Business Model Canvas: A Complete Guide for 2024Estimated Reading Time: just 11 min

Business Model Canvas Template (from Strategyzer)

The Business Model Canvas is a strategic tool that helps entrepreneurs and innovators design, test, and refine their business ideas. It is a visual template that consists of nine building blocks that represent the key elements of any business model.

In this article, you will learn:

  • What is the Business Model Canvas and why you should use it
  • How to create your own Business Model Canvas in four steps
  • How to use the Business Model Canvas to validate and improve your business idea
  • How to apply the Business Model Canvas to different types of businesses and industries
  • How to download a free Business Model Canvas template and examples

What is the Business Model Canvas and why you should use it

A business model is a description of how a company creates, delivers, and captures value for its customers, partners, and stakeholders. It answers questions such as:

  • Who are your target customers and what problem are you solving for them?
  • What value proposition do you offer to your customers and how do you differentiate yourself from your competitors?
  • How do you reach, communicate, and interact with your customers?
  • How do you generate revenue from your customers and what are your main costs?
  • What resources, activities, and partnerships do you need to run your business?

The Business Model Canvas is a tool that helps you map out and visualize your business model in a simple and structured way. It was created by Alexander Osterwalder and Yves Pigneur, based on their book Business Model Generation.

The Business Model Canvas has many benefits, such as:

  • It helps you clarify and communicate your business idea to yourself, your team, and your stakeholders
  • It helps you identify and test the key assumptions and risks of your business idea
  • It helps you iterate and improve your business idea based on feedback and data
  • It helps you align your strategy, vision, and goals with your actions and decisions

How to create your own Business Model Canvas in four steps

Creating your own Business Model Canvas is easy and fun. You can use a large poster, a whiteboard, or an online tool like Canvanizer or Miro. Here are the four steps to follow:

  1. Choose a customer segment to focus on. A customer segment is a group of people who share similar needs, preferences, and behaviors. You can have multiple customer segments, but it is recommended to start with one and then expand to others later.
  2. Fill in the nine building blocks of the Business Model Canvas, starting from the right side and moving to the left. The nine building blocks are:

    • Value Proposition: The value you offer to your customer segment and how you solve their problem or satisfy their need. It should be clear, concise, and compelling.
    • Customer Segments: The people or organizations you aim to serve and create value for. You should define their characteristics, needs, pains, and gains.
    • Channels: The ways you reach, communicate, and deliver your value proposition to your customer segment. You should consider the different phases of the customer journey, such as awareness, evaluation, purchase, delivery, and after-sales.
    • Customer Relationships: The type of relationship you establish and maintain with your customer segment. You should consider the expectations, motivations, and emotions of your customers, as well as the costs and benefits of the relationship for both parties.
    • Revenue Streams: The sources and methods of generating income from your customer segment. You should consider the pricing, payment, and revenue models you use, as well as the lifetime value and profitability of your customers.
    • Key Resources: The most important assets you need to create and deliver your value proposition, reach your customer segment, and generate revenue. They can be physical, intellectual, human, or financial resources.
    • Key Activities: The most important actions you need to perform to create and deliver your value proposition, reach your customer segment, and generate revenue. They can be production, problem-solving, or platform/network activities.
    • Key Partnerships: The network of suppliers, partners, and allies that help you create and deliver your value proposition, reach your customer segment, and generate revenue. You should consider the reasons, benefits, and risks of the partnership, as well as the type and level of collaboration.
    • Cost Structure: The main costs you incur to create and deliver your value proposition, reach your customer segment, and generate revenue. You should consider the fixed and variable costs, as well as the cost drivers and trade-offs.

  3. Use sticky notes, sketches, icons, or colors to fill in each building block. You can use one sticky note per idea, and group or link related ideas together. You can also use sketches, icons, or colors to make your canvas more visual and memorable.
  4. Review and refine your canvas. You can use the following questions to check and improve your canvas:

    • Is your value proposition clear, concise, and compelling?
    • Does your value proposition match the needs, pains, and gains of your customer segment?
    • Are your channels effective and efficient in reaching and delivering value to your customer segment?
    • Are your customer relationships appropriate and satisfying for your customer segment?
    • Are your revenue streams aligned and consistent with your value proposition and customer segment?
    • Are your key resources, activities, and partnerships essential and sufficient for your business model?
    • Are your cost structure and revenue streams balanced and sustainable for your business model?

How to use the Business Model Canvas to validate and improve your business idea

Once you have created your Business Model Canvas, you should not treat it as a final or fixed document. Instead, you should treat it as a dynamic and evolving tool that helps you test and improve your business idea based on feedback and data.

