A business model should never be confused with a business plan. Whereas the business plan details strategy and a company’s expected financial performance, a business model seeks to develop how that company captures and delivers value. A key component of the business model is its customer-centric value proposition, which should entice investors to invest.
A Visual Representation of Your Business Model
A business model canvas is a visualization of what your online business model is. Often referred to as a BMC, the business model canvas seeks to map out the relationship between business activities and your value proposition. It’s usually formatted with boxes aligned in such a way that key components of your business model are highlighted within those boxes.
Perhaps a simpler way of explaining a BMC would be that it’s a mapped outline of how you can offer value to your customers as well as your relationship with them. It will also delineate the area of cost vs. revenue, each in its respective boxes. Again, simply put, it’s the company’s outline or plan for realizing a profit. If you are seeking to attract investment from third parties, a business model canvas will be a vital tool in the process.
The Importance of the Value Proposition
For just a moment, let’s backtrack to something that has been mentioned above. That would be the value proposition. Bearing in mind that a business model canvas seeks to highlight key points within the business model that lead to profitability, the value proposition is how that profit will be made. It deals heavily on the digital marketing end and building a relationship between the brand and consumers. A value proposition then is rather a statement of intent aimed at customer relationships, explaining how a company operates, what it stands for, and why customers would want to do business with them.
It takes marketing to bring this realization to customers. Can you see now how the business model canvas relies heavily on your value proposition? Remember, your business model is all about the relationship between customers and profitability through cost vs. revenue. Your value proposition brings profitability to the forefront and your business model canvas sets that out in simple graphic visualizations to make the key points of the business model easy to assimilate.
Key Headers in Your Business Model Canvas
Since a business model is a specific resource to each company based on their particular brand, products, and customer base, every business model canvas will be specific to that organization. However, there are commonalities that most business model canvases include. These would be:
- The visual structure of the business model
- A strong focus on your value proposition
- Can be completed quickly for iteration
- Provides an understanding of your business operations
- Provides a sharable document
These are key elements included in most BMCs, no matter how large or small the company or what industry that business is in.
Working with a Business Model Canvas Template
Graphically, a business model canvas is typically laid out in boxes, each with a key point header. Depending on the nature of the business, some have six or seven boxes while others have nine. It really all depends on the business model and value proposition. Each business goes about bringing in revenue by offering value to customers, but obviously, not all will do so in the same ways.
For this reason, working with a template enables you to layout your business model canvas so that it fits the elements of your business model. However, it should also be mentioned that a business model and the subsequent business model canvas can evolve and change over time. Templates make it so much easier to make these edits, additions, and/or subtractions where needed.
Welcome to the Digital World
Above we mentioned that a good business model canvas is easily sharable. This presumed that it would be in digital format. While you can easily map out hard copies for a small office in a small business, if you are working with large teams or seeking investors, digital format is best.
Whether you post it to your company website or share it via safe file sharing providers or through email, it is easily shared quickly as the need arises. Bear in mind that this will be something you want potential investors to see because they are tuned into the profitability of any organization in which they may invest in. The digital format enables you to share your BMC quickly and edit it over time just as quickly. Welcome to the digital world.