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Business Model Canvas: Explained with Examples

Got a new business idea, but don’t know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan? There is a one-page technique that can provide you the solution you are looking for, and that’s the business model canvas.

In this guide, you’ll have the Business Model Canvas explained, along with steps on how to create one. All business model canvas examples in the post can be edited online.

What is a Business Model Canvas

A business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page.   

The Business Model Canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It’s a one-page document containing nine boxes that represent different fundamental elements of a business.  

The business model canvas beats the traditional business plan that spans across several pages, by offering a much easier way to understand the different core elements of a business.

The right side of the canvas focuses on the customer or the market (external factors that are not under your control) while the left side of the canvas focuses on the business (internal factors that are mostly under your control). In the middle, you get the value propositions that represent the exchange of value between your business and your customers.

The business model canvas was originally developed by Alex Osterwalder and Yves Pigneur and introduced in their book ‘ Business Model Generation ’ as a visual framework for planning, developing and testing the business model(s) of an organization.

What Are the Benefits of Using a Business Model Canvas

Why do you need a business model canvas? The answer is simple. The business model canvas offers several benefits for businesses and entrepreneurs. It is a valuable tool and provides a visual and structured approach to designing, analyzing, optimizing, and communicating your business model.

• The business model canvas provides a comprehensive overview of a business model’s essential aspects. The BMC provides a quick outline of the business model and is devoid of unnecessary details compared to the traditional business plan.
• The comprehensive overview also ensures that the team considers all required components of their business model and can identify gaps or areas for improvement.
• The BMC allows the team to have a holistic and shared understanding of the business model while enabling them to align and collaborate effectively.
• The visual nature of the business model canvas makes it easier to refer to and understand by anyone. The business model canvas combines all vital business model elements in a single, easy-to-understand canvas.
• The BMC can be considered a strategic analysis tool as it enables you to examine a business model’s strengths, weaknesses, opportunities, and challenges.
• It’s easier to edit and can be easily shared with employees and stakeholders.
• The BMC is a flexible and adaptable tool that can be updated and revised as the business evolves. Keep your business agile and responsive to market changes and customer needs.
• The business model canvas can be used by large corporations and startups with just a few employees.
• The business model canvas effectively facilitates discussions among team members, investors, partners, customers, and other stakeholders. It clarifies how different aspects of the business are related and ensures a shared understanding of the business model.
• You can use a BMC template to facilitate discussions and guide brainstorming brainstorming sessions to generate insights and ideas to refine the business model and make strategic decisions.
• The BMC is action-oriented, encouraging businesses to identify activities and initiatives to improve their business model to drive business growth.
• A business model canvas provides a structured approach for businesses to explore possibilities and experiment with new ideas. This encourages creativity and innovation, which in turn encourages team members to think outside the box.

How to Make a Business Model Canvas

Here’s a step-by-step guide on how to create a business canvas model.

Step 1: Gather your team and the required material Bring a team or a group of people from your company together to collaborate. It is better to bring in a diverse group to cover all aspects.

While you can create a business model canvas with whiteboards, sticky notes, and markers, using an online platform like Creately will ensure that your work can be accessed from anywhere, anytime. Create a workspace in Creately and provide editing/reviewing permission to start.

Step 2: Set the context Clearly define the purpose and the scope of what you want to map out and visualize in the business model canvas. Narrow down the business or idea you want to analyze with the team and its context.

Step 3: Draw the canvas Divide the workspace into nine equal sections to represent the nine building blocks of the business model canvas.

Step 4: Identify the key building blocks Label each section as customer segment, value proposition, channels, customer relationships, revenue streams, key resources, key activities, and cost structure.

Step 5: Fill in the canvas Work with your team to fill in each section of the canvas with relevant information. You can use data, keywords, diagrams, and more to represent ideas and concepts.

Step 6: Analyze and iterate Once your team has filled in the business model canvas, analyze the relationships to identify strengths, weaknesses, opportunities, and challenges. Discuss improvements and make adjustments as necessary.

Step 7: Finalize Finalize and use the model as a visual reference to communicate and align your business model with stakeholders. You can also use the model to make informed and strategic decisions and guide your business.

What are the Key Building Blocks of the Business Model Canvas?