To do so, you can use the following steps:

  1. Identify and prioritize the key assumptions and risks of your business model. These are the statements or hypotheses that you believe to be true, but you have not yet validated or verified. They can be related to any of the building blocks of your canvas, such as your value proposition, customer segment, channels, revenue streams, etc. You should prioritize the assumptions and risks that are most critical and uncertain for your business model.
  2. Design and run experiments to test your assumptions and risks. These are the methods or actions that you use to collect evidence or data to validate or invalidate your assumptions and risks. They can be qualitative or quantitative, such as interviews, surveys, landing pages, prototypes, etc. You should design and run experiments that are fast, cheap, and reliable, and that measure the right metrics and indicators.
  3. Analyze and learn from the results of your experiments. These are the insights or conclusions that you draw from the evidence or data that you collected from your experiments. You should analyze and learn from the results objectively and critically, and avoid confirmation bias or false positives.
  4. Update and iterate your canvas based on your learnings. These are the changes or improvements that you make to your canvas based on the insights or conclusions that you derived from your experiments. You should update and iterate your canvas by keeping what works, changing what doesn’t, and adding what’s missing.

How to apply the Business Model Canvas to different types of businesses and industries

The Business Model Canvas is a versatile and flexible tool that can be applied to different types of businesses and industries. Whether you are a startup, a small business, a social enterprise, a nonprofit, or a large corporation, you can use the Business Model Canvas to design, test, and refine your business model.

However, depending on the nature and context of your business, you may need to adapt or modify some of the building blocks of the canvas to better suit your needs. For example, you may need to:

  • Add or remove some building blocks, such as environmental factors, social impact, regulatory issues, etc.
  • Change the order or priority of some building blocks, such as customer segments, value proposition, revenue streams, etc.
  • Rename or redefine some building blocks, such as beneficiaries, donors, sponsors, etc.
  • Use different tools or frameworks to complement or supplement the Business Model Canvas, such as the Lean Canvas, the Value Proposition Canvas, the Social Business Model Canvas, etc.

You can find many examples and templates of how to apply the Business Model Canvas to different types of businesses and industries online, such as here or here.

How to download a free Business Model Canvas template and examples

If you want to start creating your own Business Model Canvas, you can download a free template and examples from the following sources:

  • Strategyzer: The official website of the creators of the Business Model Canvas, where you can find the original template, examples, and resources.
  • Canvanizer: An online tool that allows you to create, share, and collaborate on your Business Model Canvas, as well as other canvases and templates.
  • Miro: An online whiteboard that allows you to create, visualize, and collaborate on your Business Model Canvas, as well as other diagrams and templates.
  • BizShakalaka: This website that provides a comprehensive guide and analysis of the Business Model Canvas, as well as other business models and strategies.

Conclusion

If you have a great business idea, you need a great tool to make it happen. The Business Model Canvas is the tool you need. It is a simple and visual way to map out and test your business model. It helps you answer the most important questions about your business, such as who your customers are, what value you offer them, how you reach them, how you make money, and more. It also helps you experiment and learn from your results, and improve your business model accordingly. It is suitable for any type of business, from startups to corporations, from social enterprises to nonprofits. You can download a free template and examples from the sources listed above, and start creating your own Business Model Canvas today. Don’t wait, act now, and turn your business idea into reality with the Business Model Canvas.

Frequently Asked Questions

What is a Buyer Persona?

Buyer Personas are avatars of a Customer Segment and they transform the hard facts about your target audience into ‘living’ people.
If you want to know more about the topic, follow this link!

What is an AAARRR or Pirate Funnel?

An A.A.A.R.R.R. or Pirate Funnel is a model of a company’s Consumer Relationships based on 6 stages (Awareness, Acquisition, Activation, Retention, Revenue, Referral)
Each of these stages is managed through a metric that is called The Only Metric That Matters.
If you want to know more about the topic, follow this link!

What is a Social&Environmental Cost-Benefit Analysis?

A Social&Environmental Cost-Benefit Analysis (SCBA) is a framework to evaluate the impacts caused by an urban development project as well as by a company’s activities.
If you want to know more about the topic, follow this link!

What does the business model canvas do?

The Business Model Canvas (BMC) is the structure of a business plan in one single page.
The BMC is popular with entrepreneurs and intrapreneurs for business model innovation.
It delivers three things:
Focus: since it is more concise than a traditional business plan
Flexibility: sitting on a single page it is a lot easier to read than a business plan
Transparency: it is much easier to understand than a business model

What are the parts of a business model canvas?

