Are you interested in improving your business but you’re not sure how to do it? There is a variety of different steps you will need to follow. Learning about the business canvas can go a long way in preparing you for business ownership and expansion. The business model canvas was first developed by Alexander Osterwalder in 2008 and has undergone many changes or adaptations since.
What is a Business Model?
However, before we delve too far into a business canvas, it is important to outline what a business model looks like. According to the Harvard Business Review, a sufficient definition of a business model is the way a company generates and captures value for everyone involved. The business model works to show the value of products or services to a company’s customer base.
Along with the value, the pricing processes, organizational structure, and potential partnerships are also vital aspects of an effective business model. The best type of business model is one that can use a new technological advancement to fill a new market need. Some recent examples of this include the expansion of Uber instead of taxicabs and the growth of Airbnb within the hotel industry. To move further in developing an effective business plan when you are expanding your company and opening up new sites, it is useful to learn about the business canvas.
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What is the Business Model Canvas?
The business canvas is a model or template used to strategize the development of new businesses. This template involves multiple elements such as finances, the value of a company’s products or services, clients, and infrastructure. This involves considering the steps needed to execute a company’s values as well as the resources needed to assist customers. Additionally, the business canvas consists of key ways to create strong buyer-supplier relationships.
The business model canvas also focuses on developing a niche market and diversifying among different client needs and factors. Additionally, developing the cost structure and ways to minimize costs along with creating revenue streams are major parts of an effective business canvas.
The most important part of the business canvas is the value proposition box, which involves the essential value a company provides to its customer base. A superior value proposition is based on knowing a company’s target market very well. Performing an analysis or even panel interviews with a typical customer base can help an entrepreneur better understand their target market and develop more trust with their clients.
Figure out the problem that your target market is facing and how your product or service can be a key solution to their problem(s). Next, uncover the value that your services or products offer to customers. Make sure that your product is unique to your market and stands out from the rest of the competition in your industry.
When you define the value proposition for your customer base, you will find that it becomes easier to follow new leads and find those clients your company needs. Be sure that your company mission is able to target your customers by explaining the value of your products or services.
When looking through the template, one can see the customer segments. This is where you will need to describe who your customers are and ways to reach them such as through social media channels or television advertisements.
Now that you have defined who your customers are, you will need to start working on developing the proper channels to attract your client base. If you have already sold your product to a few customers, think about where you met these individuals, what steps they took to find you or work with you, and whether you can continue to copy this path toward selling more product. Since there are many channels through which you can engage your customers, spend some time figuring out where your customers are more likely to be found.
The next section involves the resourcing and production side of running a business. This includes key activities for meeting your company value requirements, the relationships and partnerships that need to be built with suppliers, and the cognitive and physical resources needed to develop the relevant products or services. The last section in the business model canvas includes the cost structure and revenue streams. It is vital to manage the costs of running a business in order to be successful and gain profit when expanding your company.
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Why the Business Canvas Matters
Alexander Osterwalder developed the business model canvas to make it easier for entrepreneurs to strategize and plan their model when running a business. The reason that the business canvas matters greatly for a successful company is due to better understanding the value an organization creates, reports strategy designer Justin Lokitz in DesignaBetterBusiness.com.
Additionally, this type of template can help entrepreneurs create a more concrete plan for their futuristic ideas and inventions. At the end of the day, the business canvas matters because it can help you brainstorm new business models and come up with more creative solutions.
One of the first steps you can try is “freshwatching,” which involves mixing and matching business models from other industries with your own model template. For instance, you can use a template from Uber to learn how running a business such as the sale of solar panels could become more innovative and effective.
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Applying Business Canvases in the Real World When Running a Company
What would happen if you apply the business canvas from Uber to your own organization? How would Uber’s model change your own company? Would you be able to make a profit by using a new and innovative business model? How would this change your company on a day-to-day scale? Answering these questions could make a big impact on improving your business model and gaining more profit.
“Freshwatching” involves looking at your company from the lens of another whether it is an online retailer, a social media giant, an accounting firm, or anything else for that matter. Now take a look at an important aspect of your company such as a key partnership you hold or a segment of your target market. Remove that key aspect and try to fix your business model by coming up with a brand, new idea.
When you take out an important aspect, it forces you to brainstorm and gather innovations to jump start your company. This could be vital for growing your company and expanding beyond your original expectations.
Next, you can start to apply the business canvas in a way where you take out eight out of nine important parts to running your business and brainstorm new ideas to fill those eight spots. How would you now build your company to achieve that ninth part you decided to keep? These type of exercises can give you many new ways to innovate better processes and make better business decisions.
Consider the PepsiCo business. What if all you had left was the drinks this company manufactures, the manufacturing facilities, and its talented workforce? How would you then change the customer segment? What other products or services would you consider offering your target market? Are there any other revenue streams that could make you a profit? All of these questions can help you define ways to change and improve your business.
When you look at a variety of business models from different companies and industries, you will likely begin to notice a pattern among them. You can apply various formulas from many business models to your own organization. For example, a common type is the bait-and-hook scenario where a company may sell cheap printers or cheap hamburgers but more expensive printer ink or pricey sodas.
Another key strategy when creating your business model is to ask “What if?” questions. Try to challenge your typical way of thinking and doing things. This can lead to more creative solutions for your customer base. Developing a business canvas can be a vital part of starting your company and will position you on the right track to success.
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The Right Software Tools Lead to Better Application of New Business Models
Any type of business canvas that you apply can be better utilized with the help of the right software tools since you will be able to properly understand the strengths and weaknesses of your model.
The workflow and task management designs of Runrun.it can help you better figure out the day-to-day activities necessary for your employees to complete when interacting with the customer base. This will allow you to create a stronger and more effective business model based on the work tracking and project management dashboards that come with this software. You can even test out future goals that align with your business model. Check out these software tools by starting a free trial at: http://runrun.it