There are nine building blocks in the business model canvas and they are:

Customer Segments

Customer relationships, revenue streams, key activities, key resources, key partners, cost structure.

• Value Proposition

When filling out a Business Model Canvas, you will brainstorm and conduct research on each of these elements. The data you collect can be placed in each relevant section of the canvas. So have a business model canvas ready when you start the exercise.  

Let’s look into what the 9 components of the BMC are in more detail.

These are the groups of people or companies that you are trying to target and sell your product or service to.

Segmenting your customers based on similarities such as geographical area, gender, age, behaviors, interests, etc. gives you the opportunity to better serve their needs, specifically by customizing the solution you are providing them.

After a thorough analysis of your customer segments, you can determine who you should serve and ignore. Then create customer personas for each of the selected customer segments.

There are different customer segments a business model can target and they are;

• Mass market: A business model that focuses on mass markets doesn’t group its customers into segments. Instead, it focuses on the general population or a large group of people with similar needs. For example, a product like a phone.  
• Niche market: Here the focus is centered on a specific group of people with unique needs and traits. Here the value propositions, distribution channels, and customer relationships should be customized to meet their specific requirements. An example would be buyers of sports shoes.
• Segmented: Based on slightly different needs, there could be different groups within the main customer segment. Accordingly, you can create different value propositions, distribution channels, etc. to meet the different needs of these segments.
• Diversified: A diversified market segment includes customers with very different needs.
• Multi-sided markets: this includes interdependent customer segments. For example, a credit card company caters to both their credit card holders as well as merchants who accept those cards.

Use STP Model templates for segmenting your market and developing ideal marketing campaigns

Visualize, assess, and update your business model. Collaborate on brainstorming with your team on your next business model innovation.

In this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company.

There are several types of customer relationships

• Personal assistance: you interact with the customer in person or by email, through phone call or other means.
• Dedicated personal assistance: you assign a dedicated customer representative to an individual customer.  
• Self-service: here you maintain no relationship with the customer, but provides what the customer needs to help themselves.
• Automated services: this includes automated processes or machinery that helps customers perform services themselves.
• Communities: these include online communities where customers can help each other solve their own problems with regard to the product or service.
• Co-creation: here the company allows the customer to get involved in the designing or development of the product. For example, YouTube has given its users the opportunity to create content for its audience.

You can understand the kind of relationship your customer has with your company through a customer journey map . It will help you identify the different stages your customers go through when interacting with your company. And it will help you make sense of how to acquire, retain and grow your customers.

This block is to describe how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company.

Channels play a role in raising awareness of your product or service among customers and delivering your value propositions to them. Channels can also be used to allow customers the avenue to buy products or services and offer post-purchase support.

There are two types of channels

• Owned channels: company website, social media sites, in-house sales, etc.
• Partner channels: partner-owned websites, wholesale distribution, retail, etc.

Revenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions.  

A revenue stream can belong to one of the following revenue models,

• Transaction-based revenue: made from customers who make a one-time payment
• Recurring revenue: made from ongoing payments for continuing services or post-sale services

There are several ways you can generate revenue from

• Asset sales: by selling the rights of ownership for a product to a buyer
• Usage fee: by charging the customer for the use of its product or service
• Subscription fee: by charging the customer for using its product regularly and consistently
• Lending/ leasing/ renting: the customer pays to get exclusive rights to use an asset for a fixed period of time
• Licensing: customer pays to get permission to use the company’s intellectual property
• Brokerage fees: revenue generated by acting as an intermediary between two or more parties
• Advertising: by charging the customer to advertise a product, service or brand using company platforms

What are the activities/ tasks that need to be completed to fulfill your business purpose? In this section, you should list down all the key activities you need to do to make your business model work.

These key activities should focus on fulfilling its value proposition, reaching customer segments and maintaining customer relationships, and generating revenue.

There are 3 categories of key activities;

• Production: designing, manufacturing and delivering a product in significant quantities and/ or of superior quality.
• Problem-solving: finding new solutions to individual problems faced by customers.
• Platform/ network: Creating and maintaining platforms. For example, Microsoft provides a reliable operating system to support third-party software products.

This is where you list down which key resources or the main inputs you need to carry out your key activities in order to create your value proposition.