The BMC business model design template is based on:
Customer Segments: this block is about which customers a company tries to target, from whom it is creating value and who are the most important ones. Customer Segments are represented by Buyer Personas
Value Propositions: this block is about how the products and services meet the needs and pains of Buyer Personas. A company’s value proposition is what distinguishes it from its direct and indirect competitors
Channels: this block is about how the Value Proposition is delivered to the customers and how Buyer Personas want to be reached
Customer Relationships: this block is about the type of relationship the company wants to create with their Buyer Personas in terms of atmosphere, interactions and customer service
Key Activities: this block is about the most important activities in executing a company’s Value Proposition for instance in terms of Design, Manufacturing, Maintenance, Logistics
Key Resources: this block is about the resources that are necessary to create value for the customer and that are needed to sustain and support the business. These resources could be human, financial, physical and intellectual
Key Partners: this block is about buyer-supplier relationships, joint ventures and strategic alliances that a company put in place to optimize operations and reduce risks
Revenue Streams: this block is about how a company makes income from each Buyer Personas, for what do customers pay and how they are paying
Cost Structure: this block is about the most important costs inherent to the business model, Key Resources, and Key Activities
Social & Environmental Benefits/Costs: these additional two blocks are about the sustainable growth of the company. This means meeting the needs of the present without compromising the ability of future generations to meet their own needs

How do I create a canvas model for my business?

My suggestion is to start from the Customer Segments and then to move upstream to expose any lack of fit between the needs/pains the company is targeting and what the organization is doing.
This can be done by following a 10 steps process as below:
Step 1 Define Customer Segments using Buyer Personas Model and Buyer Personas Canvas
Step 2 Define Value Propositions using Value Proposition Canvas
Step 3 Define Channels
Step 4 Define Customer Relationships using an AAARRR Funnel
Step 5 Define Key Activities using Supply Chain Canvas
Step 6 Define Key Resources using Supply Chain Canvas
Step 7 Define Key Partners using Supply Chain Canvas
Step 8 Define Revenue Streams using Cash Flow Canvas
Step 9 Define Cost Structure using Cash Flow Canvas
Step 10 Define Social and Environmental Benefits/Costs
Step 11 Innovate the Business Model

What is Lean Canvas business model?

Lean Canvas is a business model design template that is based on the Lean Startup model.
The Lean Start-up is a framework for developing businesses and products that aim to shorten both:
– the Time to Market
– the reaching of Break-Even Point.
The concept of Lean Start-up was brought to the world by Eric Ries in 2008.
This framework is based on adapting lean management principles to start-up companies but it can be used also for introducing new products and services to a market or to develop innovative projects inside an organization.
Today, several companies such as Dropbox, Intuit, Wealthfront, Votizen, Aardvark and Grockit adopted Lean Start-up methodology and its principles are also taught in classes at Harvard Business School and UC Berkeley.
Lean Start-up methodology aims to eliminate waste and to increase value during the product development phase.
This is achieved by:
– Talking with Target Customers
Co-developing Value Propositions with them
– Using Customers Feedback to avoid investing in features that nobody wants to pay for
These 3 activities are performed on a day by day basis in order to achieve Continuous Improvement.
The Lean Start-up Framework is popular because of:
Minimization of the Capital needed by the start-ups
Strong Relationship that can be created between the Company and the Customer

What is the difference between lean canvas and business model canvas?

They are both business model design templates.
Lean Canvas is more useful for Startups and New Product Launching.
Business Model Canvas is more useful for established companies that have an organic strategy. Therefore, BMC is more complete and detailed in describing a business model.

Where can I find some real Business Model Canvas Cases?

If you would like to go through some real cases, follow the White Rabbit through this link!

Nicola Zaffonato Administrator

Business Strategy | Product Marketing | Executive Master eCommerce Management | Business Innovation Master | MSc

I am driven by my personal growth and of people/contexts that surround me.

I followed a professional path in Valentino Fashion Group and Luxottica during which, thanks to the ability to understand different businesses and interests, I was able to succeed in Operations, Merchandising and Retail.

These organizations have exploited my ability to mediate and translate needs/constraints into practice, assigning me to Project Management roles.

Luxottica relied on my ability to analyze, to anticipate things and to imagine/implement solutions by appointing me in Supply Chain Management department and assigning me to the Product Management of IoT solutions for Anti-counterfeiting and Retail digitalization.

During this professional path, I also developed my leadership by managing teams to build Processes, Organizations, Systems and Governance Tools.

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