Think you got an idea for the next big thing? You just might do, but before you start dropping all of your cash and love capital you’ve managed to raise into your startup idea, make sure you and your team has done its DD (due diligence). Research has shown that 90% of startups fail and the number one reason for its demise is because of the product market fit – nobody needed their product. A great way to mitigate against failure of your startup and to make sure you have all your bases covered is to employ a great strategic management and entrepreneurial tool like The Business Model Canvas. Also known as the BMC, it’s a invaluable resource that every entrepreneur should employ.
The BMC differs from the traditional 40-50+ paged business plan by allowing you to focus on the core drivers of your business and makes it easier to tweak along the way. The graphical template is setup in a way that enables you to visualize and break down each component of the canvas. Doing this helps you dive deeper and analyze contributing factors that can impact the success of your business by mapping out this process systematically.
The nine key components of the canvas are listed below.
1. Key Partnerships: What can the company not do so it can focus on its Key Activities?
2. Key Activities: What uniquely strategic things does the business do to deliver its proposition?
3. Key Resources: What unique strategic assets must the business have to compete?
4. Value Propositions: What’s compelling about the proposition? Why do customers buy, use?
5. Customer Relationships: How do you interact with the customer through their ‘journey’?
6. Channels: How are these propositions promoted, sold and delivered? Why? Is it working?
7. Customer Segments: Who are the customers? What do they think?
8. Cost Structure: What are the business’ major cost drivers? How are they linked to revenue?
9. Revenue Streams: How does the business earn revenue from the value propositions?
The beauty of this model is that although the blocks are setup in a logical order, your starting point need not be. However, a good starting point will be to focus on what your business does and what problem it helps solve.
Leave a comment and let us know how The Business Model Canvas has helped you refine your business model and turn your idea into the next big thing.
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