Business Model Canvas for planning

Great, let’s invest in this idea!, said Sir Richard Branson to the project that Brett Godfrey proposes to open an airline in Australia. The company will become Virgin Airline Australia which will invoice billions. Brett convinces Sir Brandson with a beer coaster, where he has written the main points of his idea of him.

Richard Branson Virgin Airline Moss Cristiano Bellucci

The Business Model Canvas encompasses all the fundamental elements of a business plan on one page. In this way, we can convince investors of the goodness of our idea or visualize all the essential aspects of our business in one sheet.

Cosa e‘ il Business Model Canvas

The Business Model Canvas is a strategic framework to illustrate all the fundamental elements of a business.

The Business Model Canvas can be used both to map an existing business and to capture the characteristic aspects of an innovative idea.

The components

The Business Model Canvas consists of 9 components grouped into 4 areas.

The Business Model Canvas Cristiano Bellucci

The 4 areas are:

  • Value proposition
  • Production
  • Client
  • Money

The only area that contains only one element is the first, value proposition. Value proposition refers to what value the business generates for customers. It is the heart of the Business Model Canvas and specifies what customers can buy that will give them greater value than they have.

On the left side of the framework, there is the production area. Production consists of 3 elements:

  • Resources
  • Activities
  • Partners

On the right side, the customer area is made up of 3 elements:

  • Clients
  • Channels
  • Relationships

At the bottom is the profit area. The profit comprises of 2 elements that give the profit:

  • Revenue
  • Cost

How to fill a Business Model Canvas

There is a way to build this framework, which focuses on customers and their value. Aspects of production and revenues are the consequence of the value generated for customers.

The first phase of the Canvas Business Model relates to customers and we try to be as specific as possible, finding a niche of customers to serve and clarifying what their problems are. Based on the customers we can define the value to give them. After that, it is the turn of the channels, how we are going to distribute our product or service to customers. And what relationship do we want to have with them, if we want to hold a direct interview, delegate it or try to keep contact to a minimum.

The result of the value we generate for customers translates into revenues.

We can move to the left side of the framework. What are the resources that we can use to realize our idea? Then what are the main activities that will make customers like our idea? Finally, which partners do we need to involve for production? This is especially true in case we want to delegate part of the production to others.

Adding all these aspects we will have the costs.

Richard Branson Virgin Airline Cristiano Bellucci

Experiences with the Business Model Canvas

When I attended the MBA, Masters of Business Administration, in the UK, we did not use the Business Model Canvas. We had to work hard to find detailed information. In recent years, even Harvard University has been using this framework to create business plans.

Businesses shifted from long and detailed business plans towards more compact frameworks. A lot depends on what you want to achieve and the culture of the company. Recently, startups and large companies prefer to have all the fundamental aspects of a business in a central point, visually. Specialised teams can then work on the details. Otherwise, you can use the Business Model Canvas in the beginning, to create the idea. At the beginning of a project, you cannot have all the details. It is only by developing the concept and interacting with customers and suppliers that you can understand the details. You can analise these aspects at a later stage. Only if these aspects have an impact on the overall plan, then they can be reported in the Business Model Canvas.

The best ideas don’t always need to have detailed financial projections and complicated business proposals behind them. Sometimes they come fully formed on the back of a beer mat… If it can’t fit onto the back of an envelope, it’s probably a bad idea. Keep it short, sharp and picture-perfect.Sir Richard Branson

Business Model Canvas in action!

Now is the time for action, it’s your turn! Print the Business Model Canvas from the image above or take a piece of paper and make the corresponding boxes. Whether you want to start a new business, a new product or service, or you want to verify your current business, write all the elements of the template. When you have finished, check if all parts are clear. Are there any areas that need to be analysed further? Are there any items that need to be discussed with customers or partners? Having all the business in one sheet, does it feel like all the elements are converging to generate value for customers? Can you optimise any areas?

Already with this action, you will have more control of your business and you will have seen if it is already mature or if there are areas that can be improved.

Conclusion

The Business Model Canvas is a useful framework for developing an idea and understanding if it can work. It is also useful for mapping the unique aspects of an existing business and understanding how to improve it.

If we want to aim to innovate, create new businesses, understand if a business can work or not or we want to optimize an existing business, the Business Model Canvas is the right tool to consider all the fundamental aspects.

Leave a Comment