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A Guide to Using the Business Model Canvas as a Foundation for Starting a Business

04-May-2022

A business idea will be easily realized when you have a comprehensive understanding of the idea you have. The Business Model Canvas (BMC) is a great tool for understanding and developing business ideas.

BMC is an important document that contains a variety of fundamental information presented in a structured manner with a visual approach. Understanding a good and holistic business idea can be used as a strong foundation to build your company.

 

Get to know the concept of the Business Model Canvas

Business Model Canvas (BMC) is a tool used to map and visualize a business model briefly, concisely, and clearly on one page.

This management tool was developed by Alexander Osterwalder, a Swiss businessman and business theorist. In addition to Osterwalder, a professor of information systems management from Belgium named Yves Pigneur helped develop it.

BMC is strategic because it includes nine essential elements of a business model. Through BMC, business people and stakeholders can clearly understand how a business operates.

 

Advantages of Using the Business Model Canvas

BMC has provided many benefits for various businesses from various industrial sectors in various parts of the world. Here are some of the advantages of using BMC:

1. Focus on the Value Proposition

When building a business, the entrepreneur's focus is often divided and distracted. This makes you forget one of the essential elements in business, namely the value proposition. Value proposition is the benefit of the product you offer to consumers.

The benefits offered must be a unique advantage for consumers to buy your product. The value proposition is the main element that can help you stay focused on the business advantages that you will bring.

2. Provide a Holistic Perspective

With BMC, you can see how all elements of the business relate and affect each other. This perspective can provide a comprehensive understanding of your business operations, both as a stand-alone system and within a business ecosystem.

3. Assist in Communicating with Stakeholders

BMC's very visual and simple form makes it easy for anyone to understand. If a business already has a BMC with complete and clear information, this can be used as presentation material or pitching to potential investors, teams, or business partners.

 

Know the Nine Elements and How to Create a Business Model Canvas

Creating a BMC is very simple, you just fill in the blocks consisting of nine key elements of a business. Here are nine business elements that you need to fill in your BMC.

1. Value Proposition (Product or Service Benefits Value)

The value of product benefits is a fundamental element in a business idea. In general, this value relates to compelling and unique reasons for consumers to use the product or service you offer.

Write down the strengths of your product or service in meeting consumer needs. In addition, emphasize the argument that your business offers solutions to problems or pain points that consumers have.

2. Customer Segments (Consumer Segment)

Consumer segmentation is a step to classify various types of consumers based on several indicators such as age, gender, hobbies, purchasing power, consumption patterns, and the like. This aspect helps identify business potential for various consumer segments and measures the size of the targeted market.

3. Channels (Distribution Channels)

According to Osterwalder and Pigneur, there are five important phases in determining an effective distribution for a business. These phases are awareness, evaluation, purchase, delivery, and after sales.

A product or service must be able to reach consumers. Choose a distribution channel that can reach your target consumers. In the digital era, distribution channels are increasingly diverse, from marketplaces, e-commerce, to social media.

4. Customer Relationship (Consumer Relations)

This element determines how a business interacts and maintains good relationships with its customers. You can create a user journey map to find out the most effective way to build relationships with consumers through social media, offline events, or hiring third party services.

5. Revenue Streams

The source of income is obtained from the way a business or company converts the value of the benefits of a product or service into financial benefits. Pay attention to setting the right price so that your business gets optimal profits. There are various revenue models that can be done, including unit prices per product or subscription fees.

6. Key Resources

List the critical assets and resources needed for your business to operate smoothly. The resources needed must also be able to realize values ​​that are beneficial to the business in the form of physical, intellectual (patent), human resources, and finances.

7. Key Activities

Summarize the types of activities that support your business to be able to provide the value of the planned benefits. Both technical matters such as design or strategic such as consulting services.

8. Key Partnership

Make a list of potential partners you can work with to support the success of your business. Also summarize the benefits derived from this collaboration.

9. Cost Structure

Calculate and identify the costs you have to put in place for your business to operate. Both from the production process to the product or service purchased by consumers and generate financial benefits.

Those are some guidelines for using the business model canvas (BMC) as a foundation for building a business. The formulation of the business model canvas must also be based on the existence of a good planning function.

This can be trained through the Strategic Business Analysis program because managers and directors can perform leadership functions to achieve business targets through teamwork by implementing the right business strategy.

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