There are several types of key resources and they are

• Human (employees)
• Financial (cash, lines of credit, etc.)
• Intellectual (brand, patents, IP, copyright)
• Physical (equipment, inventory, buildings)

Key partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged in oder to reduce risks and acquire resources.

Types of partnerships are

• Strategic alliance: partnership between non-competitors
• Coopetition: strategic partnership between partners
• Joint ventures: partners developing a new business
• Buyer-supplier relationships: ensure reliable supplies

In this block, you identify all the costs associated with operating your business model.

You’ll need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners.  

Businesses can either be cost-driven (focuses on minimizing costs whenever possible) and value-driven (focuses on providing maximum value to the customer).

Value Propositions

This is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment.

A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes.

Value propositions can be either quantitative (price and speed of service) or qualitative (customer experience or design).

What to Avoid When Creating a Business Model Canvas

One thing to remember when creating a business model canvas is that it is a concise and focused document. It is designed to capture key elements of a business model and, as such, should not include detailed information. Some of the items to avoid include,

• Detailed financial projections such as revenue forecasts, cost breakdowns, and financial ratios. Revenue streams and cost structure should be represented at a high level, providing an overview rather than detailed projections.
• Detailed operational processes such as standard operating procedures of a business. The BMC focuses on the strategic and conceptual aspects.
• Comprehensive marketing or sales strategies. The business model canvas does not provide space for comprehensive marketing or sales strategies. These should be included in marketing or sales plans, which allow you to expand into more details.
• Legal or regulatory details such as intellectual property, licensing agreements, or compliance requirements. As these require more detailed and specialized attention, they are better suited to be addressed in separate legal or regulatory documents.
• Long-term strategic goals or vision statements. While the canvas helps to align the business model with the overall strategy, it should focus on the immediate and tangible aspects.
• Irrelevant or unnecessary information that does not directly relate to the business model. Including extra or unnecessary information can clutter the BMC and make it less effective in communicating the core elements.

What Are Your Thoughts on the Business Model Canvas?

Once you have completed your business model canvas, you can share it with your organization and stakeholders and get their feedback as well. The business model canvas is a living document, therefore after completing it you need to revisit and ensure that it is relevant, updated and accurate.

What best practices do you follow when creating a business model canvas? Do share your tips with us in the comments section below.

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FAQs About the Business Model Canvas

• Use clear and concise language
• Use visual-aids
• Customize for your audience
• Highlight key insights
• Be open to feedback and discussion

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Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

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The 20 Minute Business Plan: Business Model Canvas Made Easy

Table of Contents

What’s the Business Model Canvas?

How do you get started, why use the business model canvas, when should you use the business model canvas, how do you use the canvas to facilitate alignment and focus, step 1 (of 10): customer segments, step 2 (of 10): value propositions, step 3 (of 10): channels, step 4 (of 10): customer relationships, step 5 (of 10): revenue streams, step 6 (of 10): key activities, step 7 (of 10): key resources, step 8 (of 10): key partnerships, step 9 (of 10): cost structure, step 10 (of 10): applications, analysis & next steps, example a: enable quiz (startup), example b: hvac in a hurry (enterprise), using the google doc’s/powerpoint template.

If you’re already familiar, you can skip to the next section, ‘ How do I get started ?’.

The Business Model Canvas (BMC) gives you the structure of a business plan without the overhead and the improvisation of a ‘back of the napkin’ sketch without  the fuzziness (and coffee rings).

Together these elements provide a pretty coherent view of a business’ key drivers–

• Customer Segments : Who are the customers? What do they think? See? Feel? Do?
• Value Propositions : What’s compelling about the proposition? Why do customers buy, use?
• Channels : How are these propositions promoted, sold and delivered? Why? Is it working?
• Customer Relationships : How do you interact with the customer through their ‘journey’?
• Revenue Streams : How does the business earn revenue from the value propositions?
• Key Activities : What uniquely strategic things does the business do to deliver its proposition?
• Key Resources : What unique strategic assets must the business have to compete?
• Key Partnerships : What can the company not do so it can focus on its Key Activities?
• Cost Structure : What are the business’ major cost drivers? How are they linked to revenue?

