A step by step Fill in the Business Model Canvas (BMC) as Guide to Building Powerful and Impactful Startup

Business Model Canvas (BMC) is a diagram initiated by Mr. Alexander Osterwalder and his professor Mr. Yves Pigneur at the University of Lausanne. With hope to replace the cumbersome business plans.

So, why we must start business plan using BMC?

The answer is not.

Not all businesses planned using BMC. Not merely, some big companies well known in this twenty-first century have not started the business using BMC Method while planning. But in the fact, they exist to this day.

Meanwhile, BMC is a simple way to transform your ideas into business plan and more feasible to execute either hiring people with business expertise and/or MBA graduates to planning yours. In other words, if you read all of this journal, I can ensure you could successful planning your business to be more actionable.

I resumed some reasons why BMC still “counts” in my desk to planning business:

1. BMC is a tool to quickly and easily define and communicate a business idea or concept.
2. To quickly draw a picture of what the idea entails.
3. It allows us to get an understanding of your business and to go through the process of making connections between what your idea is and how to make it into a business.
4. It looks at what kinds of customer decisions influence the use of your systems.
5. It allows everyone to get a clear idea of what the business will likely be.
6. Easily identify strengths, gaps, weaknesses, opportunities, and potential competitive threats.

The Business Model Canvas is basically constructed by 9 (nine) blocks with interconnection by each other. In my seminars I have done, I regularly converting BMC similar like Theatre Show. There are visitors (customers) in the tribune. There is a podium where the show is shown, on the left side there is a backstage where the crew working together for the show. Without the left and the right side, the show itself was never conducted.

For further explanation about the BMC analogy as a theatre show, you may check the video through this link.

Series of blocks in the BMC, represents important aspects of the business plan. It is Offering, Customers, Infrastructure, & Finance fields.

Offering in the business is exchange activities between two-side roles (between customers and your business itself). The Offering aspect is actualized in the middle block of the BMC, (1) Value Proposition (if we used the previous analogy like the theatre show, value proposition means the show itself).

Here are a few fundamental questions to help you define the Value Proposition for your business plan:

• What is the problem I am solving?
• Why would someone want to have this problem solved?
• What is the underlying motivator for this problem?

The best way to produce valuable value propositions for your business is deeply understanding the position of your product/service to solve the problem with Maslow’s Hierarchy of Needs.

It is similar if your business delivers to help another business. You should be positioning yours as the primary key for them to fulfill the needs of their customers.

Value Proposition is the show that fulfilling the desire, needs, even the needs of the customer/your visitor. And for sure, you gaining revenue from your show.

The next aspect after you successfully defined your business value proposition ( the theatre show) is the audience or customer itself. The blocks in BMC with function to mapping the customers actualized in the 3 (three) blocks on the right side as shown in the figure below:

Let’s breakdown block by block:

(2) Customer Segments;

In this block, you will be direct to divide the customer into specific and small communities based on their ages, gender, interests, and/or their behavior and habits.

Things to consider when determining your customer segments:

• Who are we solving the problem for?
• Who are the people that will value my value proposition?
• Are they another business?
• If so, what are the characteristic of those businesses?
• Or, are they other people?
• Does my value proposition appeal to men/women or both?
• Does it appeal to young adults aged 20 to 30 or teenagers?
• What are the characteristics of the people who are looking for my value proposition?

Another aspect you should consider and understand is the market size. By understanding how big your customer is in the customer segment, it will help you from the micro and macro perspective.

A great place to start understanding your customer is to create customer personas for every Customer Segment.

Here are some examples in the customer segments field based on some business models to be consider:

• Mass Market
• Global Retailers
• Multi-sided platforms

As an addition, you may read Persona Development Technique to help you define customer behavior. You may visit my own journal about this topic on my profile.

(3) Customer Relationships

After we know the show (or the Value Proposition), and fully fill in the customer’s behavior in the Customer Segments field. We should be understanding what kind of interactions between yours (business) and the customer.

Customer Relationship is defined as how a business interacts with its customers. Is it directly met by personal? via telephone? Email? Or fully online, so your interactions with customers will be fully online?

Things to consider when filling in the Customer Relationship block are:

• Does my business involve direct interactions to communicate?
• Does my customer should be taught by directly communicating?
• Does your business running online?
• Does your business involve mass-public at one-time?

As an example, here are some Customer Relationships for guidance:

• In-person (one-to-one)
• Third-party contractors
• Online
• Events (one-to-many)
• Phone

A great way before fill in the block is by mapping customer interactions and behavior for your business. This will help you clarify the points of engagement between you and your customer and the modes used to relate to your customers. This will also help you start to define your operations as a business and also help you identify opportunities for automation.

(4) Channels

The next block on the right side is Channels. Channels are defined as how your customer understands your business (value propositions) offer, by taking the role important in the selling cycle. Channels basically have strong relations with your marketing plan.

Some questions to ask for fill in this block are:

• How are we going to tell our customer segment about our value proposition?
• Where are our customers?
• Are they on social media?
• Are they driving their car and listening to the radio?
• Are they at an event or conference?
• Do they watch TV at 7 pm on a Friday night?

