The Business Model Canvas

24/01/2018

Business Model Canvas is a strategic management and lean startup template for developing new existing business models. It is a visual chart describing a firm or product’s value proposition, structure, customers, and finances. It assists businesses in aligning their activities by illustrating potential trade-offs.

The idea behind the plan is split up into 4 sections of importance.
The first important part of the plan is the infrastructure of the business.
Key Activities are the most important activities in executing a company’s value proposition. An example for Raw Space, our co-working space, would be creating an efficient event system for members to attend appropriate workshops. This could be by using key resources that are necessary to create value for the customer. They are considered an asset to a company, which are needed in order to sustain and support the business. These resources could be human, financial, physical and intellectual.
Partner networking is another important part of the business model in order to optimize operations and reduce risks of a business model.
Business alliances also can be considered through joint ventures, alliances between non-competitors or competitors.

The next main key part in the business model is the offering.
Value propositions are the collection of products and services a business offers to meet the needs of its customers. A company’s value proposition is what distinguishes itself from its competitors and makes them or their product unique and desirable. The value proposition can be judged by various different characteristics such as how new it is, performance of the product or service, design, the brand and its status, price, cost reduction, risk reduction, and more.
The value propositions may be quantitative where you can measure accurately the price and efficiency.
However they can also be qualitative which is harder to judge but for example the overall customer experience and outcome of this experience with you.

Another vital part of the plan is the customer.
Firstly the customer segment, as to build an effective business model, a company must identify which customers it tries to serve, help or provide for. Various sets of customers can be segmented based on the different needs and attributes to ensure appropriate implementation of corporate strategy meets the characteristics of selected group of clients.
Secondly the channels of which a company can deliver its value proposition to its targeted customers through different channels is important. Effective channels will distribute a company’s value proposition in the fastest, most efficient and cost effective. An organisation can reach its clients either through its own channels for example a shop window, partner channels from major distributors, or ideally a combination of both.

Customer relationships are one of the most important things to consider as it can help to secure long lasting and loyal customers. To ensure the survival and success of any businesses, companies must identify the type of relationship they want to create with their customer and then maintain this relationship.

The last but definitely not the least important thing to consider, and often one of the main worries, concerns or hold backs for a business starting is its finances.
Starting with cost Structure which describes the most important consequences while operating under different business models.
Businesses can either be ‘Cost-Driven’ whereby the business model focuses on minimizing all costs and to efficiently make money from its products. An example of this would be Primark where by they aim for low cost of manufacture and therefore sell their products in high quantities.
Alternatively a business may be Value-Driven of which their plan is less concerned with cost, and rather the values they hold, quality of their products and reputation. This business model focuses on creating value for their products and services such as luxury brands such as Gucci, Louis Vuitton, Rolex or Balenciaga.

It is also important to consider revenue streams of which the way a company or proposed business makes income from each customer segment whether it be Asset Sale, Usage Fee, Subscription Fees (which Raw Space would consider), Lending, Leasing and Renting, Licensing or Advertising.

Overall the business model canvas allows one to compare all aspects of their business or proposed business in a simple and easily read format making it easier to plan, action and succeed.

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