The Canvas is popular with entrepreneurs and intrapreneurs for business model innovation. Fundamentally, it delivers three things:

• Focus : Stripping away the 40+ pages of ‘stuff’ in a traditional business plan, I’ve seen users of the BMC improve their clarify and focus on what’s driving the business (and what’s non-core and getting in the way).
• Flexibility : It’s easier to facilitate alignment by tweaking the model and trying things (from a planning perspective) with something that’s sitting on a single page.
• Transparency: Your team will have a much easier time understanding your business model and be much more likely to buy in to your vision when it’s laid out on a single page.

The first time you engage with the canvas, I recommend printing it out or projecting it on a whiteboard and going to town (see below for a PDF). However, if you’re ready to put together something a little more formal (for distribution, presentation, etc.) here’s a Google App’s template you can copy or download as MSFT PowerPoint:

*Omnigraffle a popular diagramming program for the Mac. It has a fairly easy to use layering environment which you may find handy as you want to tinker with and produce different views of the canvas. You can try Omnigraffle for free (the basic paid version is $99).

The short answer is this: because it’s simple yet focused and that means more of your audience is likely to pay attention to it. Also, it’s highly amenable to change on the margins.

This matters a lot- more than most people think. A company that wants to innovate has to be ready to be wrong . A good VC in early stage investments succeeds with a prevalence of something like a 1/10. If you think you’re doing a lot better than that with substantial new innovation investments (a startup or a new line of business inside an enterprise) you’re probably throwing good money after bad.

Transparency, simplicity, and focus are great facilitators of the ‘creative destruction’ a good innovation program needs, and the Canvas does a nice job of delivering that across lines of business. For a large corporation with multiple lines of business at various levels of maturity, I actually prefer the Corporate Innovation Canvas as a starting point. However, from there, the Business Model Canvas does an excellent job of bringing clarity to the questions of how, for example, a given line of business creates focus and then implements it in an innovation-friendly way with, for example, ‘objectives and key results’ OKR’s . It’s a central element in the ‘innovation stack’ where an enterprise is able to go from priority innovation areas (with the Corporate Innovation Canvas) to testable business model designs (with the Business Model Canvas) to product charters (with an agile team charter ) to individual learning pathways to cultivate the talent they need to execute.

Even more important than the top down cascading of objectives with testable results and KPI’s is the improvement in the feedback in outcomes that helps the overall innovation program learn and adapt quickly. With layer appropriate innovation metrics, it’s much easier for the achievements of individuals to cohere (or not) to the job of teams and in turn from there to lines of business back up to corporate objectives. This helps both help the company’s talent understand where they might benefit from more practice and learning as well as what constitutes success in their individual roles and collaborations.

Anytime you want to have a focused discussion about what matters to a given line of business, the Business Model Canvas is a good place to start. The Canvas has received a lot of attention as a tool for startup entrepreneurship. While this may be one of the ‘sexier’ and more ostensibly simple applications of the Canvas, I actually think it’s one of the least compelling. For a startup, the only thing that matters is product/market fit, which the Canvas represents as a set of relationships between Customer Segments and Value Propositions. The Canvas doesn’t do a bad job of describing this, but it’s kind of overkill- the whole left side of the Canvas which describes the delivery infrastructure is mostly irrelevant for startups that are still finding product market fit, since all that’s provisional about where (and whether) they arrive at product/market fit.

Where the Canvas really shines is describing an existing line of business to answer questions like: a) What does product/market fit mean for this business? b) Where have we focused our company building and is it still relevant to ‘a’? c) What are our key revenue, cost, and profit drivers, and how do we improve those?

Now we’re taking! Whether you’re an ‘intrapreneur’ exploring a new extension to the business or a ‘digital transformation’/IT consultant trying to facilitate a discussion about what ‘strategic IT’ means and how you’ll know if you achieve it, the Canvas is a quick and productive place to anchor such a discussion.

First and foremost, I’d try it out for yourself. Fill out the elements the business you’re working on and then ask yourself ‘Does this make sense?’ ‘What are the most important linkages and components of the model?’

From there, you may just want to use the Canvas you sketch to facilitate alignment on some other topic. However, if you’re working with a team on a new venture or with a client on a new project, you may then want to take it from the top and facilitate a workshop where you facilitate a fresh take on the Canvas, levering your experience thinking through it once. The link below will take you to a related curriculum item that has workshop slides, prep. items, and agenda.