Here are few examples from another business models about Channels block:

• Social media
• Public speaking
• Electronic mail (email marketing)
• Networking
• SEM (Search Engine Marketing)
• SEO (Search Engine Optimisation)
• Engineering as marketing
• Viral marketing
• Targeting blogs
• Sales and promotions for commissions
• Affiliates
• Existing platforms
• PR
• Unconventional PR
• Social advertising
• Trade shows
• Content marketing
• Community building
• Offline advertising (billboards, TV, radio)

By understanding how you reach your customer, it will be directly impactful to your business cycle in the future.

If you had finished filling in three blocks on the right side of the BMC, I can summarize you are half-way in your business plan. Congratulations!

After you have the Value Propositions ( the show in your theatre) and customers who will enjoy yours (the Customers Filed on the BMC). Now, we could move to the left side containing the infrastructure to achieve your value proposition.

The Infrastructure you should build and not show to your customers. The infrastructure behind the scene, behind the curtain of your theatre show.

What kind of this field? Generally it comparison into three categories, it is (5) Key Activities; (6) Key Resources; (7) Partner networks.

Let’s Conquer one by one!

(5) Key Activities

Key activities are the primary activities of your business (theatre show) to fulfilling the Value Proposition (the big target of your show).

You can start by answering several questions below to fill in the block:

• What activities does the business undertake in achieving the value proposition for the customer?
• What is the resource used?
• Time?
• Expertise?
• Distribution of product?
• Technical development?
• Strategy?
• Offer resources (human/physical)?
• What actions does it take you and/or your staff to achieve value exchange?

Here are few examples of Key Activities from several business models you may follow:

• Consulting
• Designing
• Web Development
• Baking
• Driving
• Shovelling

(6) Key Resources

To fully support your business activities, you should determine the resources needed for yours (business).

Or, if you were more familiar with the analogy of Theatre Show like the beginning of this journal. So, the Key Resources is the list of attributes used by your performances.

Here are some examples of Key Resources:

• Office space
• Computers
• Hosting
• People (Staff)
• Internet connection
• Car
• Bike
• Oven
• Electricity
• Car Parts

(7) Partner Network/Key Network

The next block you should fill in on the right side of the BMC is the Kay Partners/Partner Network. For this block, you should think about the feasibility or potential to collaborate with any stakeholders/partners to achieve your goals on the show or your value propositions.

To be more familiar, I will bring back you to the analogy of the theatre show. In the previous point, you have finished the list of needs/resources. So in this time, you will be asked to think about the partner and stakeholder to join yours. Those partners such as Logistic, man-power, or any.

Here are examples of the Key Partner to guide you fill in the block:

• Manufacturer
• International Supply Chain
• App store
• Store
• Developers
• Publishers
• Music, TV, and Movie Industries
• Providers
• Retailers
• Star athletes, artists, actors

Now, both blocks on the left and right sides fill out perfectly. Leaving two small-medium blocks at the bottom of Canvas. Two blocks fill in, your great show is ready to show!

Two blocks at the bottom of the BMC were collected as the financial blocks. Containing (8) Cost Structure and (9) Revenue Streams. By completing these 2 blocks, all aspects of running a business were completed.

(8) Cost Structure

As for how business going on, you should create the financial roadmap to run your business. This is one of the crucial aspects, even more, you have planned to do business with support from the bank.

For completing this block, you can start by asking several questions about your business idea:

• How much does it cost to achieve my business key activities?
• What is the cost of my key resources and key partnerships?
• How much does it cost to achieve the value proposition for my customers/users?
• Are there additional costs to running a business?
• Legal?
• Insurance?
• What is the cost of my business?
• It is important also to place a monetary value on your time as a cost.
• How much would it cost you to hire you?
• What is the opportunity cost of running your business?

As an example, here is cost structures example from another previous business model:

• Cost driven
• Economies of scale
• Cost of sales -$1.7B
• Research & Development — $23.8M
• Promotion & Advertising — $395.6M
• Selling & Administrative — $494.3M

(9) Revenue Streams

Before continuing, You should know…, To be honest.. this is one of my interests fields, in every stage of the business plan I have done.

This is the part where you will transform or convert your Value Propositions (the Theatre show) into purely financial income to your bank account.

Gaining money, to discover life. :`)

But, one of the important things, you should consider is the price you will offer from your Value Proposition to fit in with the problem you solved. Simply, the right price for the right product or services you offer.

You know, this doesn’t mean I stated iPhone or any Apple products are too expensive. You just gonna bring me to the unlimited debates between apple fan base and versus.

Here are some typical revenues stream models for your references:

Finally, your business idea was perfectly filled out in the BMC, you are half-way through your journey and your dream to become an entrepreneur. It is time for you to start developing it. If you feel busy by scrolling this journal to finish your BMC, you may try another option I prepared for you below:

• TypeForm
• If you willing the printout of the BMC, you may download the files here

And as the conclusion, the great business is the business with direct execution. There are a lot of people has a great idea/concept, just some of them start to doing it.

— Stay inquisitive n Keep innovating! 🚀

Originally published at https://karyadesa.com.