The Canvas Model Business is a strategic management tool, which is used when working on business models.
It is a graphic scheme, precisely structured and studied. And it is very useful for developing new business models or for perfecting existing ones.
It was conceived with a view to using a visual approach in the management of business projects.
WHAT CANVAS MODEL BUSINESS IS
The business model, or business model, can be understood as an organizational strategy.
More precisely, it is the set of organizational and strategic solutions that allow the company to create, distribute and acquire value.
Creating value for a company means helping its customers to satisfy their needs. If the company fulfills the wishes of its customers, it will consequently acquire recognition and value.
THE CANVAS MODEL BUSINESS: LET’S CLEAR
The Business Model Canvas (acronym BMC) was devised in 2004 by Alexander Osterwalder. And developed in 2010 by Osterwalder himself with the collaboration of Yves Pigneur, Alan Smith.
In addition to the support of a community of 470 experts located in 45 countries. The community is part of an international development project for this tool.
The characteristic of this model is that it exploits the logic of visual thinking. Canvas in English means canvas – a business model on canvas.
It looks like a large scheme (on canvas) that allows you to share and simplify complex concepts. Both concerning the management but also the operation of the company.
And it makes them understandable to everyone. The fact of proposing a clear and schematic view makes it a model suitable for any business project and type of company.
It is useful for the manager of a large company, for the entrepreneur of innovative start-ups, for the historic manager of a company who wants to change his habits.
WHY USE THE CANVAS MODEL BUSINESS?
The Business Model Canvas is created with the main objective of offering an overview of the main elements that make up a business model.
And of the interconnections present within the model itself. In concrete terms, the model can be easily reproduced using any tool.
For example, a sheet of paper enriched by the use of post-its, an erasable blackboard, a bulletin board or a screen. The important thing is to keep it updated according to the changes that a company goes through.
In this way, anyone (managers, employees, experts …) can observe it and start the process of discussion and analysis that derives from it. It is a suitable tool to stimulate discussion, analysis and understanding of current business.
WHAT ARE THE ELEMENTS OF THE CANVAS MODEL BUSINESS?
The Canvas Model Business consists of 9 basic elements. A specific space is dedicated to each element. Let’s see what these elements are:
- Customer Segments
Who are the customers and what are their actions, feelings and opinions. The classes of people and organizations to which the company addresses are described.
And demographic data, psychographic factors (consumption habits, common needs and interests) are used. Or opinions and reviews regarding a product.
It is used to plan the market analysis and build an efficient business plan. And also to have targeted products and services, use more profitable distribution channels and target the type of market chosen.
- Value Proposition
The value of the products and services offered to customers. It is a sort of promise, the motivation that pushes recipients to prefer a company rather than a competitor. You can create a value proposition in several ways.
Like an innovation, something revolutionary; an offer, a price reduction that results in economic savings. Or even an improvement in the design and performance of a product. You have to get to the customer.
- Distribution Channels
The channels through which to reach the customer.
Choosing the right channels is essential to inform potential buyers of the existence and value of its products, to make them accessible and allow them to be purchased.
It is possible to choose a direct channel, owned by the company, or indirect (for example, official distributors and partner shops).
- Customer Relationships
The relationships that are established with the customer. Knowing what kind of relationships the company establishes with its customers allows the company to acquire new customers and retain existing ones.
The relational aspect is an essential part of a business plan that works. By asking about communication with customers, it allows to improve the company’s image on the market.
- Revenue Streams
The revenues generated. The proceeds that the company obtains from the sale of products or services are described. Prices and payment methods are considered, two fundamental aspects to make the business model sustainable.
It is useful for identifying the payment system preferred by customers, as well as the added value for which the target is willing to pay.
- Key Resources
The key resources of the company. They are all the resources a company needs to run its business.
The resources are of different types. Human resources (workforce), physical (points of sale, plants, machinery), intellectual (software, licenses for use, copyright) and financial (loans, lines of credit, cash).
The aim is to identify the most effective resources to create an effective and efficient value project.
- Key Activities
The key activities to make the business model effective. All the activities necessary for the creation of a value proposition, together with the most efficient processes to reach the target.
In addition to maintaining customer relationships and, of course, generating revenue. The types of key activities are: productive, problem solving, maintenance or development.
- Key Partners
The key partners with which the company intends to ally in order to create value for the customer. Every company needs to have a network of suppliers and partners to collaborate with to create value to offer to the customer.
Each company is not a self-sufficient structure, but a system that acts within a wider context, supported by external actors.
Establishing strategic alliances responds to the business need to reduce costs, reduce competition risks and acquire particular resources and activities.
- Cost Structure
The cost structure for resources, activities and partners. It includes both the fixed costs (for example, rents and salaries), and the variable ones, that the company has to bear for its resources, activities and key partners.
For many businesses, the fact of containing expenses becomes a central aspect. Especially if one of the objectives of the business plan is to keep their prices competitive.
The common goal is to make sure that revenue streams exceed expenses. Only in this way can the business be truly sustainable.