LINK TO WORKSHOP PAGE

Otherwise, the next sections (10 steps) offer a tutorial on how to think through a business model design with the Canvas. The closing sections offer notes on how to use the Google Doc’s/PowerPoint and Omnigraffle templates.

Output : a list of Personas, organized by Customer Segment if you have more than one segment. I recommend trying to prioritize them- Who would you pitch first if you could only pitch one? Who next? And so forth…

Notes : If you’re spending a lot of time on this first item, that’s OK (and it’s probably good). The Canvas is a tool, not a strategy and not all the nine blocks are equal. The pairing of Customer Segments and Value Propositions is really the ‘independent variable’ that should be driving everything else in your business model. When I use the Canvas in my Venture Design classes, we usually spend all of the first session (plus time for field research) on Customer Segments and Value Propositions.

For example, at Leonid, an enterprise software company I founded, we thought our largest customers worked with us because of the cost savings we offered and our knowledge about best practices. It turned out that was mostly wrong- reducing their time and risk to get new services to market was the most important. It’s not that the other things weren’t important, but they weren’t the top Value Proposition. That made a difference on how we sold the product and how we focused on operationalizing it for customers.

This mapping says ‘We have 3 personas. Persona 1 cares about VP 1 & 2. Persona 2 cares about VP 2; Persona 3 cares about VP3. (One segment only so segments not noted)’.

Output : a prioritized list of Value Propositions and linkages from each Personas to the VP’s relevant to them.

Notes: Again, this pairing is the key driver for most business models and if you want more on how to describe and discovery what to put in this part of the canvas, I recommend this: Tutorial- Personas .

Maybe you feel like you’re in good shape on understanding the customer’s world but you don’t have any validation on whether the Value Propositions are clicking because this is a new venture? If you’re not sure, that’s OK and good for you for acknowledging the uncertainty! It’s the responsible thing to do. The key is to write down those assumptions, prioritize them, and figure out the quickest and cheapest way to prove or disprove them. That’s what Lean/Startup is about and there are resources here to help you with that, if you’d like- Tutorial: Lean Startup .

Channels includes entities you use to communicate your proposition to your segments, as well as entities through which you sell product and later service customers (see AIDAOR journey below). For example, if you sell bulbs for light houses and there’s a website all light house attendants purchase equipment, that site is a sales Channel. If you use Google AdWords, that’s a Channel, too (for getting attention). If you use a third party company to service the bulbs when they break, that’s also a Channel.

Output : a list of important Channels, linked to Personas or Segments if they differ substantially. Make notes on what steps are relevant for each- promotion, sales, service, etc. See Note this section for more structure on this.

Notes: Channels and the next item, Customer Relationships, define your interface with the Customer. It’s important to think all the way through the customer ‘journey’ in specific terms. For most businesses, the way they get a customer’s attention is different than the way they onboard them or support them over the long term. For this, I recommend the AIDA.OR framework (attention-interest-desire-action-onboarding-retention) and storyboarding your way through it. Here’s a post explaining all that- Storyboarding AIDA(OR) . If you don’t want to do the storyboards, I recommend at least making notes about your customer journey through the AIDA(OR) steps.

Another consideration is whether your channels will give you enough visibility into the user, including, for example, a way to follow up with users. Not sure? Document your assumptions Lean Startup style and figure out how you’ll quickly prove or disprove them.

Output : a description of Customer Relationships, with notes if they differ across Customers (between Segments or among Personas within a Segment) or across the customer journey.

Notes: If you’re a startup, be sure to document and review critical assumptions here. Also, the focal items are in a kind of specific order- you should validate your Segments and their relationship to the Propositions above all else. If this means you provide personal support in the early days (a ‘concierge test’ in Lean Startup terms) to do discovery and validation of Segments and Propositions, that’s OK. You can subsequently test the Customer Relationship models. (Here’s a post on using consulting as a concierge vehicle in B2B if you want more detail: Consulting as B2B Concierge Vehicle ).

Notes : If you have a startup or are re-engineering the business, this is a time to look at where you’re driving revenue and whether it aligns with the rest of your focal points. Are you charging on value? Perceived value? They say everyone loves their banker; hates their lawyer. Why is that? Is there an actionable analog in your business?

