Strategic Tool Box Serie (#5) The business Model Canvas : give a first step to your new business project

Do you have a business creation project or a new activity within your existing company? Willing to check if your project meets a real customer needs, and evaluate in few steps the solidity of your project before going further into your business model ?

The Business Plan Canvas is the best way to summarize the business model on a single page. This strategy consists of summarizing it in a table. The business model canvas contributes to the proper functioning of a company by facilitating its launch and adapting it to market developments. The Canvas business model is the work of Yves Pigneur and Alexander Osterwalder, entrepreneurs and authors of the book “Business model generation”. Currently, most new compagnies and startups are adopting this innovative solution due to its multiple benefits. Here they are.

The Business Model Canvas: A synthetic tool

In particular, it is a management tool that helps define the economic aspect of the company. Its presentation as well as its practical side distinguishes it from conventional business plans. Indeed, this model offers a global view of all the actions to be carried out, in particular the description of the product or service to be offered, the determination of the financial state of the company, the implementation of communication and marketing strategy and the implementation of this set for the launch of the project. Thanks to it, it is particularly possible to get a precise idea of the product to be designed or the service to be offered, taking into account their usefulness. This is for example the case when you plan to manufacture ergonomic pillows. By developing your Business Model Canvas, you will synthesize everything that each category of customer needs in your management tool. In addition to being useful for creating a start-up, it also turns out to be a great help for launching a new product or service.

An alternative to the business plan

If the detailed business plan is not always easy to manage, the Business Model Canvas is an excellent alternative. Its simplicity offers the entrepreneur the possibility of transforming a simple idea into a major project. This management tool facilitates the visualization of the entire company, in different branches. To do this, it has several blocks of strategies linked together. The resulting business model is not final, but scalable given possible changes in the market or in the business environment.

The realization of the business model

a. The key elements of the project in one page

The Business Model Canvas essentially presents the key elements of the project, including the financial situation, the infrastructure used and the target market. By referring to this management tool, the entrepreneur is able to find the appropriate answers to recurring questions on:

§ The type of product or service to be offered,

§ The prospecting method used

§ The production of added value.

To this end, he validates his ideas as the business plan is developed by following this matrix. However, be aware that the latter is not the only tool available on the market. Other tools can be associated with it, such as the SWOT (Strengths, Weaknesses, Opportunities, Threats) which helps to carry out a diagnosis before the creation of the company. Such an assembly allows the entrepreneur to get a real idea of the product to be launched, the target clientele, the means necessary to launch the product and the income to be collected.

If you do not yet have a precise idea of the activity you can practice, the Business Model Canvas can concretely direct you towards products or services with high added value in your region or in the field where you wish to practice. If you plan to open a consulting activity, for example, it helps you consider the feasibility of your project, taking into account the customers you can find in your region and your budget. In this way, you can determine whether you have the possibility of practically opening a large agency or limiting yourself.

If you hesitate between practicing one or more activities following the same business model, the Business Plan Canvas is your best ally to make the best decision.

b. The strategic blocks of the Business Plan Canvas

In all, this management tool is made up of nine strategic blocks.

§ The different types of customers (customers segments) : there are various customer profiles. As a result, the approach changes from one client to another. The same goes for the marketing actions to be undertaken and the determination of prices. It is therefore necessary to develop a matrix for each profile. For example, a computer equipment store may have photographers, computer scientists, workers who travel frequently or the elderly as customers. If computer scientists and professional photographers demand high-end equipment, this is certainly not the case for the elderly. Workers on the go, on the other hand, are looking for tools that are both functional and practical for their travels.

§Value proposition: it is this information that drives customers to consume the product or service offered. It is determined based on usefulness, benefits and value compared to that of the competition. For example, a made-to-measure garment is more suited to the customer’s tastes compared to ready-to-wear since the latter has been entirely designed according to the customer’s wishes. This advantage is the main asset of fashion houses and independent designers.

§ The distribution of the product (Channels): it essentially includes the distribution channel. The latter is defined as the way deployed to facilitate access to the product by the customer. For example, you can have a digital channel (online, social media), but you can also play with a physical workfoce (integrated or externalized) or with offline advertising.

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§ Customers relationships : to enhance a project, it is necessary to determine how you intend to retain your customers and what your strategies are for this purpose. Proximity to customers plays a strategic role in the evolution of the company, hence the usefulness of strengthening this emerging relationship with the help of quality products and services. For example, if you decide to open a website to publicize your business, make sure to establish permanent assistance there and offer Internet users the possibility of communicating with you through social networks.

§ Key revenues: each customer segment generates revenue contributing to the establishment of the value of the company. The question arises above all at the level of the costs which can vary according to the resources necessary to launch the activity. For an online sales business, for example, the entrepreneur can offer a 10% discount for the purchase of two items on his platform. In this way, he retains his customers while boosting the value of his business, without losing his profits.

§ Key activities: these include the tasks that primarily contribute to the proper functioning of your business and affect all products and services offered. For an e-commerce site, for example, it can be Community Management on social networks, which consists of making the company and its services better known.

§ Key resources: they involve human, financial, real estate and furniture, among others. To set up your business, you will need a few employees to help you with your tasks, a budget to buy all the equipment you need and a place to practice your activity.

§ Key Partners: the choice of a good partner is included in the Business Model Canvas. This action consists of selecting strategic partners who can provide various advantages, such as a communication agency for better visibility, a supplier or key distributors.

§ Costs: by listing all the resources needed for your project, determine the priority and most significant costs. Establish a price range for this purpose. More often than not, opening a website can be expensive since this step involves the development and optimization of your site. Next comes the budget for communication, marketing and human resources.

In summary

Your business model canvas is structured around 9 boxes. They allow you to get an overview of your project. This tool is useful at all stages of your business, whether at the idea stage, to guide you, but also the day you want to sell your business, to allow you to visualize your strengths and also your weaknesses.

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