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Business Model Canvas

The Business Model Canvas (BMC) is a tool, conceived by the Swiss entrepreneur Alexander Osterwalder, that helps you to visualise your business model and (further) develop your business ideas.

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.

Drawing up a BMC – 4 tips

  • A young woman sits at a desk in front of a laptop and makes notes in a book.

    1. Find your start point

    There is no right or wrong - it depends on the phase you are in with your business start-up. Use the BMC for planning, optimisation or gaining new perspectives.

  • A woman sits at a table with other people and points to something in front of her with her pen.

    2. Take your time

    Don't be satisfied with the first result! Take your time and repeat the exercise several times.

  • A group of young people are standing in the circle looking at a piece of paper that one of the men is holding.

    3. Use examples

    If you find it difficult to get started, begin by going through a full sample business model. This will give you an overview of the issues and their correlations.

  • A young man with beard smiles and holds a tablet in his hand.

    4. Do it for your business plan

    The Business Model Canvas can be a good basic framework for your business plan and make it easier for you to get started. Feed your ideas and results into your business plan.

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?

6. Channels

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.