For a product-driven business, this probably includes ongoing learning about users and new techniques to build better product. If you’re focused on doing a bunch of things for a particular set of customers (ex: comprehensive IT for law offices), this probably includes maintaining superior expertise on the segment(s) and creating or acquiring products and services that are a good fit, whatever that entails. For an infrastructure business (ex: electric utility), it probably includes keeping the infrastructure working reliably and making it more efficient.

Outputs : a list of Key Activities linked to your business’ Value Propositions.

Notes : One question this analysis should raise for you is whether or not certain Activities and Resources are actually core, actually focal to your business, something you’ll want to think through .

Outputs : a list of Key Resources linked to your business’ Key Activities.

Notes : Product-driven businesses have a differentiated product of some sort. Rovio, the company that makes the popular app Angry Birds, is such a company. Key Resources in product-driven businesses are typically key talent in critical areas of expertise and accumulated intellectual property related to their offering.

Scope-driven businesses create some synergy around a particular Customer Segment. For example, if you started a business that would take care of all the IT needs for law firms, that would be a scope-driven business. These businesses typically have key knowledge about their segment, a repeatable set of processes, and sometimes infrastructure, like service centers.

Infrastructure-driven businesses achieve economies of scale in a specific, highly repeatable area. Telecommunications is traditionally an infrastructure business. Retailers focused on retail, like Walgreens or Costco, are primarily infrastructure-driven businesses. The Key Resources for this type of business are, you guessed it, various types of physical or virtual infrastructure.

Let’s take a single product category: diapers. The Honest Company or another innovating around compostable or otherwise more environmentally friendly diapers would be a product-driven take on the category. Procter & Gamble which has a cradle-to-grave strategy for providing consumer products is a scope-based take; so are various baby-focused retailers. Kimberly-Clark (wood pulp) or DuPont (chemicals and polymers) are both infrastructure-based takes: diapers is just another way to sell something they produce at scale with relatively little differentiation.

If there are major cost components that don’t map to a Key Activity, I’d take a closer look at those costs.

Output : a list of Cost Structure elements with notes on their relationship to Key Activities.

Congratulations- you have a working canvas! The section below offers a few analytical ideas and suggestions for next steps.

Core Applications The most core and obvious applications of the Canvas are to ask: – Does it make sense? – Could it be better? – Does the rest of my team understand and agree? Have additional ideas? – (rinse and repeat at least quarterly)

Competitiveness The canvas does a good job of helping you figure out your business, which is a good place to start. You also want to look at the competitive environment and think about if and how you have/maintain a long term competitive advantage.

For this, I like Michael Porter’s Five Forces framework ( Wikipedia Page ; see also Chapter 2 of ‘ Starting a Tech Business ‘). Try walking through the Five Forces for your company and then bounce back to your canvas. How does it all hang together?

Next Steps Every business is a work in progress (sorry, I try to avoid saying things like that but it seemed to fit here). As you go through the canvas, you may encounter areas that give you trouble. The table below summarizes a few of the most common that I see in my work as a mentor and coach:

Want to make innovation an everyday thing?

What is Enable Quiz?

Enable Quiz is a (fictional) startup that’s building a lightweight quizzing application for companies that hire a lot of technical talent (engineers). Their take is:

For hiring managers who need to evaluate technical talent, Enable Quiz is a talent assessment system that allows for quick and easy assessment of topical understanding in key engineering topics. Unlike formal certifications or ad hoc questions, our product allows for lightweight but consistent assessments of technical talent.

Why and how would Enable Quiz use the Business Model Canvas?

They have a small team, but arriving at a clear, shared understanding of what they’re after is still important. That said, it’s important that the way they talk about this is both highly visible and amenable to change. Given that, the Canvas is a good fit.

The Business Model Canvas at Enable Quiz

This page shows Enable Quiz’s current working view of product/market fit:

What is HVAC in a Hurry?

HVAC in a Hurry is a mid-sized enterprise that services commercial HVAC (heating, ventilation, and air conditioning) systems. Their take on the business is:

For facilities managers & business owners who need their heating & cooling systems managed and repaired, HVAC in a Hurry is a full service provider that allows for easy and responsible management of a business’ HVAC systems. Unlike smaller firms, our commitment to best practices and training allows customers to worry less and realize superior total cost of ownership for their HVAC systems.

