The BMC shows you the key factors that a business model needs to take into account and helps you to obtain an overview of the individual areas and ultimately to realise your business idea.
How does the Business Model Canvas work?
With the Business Model Canvas, everything works in the same way. You only need a large sheet of paper, for example A0 format, different coloured Post-its and pens. Divide the sheet of paper (canvas) into nine segments of different sizes and put the name of a key factor into each segment. You will learn about these in more detail later.
To get started, you just need to sit down on your own or with your team and do some brainstorming. You then note down the keywords for your ideas and thoughts for each key factor on the Post-its. You then stick these in the relevant segments of the grid. You can also use drawings and stick these on the grid.
If you subsequently find that the keywords don’t fit the respective key segment or fit another one better, you can simply remove them or stick them somewhere else. In this way, you build a segmented collage of your ideas about the business model; you can then group them into clusters and relate them to each other. This should ultimately help you to find a marketable model.
The 9 elements of the Business Model Canvas
1. Key partners
Depending on your business model, suppliers, service providers or other companies that are not in competition with you may offer opportunities for strategic partnerships. Which companies or organisations could be key partners for you?
2. Key activities
What key activities are essential for you to do to produce the product or service that you are offering?
3. Key resources
Which human, physical or financial resources are you dependent upon to manage your production or provide your service?
4. Value propositions
The product or service that you are offering includes a value proposition, in other words, a benefit/source of added value to your customer, which sets you apart from rival products/services. What benefits will your customers have by purchasing your product or working with you?
5. Customer relationships
Automated or direct human interaction - the form of the customer relationship varies considerably in B2C and is a key element of your business model. How are you planning to gain your prospective customers and how will you ensure they remain loyal to you?
To be able to purchase your product or use the service you are offering, your potential customers first need to experience your product. How will you make them aware of your offer and what will sales and marketing need to look like?
7. Customer segments
Small niche or mass market - your business values will appear strong in some customer segments and weak in others. Analyse which needs are paramount in the individual segments and how you can achieve them through communication and in the distribution channel or which other segments you can tap into. In short: which users, subscribers and paying customers will be included in your target groups?
8. Cost structure
Your operation and business activity will clearly incur costs, particularly for activities, the required resources and partnerships. What are the key expenses without which your business model would fail and where could you save costs?
9. Revenue streams
Quick revenue through one-off payments or a steady income from subscribers - you can generate revenue through different pricing strategies. Where will your business earn its money?
Tip: Business Model Canvas template available for download:
You can download a template for your Business Model Canvas from the Federal Ministry for Economic Affairs and Energy’s website.