Originally designed by Alexander Osterwalder of Strategyzer, the business model canvas is a brilliant tool to help you understand how to create or write a business model in a very straightforward and simple way, and if you're anything like me then the visual layout of it is so helpful for your memory!
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The business model canvas is comprised of 9 different sections each of which are essential building blocks to help you figure out exactly what your services or products are, who your clients are, how you're going to let those clients know about them and much more.
I will explain what each of these sections are and then go through a simple example for you below:
Section 1: Customer segments
These are all the people, groups of people or organisations that you (your business) are creating value for. These can be anyone from a single user or client to a big corporation who might be using your services or buying your products.
Section 2: Value Proposition
For each customer segment, you have a specific value proposition. Simply put, these are the bundles of products or services your business provides. This way of looking at it helps you figure out how your product or service can be a solution to a client or customers problem or 'pain'.
Section 3: Channels
Channels describe which ways your customers can be reached to let them know about and/or deliver your value to them. You will need to consider which channels your customers can be reached through and which ones will work best for each particular customer segment. There may be no point using social media if your customers are of an older generation that generally don't use FaceBook etc. This emphasises the importance of knowing your customer segment well.
Section 4: Customer Relationship
Customer relationships show you what kind of relationship you are establishing with your customers. What sort of relationship do they expect you to establish? For example are they personal face to face relationships or will everything be done impersonally via website bookings and exterior delivery services?
Section 5: Revenue Streams
Revenue streams make clear to you where you are creating value and therefore where your income is coming from. In other words, what value are your customers willing to pay?
Section 6: Key Resources
Key resources show which things are indispensable in your business. What assets do you require to make sure you are successfully creating, delivering and capturing value? This the infrastructure of your business.
Section 7: Key Activities
The key activities show what things you really need to do to be able to perform well, simple really isn't it?!
Section 8: Key Partners
These are who can help you build your business successfully. You won't necessarily own all key resources or be able to do all the key activities yourself so these key partners are people/software/businesses who can help you do those. Basically outsourcing!
Section 9: Cost Structure
Last but not least cost structure. Once you know all the previous sections, for example, the channels you're using, your key activities and resources and also who your key partners are, you'll then know what your costs are and can write a clear cost structure without missing anything out.
Ok so now that you know what the canvas looks like and know what each section means, let's move on to the first real-life example! Rather than thinking about all the products and services I provide in my business as a whole, we will just focus on one example, me as a wedding photographer. My value proposition for my couples is that I provide them with a luxury photo album full of beautiful photographs of their day. This is something that they will definitely value and something that couples desire, so I know it is a good service and product:
Customer Segement Example:
So, for this value proposition who is my particular customer segment? For this particular value proposition of a 'Beautiful Luxury Wedding Album' full of photos that i have taken of their special day, my customer segment will be engaged couples who aren't on a tight budget! They will be people who appreciate and desire luxury and the general demographic will usually be a younger generation, generally between the ages of 20 - 40. Obviously, there are always exceptions to the rule! You can get married at 18 or even at 78, but the majority of my customer segment will be within that age bracket.
Presuming my target market or 'customer segment' are younger rather than older, they will probably be using the internet to find me! So making sure my google ratings are up, I have an accessible, easy to navigate website and flourishing social media pages will really help as they will be the main 'touchpoints' that this customer segment will be able to find my value proposition or service/product. Another way I could access this particular customer segment in this industry is by being on a 'recommended vendors' list at some of the more luxury wedding venues nearby. So I will add those to my channels section below:
Customer Relationships Example:
After you've figured out who your customers are, what value you're going to provide them with, and then how they're going to find or discover that value, you can decide what sort of relationship you're going to have with your customers or clients. As a wedding photographer, providing them with a luxury wedding album that captures the memories of their big day, I would have quite a personal relationship with them as they are of course inviting me to capture one of the biggest, most important days of their lives! I don't want to be a stranger in some far off digital world as I want them to feel as comfortable as possible when it comes to them being in front of my camera. This means I will schedule in either video calls and/or actual in-person chats to go through their day and figure out how I can serve them best, which in turn gives them a chance to get to know me in quite a personal way! As they are after a luxury experience I will also make sure I roll out the red carpet and go the extra mile to make sure I can make their day and their album something to treasure.
Revenue Streams Example:
If you were doing a more detailed business model canvas you would list off all the different ways you receive income in this section. These are things that customers pay for, whether it's products or services. For this example, it's very easy the revenue stream is the payment that I receive for the wedding photography and the wedding album.
Key Resources Example:
Your key resources are all the things that you need to get your business to run smoothly and efficiently. So, to advertise, be found, communicate with my client, capture my client's wedding on my camera and then create a beautiful album for them I will need: A fully working website, flourishing social media channels, Insurances, to protect my equipment and liability! Equipment e.g. camera's, lenses, tripod, lights etc.. Editing software and storage for the photos after their big day, album creation software and then some sort of delivery service like the post office! Within each of those sections, there are obviously smaller details like the packaging for the album etc but these are the main key resources. See it all written into the canvas below:
Key Activities example:
The key activities that will need to be completed well to achieve delivering the final service and product are: marketing, communicating with the client, physically photographing their wedding day, editing the photos, creating the album, printing it and delivering it.
Key Partners Example:
Your key partners are external people or services that help you achieve your end goal. For this example, I would outsource my website hosting (I can design my own website but need to pay a website provider to host it etc). I send my album design off to an external print/wedding album company and then, unless the clients lived on my road I will obviously need to use a delivery company to deliver the final product.
Cost Structure example:
The final and ninth section is cost structure, this is at the end because if you haven't figured out all the other sections first you're not going to truly know what all your costs are going to be. My costs for this example will be: Website hosting and domain costs, insurances, equipment e.g. cameras, lights etc, software costs, album printing, delivery and travel costs, which I've detailed below:
So there you have it! An easy way to test out your business ideas and see if they can become a reality! Remember, this can be an ever changing document that as you try different things and come up with new ways to expand your business you can add, take away and change your business model canvas to suit.
Later on this month I will be releasing a blog going into more detail on the first two points 'Value Proposition' and 'Customer Segments' so make sure you join the Georgia-Beth Photography family so you don't miss out on that!
See the videos below for more explanation of how these work:
If you have any more questions don't hesitate to pop me a message on social media or comment below and I will get back to as soon as possible.
I'm always cheering you on!