Why and how would HVAC in a Hurry use the Business Model Canvas?

HVAC in a Hurry has a working version of product/market fit. However, their industry is competitive and successful firms increasingly use technology to improve customer experience (CX) and reduce cost (overhead) in their operations. HVAC in a Hurry has a small ‘digital transformation’ team that’s working on digital applications to improve the company’s performance. This team decided to use the Canvas to ‘manage upwards’ in order to facilitate better discussions about where they should focus, how that aligns with the business as a whole, and what success definition makes sense for them.

The Business Model Canvas at HVAC in a Hurry

Here’s their current view of product/market fit:

If you’re not familiar with it, Google Doc’s is a web-based office suite, similar to MS Office. If you have a gmail account, you can access it (no guarantees- that was the case last time I checked).

First, you’ll want to link to the template file: BUSINESS MODEL CANVAS TEMPLATE IN GOOGLE DOC’S .

Once you’re accessed the file, you can make make it your own by going to the File menu and either ‘Make a copy…’, creating a copy in your own Google App’s domain or you can use the ‘Download as…’ option to download it as PowerPoint (and a few other formats).

What’s your experience with the Canvas? How have you used it? What worked? What didn’t? Please consider posting a comment!

Copyright © 2022 Alex Cowan · All rights reserved.

The Business Model Canvas

The Business Model Canvas is a strategic management and entrepreneurial tool. It allows you to describe, design, challenge, invent, and pivot your business model. This method from the bestselling management book Business Model Generation is applied in leading organizations and start-ups worldwide.

The Business Model Canvas enables you to:

• Visualize and communicate a simple story of your existing business model.
• Use the canvas to design new business models, whether you are a start-up or an existing businessManage a portfolio of business models
• You can use the canvas to easily juggle between "Explore" and "Exploit" business models.

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Business Plan vs Business Model Canvas Explained

6 min. read

Updated December 15, 2023

It might be stating the obvious, but planning and preparation are keys to success in business.

After all, entrepreneurs put in hard work to develop their product, understand the market they plan to serve, assess their competitive landscape and funding needs, and much more.

Successful business owners also take time to document their strategies for guiding the growth of their companies. They use these strategies to take advantage of new opportunities and pivot away from threats.

Two common frameworks for documenting strategies – the business model canvas and the business plan – are also among the easiest to get confused.

Though they can complement each other, a business model canvas and a business plan are different in ways worth understanding for any entrepreneur who’s refining their business concept and strategy.

Let’s start by digging deeper into what a business model canvas is. 

• What is a business model canvas?

You may have heard the term “business model” before. Every company has one. 

Your business model is just a description of how your business will generate revenue. In other words, it’s a snapshot of the ways your business will be profitable.

Writing a business plan is one way of explaining a company’s business model. The business model canvas takes a different approach.

A business model canvas is a one-page template that explains your business model and provides an overview of your:

• Relationships with key partners
• Financial structure
• And more…

While the business model is a statement of fact, the business model canvas is a strategic process—a method for either documenting or determining your business model.

It’s meant to be quickly and easily updated as a business better understands what it needs to be successful over time. This makes it especially useful for startups and newer businesses that are still trying to determine their business model.

You can think of a business model canvas as a condensed, summarized, and simplified version of a business plan. It’s a great way to quickly document an idea and get started on the planning process.

The business plan is a way to expand on the ideas from the canvas and flesh out more details on strategy and implementation.

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Components of a Business Model Canvas

The simplest way to think about your business model canvas is to map it out visually. A business model canvas covers nine key areas:

• Value proposition : A company’s unique offering in the market and why it will be successful.
• Key activities: The actions that a company takes to achieve its value proposition.
• Customer segments : The types of people or businesses that are likely to want a company’s products or services.
• Channels : How a company reaches customers through marketing and distribution efforts.
• Customer relationships: How a company interacts with customers and maintains important relationships.
• Revenue streams: The ways in which a company makes money.
• Key resources: The assets such as property, equipment and staffing that a company needs to perform its key activities.
• Key partners: The relationships with suppliers, vendors, customers and other stakeholders a company must maintain in order to be successful.
• Cost structure: The major drivers of company expenses that will need to be tracked and managed.

