepreneurs fill out their canvases — it’s a lot easier if you can watch other people.
The beauty of this is that we now have a standard by which to evaluate ideas and some inspiration for creative ways to achieve this.
There’s no particular order on the canvas, but I’ve found this to be the best place to start.
Your business is centered around your customers, and you think those people will be motivated enough to try your new product/service in order to reap some sort of compelling benefit.
What Is The Business Model Canvas?
First, we group customers and describe each customer based on their common characteristics, i.e. small business owner, student, parent, etc.
Remember, our customers are the ones who make the decisions and pay for our products/services (not to be confused with end users or beneficiaries).
We want to understand how our product/service can make their life better so that customers will happily pay us for this value proposition.
They love the story of the brush’s aesthetics and movement. It’s an easy way to do some cool stuff.
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2. Mothers with young children who want to develop an environmentally responsible mindset in their daily decision-making.
They love the personalized color of each brush, and by making brushing fun, they reduce their child’s objections twice a day.
They love how engaged the students are and this is a great way to incorporate the annual NAIDOC week.
They love learning about rituals, their connection to nature and the land, and the feeling of being away from empty distractions on weekends.
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They love interesting sauce brands to entice their customers, as well as hot sauces that are spicy without sacrificing flavor.
Now that we have a clear understanding of who we are serving and how we please them, we can design three things: how we acquire them, how we retain them, and how we interact with them.
The channel box is our opportunity to explain how we first meet our customers and how we deliver our value proposition.
For example, your business might find customers through Google Ads or Facebook, then serve customers through in-person seminars or drop-shipping packages.
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If so, does it need to be a specific person, or is it the same person every time I come back?
By understanding our customers, their wishes and preferences, we can determine the best way to recruit and retain them for years to come.
Josh – Our acquisition channels are Instagram and word of mouth, and our primary delivery channel is through mail order.
Once we figured out a way to tell the story and show them what the product would look like, it was easy to get orders.
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Kylie and Dan – Personal referrals are our best source of acquisition, but we’re keen to find new ways to reach primary school decision makers, who often make decisions six months in advance.
Most of our clients come back every year, so our focus is on acquiring new clients, especially during off-peak hours.
Anna – Supermarkets and cafes need a face-to-face pitch to hear stories and see products in person.
We have a hard time retaining staff and need to develop a long-term personal relationship with each manager.
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These three boxes describe how the business will work “behind the scenes”—all the operational components that make the value proposition a reality.
We want to list all the vital ingredients, vital processes and valuable allies that make our business possible.
This is not a complete list but a list of resources which, if lost, would render the business inoperable.
Key Activities are the processes and tasks that must be completed in order to provide services to our customers.
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For example, if you are going on leave, what will your successor need to do to keep things running smoothly?
There is some flexibility in these three boxes, and it’s worth considering how you can outsource to a partner tasks that aren’t your core skills, or how you can bring things in-house to save money or improve quality.
Josh – Most of the resources and activities are better executed by partners who grow the bamboo and make the brushes.
Kelly and Dan – The most important resources were Kelly and Dan, as their knowledge and credibility made the entire operation possible.
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They are currently looking for a partner who can take the management functions away from the founders and introduce them to the new school.
Essential activities are marketing new supermarkets and cafes, maintaining existing relationships, and fulfilling orders received through the website.
This means understanding volume (how our costs/prices are set) and frequency (how often do we get repeat customers/bills).
The cost structure is the 7-8 biggest expenses – how much we spend, how often we spend it, and whether it changes as sales go up and down.
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These may include rent, wages, raw materials, advertising, furnishing a store, or commission payments to other parties.
The revenue streams are the prices each type of customer typically pays, and how often they come back.
This helps us differentiate big spenders from one-time shoppers and highlights which products are pre-purchased and which are purchased over the next few months and years.
While these boxes are no substitute for a proper financial model, they at least enable us to make basic forecasts such as marginal revenue and break-even point.
Customer Segments Business Model Canvas
It also gave us an opportunity to think about our pricing strategy – smart pricing can greatly improve the profitability of your new business.
Josh – The main costs in the business are brush purchases (recurring costs that decrease as orders come in), customer acquisition costs (advertising and content creation), and order fulfillment costs (packaging, mailing, and staff time).
This will require diversification, either by selling larger orders to different customers with complementary products such as dental floss or mouthwash, or by selling individual brushes.
Kylie and Dan – Kylie and Dan themselves are the primary cost, followed by administrative, travel and sales costs (ticketing, materials, etc.).
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Weekend camps are capped at 18 at $375 each, so the revenue amount depends on how many camps are held each year.
Ana – there is a long list of costs, from the bottle to the sauce to shipping and labelling, plus salaries for the management and sales staff.
The revenue is all from the same product – sauces in 450ml bottles, but in different quantities and price points.
Instead, Canvas lets our thoughts take charge; if we make a commitment somewhere on the right, it also needs to be listed in one of the boxes on the left.
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If we wish to maintain a personal relationship with each client, that becomes part of our key activities and cost structure.
This does two things: it highlights activities and resources that may have been overlooked that are critical to success, and it makes us reconsider expenses that don’t directly contribute to the value proposition.
We want the canvas to be as clear as possible, both for our benefit and to explain the idea to others.
One way to understand the right side is to color-code each customer segment; this highlights which value proposition best pleases each customer, and the revenue streams they each provide.
Business Model Canvas: A Type Of Alignment Diagram
It’s not a good idea to show newcomers the full canvas – there’s just too much to accept.
This makes the business easier to understand and in the end creates a richer appreciation of the model.
Even if you just list a few words in each box, it will take about 6-8 minutes to explain the full concept and will clear up a lot of misunderstandings.
For this reason, we start by assuming that all the words on the page are assumptions, and our next job is to verify them—starting with the most critical ones.
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I find this easier to do with simple test cards that ask you to state your main assumptions, choose a measure of truth, and set pass/fail criteria.
Research should be done with real people, who need to be people in your customer base.
When you’re talking to your customers, don’t show them a canvas — it’s better to ask natural questions to help you fill in each box, rather than using all the same terms.
Josh wanted to test some new products with his current customers, but also considered business class airlines and high end hotels, as they all want to provide toothbrushes to their customers while appearing environmentally responsible.
Imagine And Develop Your Business
Kylie and Dan will test out an intriguing new studio
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