[Want an even simpler alternative? Try downloading our free one-page plan template and start building your plan in less than 30 minutes.]

To get a better sense of how a business model canvas documents business strategy, consider a company like Netflix. The streaming company’s business model is based on generating subscription revenue through its content library and exclusive content.

If Netflix executives were to create a business model canvas, it would map out how the company leverages key resources, partnerships, and activities to achieve its value proposition and drive profitability. The business model is the destination.

The great thing about a business model canvas is that you can quickly document business ideas and see how a business might work at a high level. As you do more research, you’ll quickly refine your canvas until you have a business idea you think will work.

From there, you expand into a full business plan.

• What is a business plan?

If a business model canvas captures what a company looks like when it’s operating successfully, then a business plan is a more detailed version along with a company’s blueprint for getting there.

Think of your business plan as a process of laying out your goals and your strategies for achieving them.

The business plan is more detailed, and changes over time. It examines each aspect of your business, from operations to marketing and financials.

The plan often includes forward-looking forecasts of a company’s projected financial performance. These are always educated guesses. But these forecasts can also be used as a management tool for any growing business.

Comparing actual results to the forecast can be a valuable reality check, telling a business if they’re on track to meet their goals or if they need to adjust their plan.

A business plan is also a must for companies hoping to receive a bank loan , SBA loan , or other form of outside investment . Anyone putting up funds to help you grow will want to see you’ve done your homework.

So a business plan is how you not only prepare yourself, but also show your audience that you’re prepared.

Components of a business plan

While there are several different types of business plans meant for different uses, well-written plans will cover these common areas:

• Executive summary : A brief (1-2 pages) overview of your business.
• Products and services : Detailed descriptions of what you’re selling and how it fills a need in the market.
• Market analysis : Assessing the size of your market, and information about your customers such as demographics (age, income level) and psychographics (interests, values).
• Competitive analysis : Documenting existing businesses and solutions your target customers are finding in the market.
• Marketing and sales plan : Your strategies for positioning your product or service in the market, and developing a customer base.  
• Operations plan : Describing how you will run the business from day to day, including how you will manage inventory, equipment, and staff.
• Organization and management team: Detailing the legal structure of the business, as well as key members, their backgrounds and qualifications.
• Financial Plans : Business financials that measure a company’s performance and health, including profit & loss statements, cash flow statements and balance sheets. Effective financial plans also include forward-looking sales forecasts and expense budgets.

How a business plan and business model canvas inform business strategy

Avoid the trap of using the two terms interchangeably. As we’ve shown, the two have different focuses and purposes. 

The business model canvas (or our one-page plan template ) is a great starting point for mapping out your initial strategy. Both are easy to iterate on as you test ideas and determine what’s feasible.

Once you have a clearer sense of your idea, you can expand the canvas or one-page plan into a business plan that digs into details like your operations plan, marketing strategy, and financial forecast.

When you understand how – and when – to use each, you can speed up the entire planning process. That’s because the business model canvas lays out the foundation of your venture’s feasibility and potential, while the business plan provides a roadmap for getting there.

The work of business planning is about connecting the dots between the potential and the process.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• How both inform your strategy

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Business Model Canvas (BMC)

What is the Business Model Canvas

Business Model Canvas (BMC) is a framework that helps determine how a business creates, delivers, and captures values. It is a visual representation of the important aspects or parts to consider when designing a Business Model.

BMC aids in constructing a shared understanding of a business by condensing it into a simple, relevant, and intuitively understandable one-page visual while not oversimplifying the complexities of how enterprises function.

This concept has been applied and tested around the world and is used in organizations such as GE, P&G, Nestlé, IBM, Ericsson, and Deloitte, including Government Services of Canada and many more [1],[2] .

The Nine Building Blocks

BMC describes a business through nine basic building blocks that show the logic of how a business intends to make money. These nine blocks cover the four main areas of a business: Customers, Offer, Infrastructure, and Financial Viability.

BMC acts as a shared language for describing, visualizing, assessing, and changing business models. It is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems.

Each of these blocks is explained in more detail as follows:

1. Customer Segments (CS)

These are the groups of people or organizations that a business aims to reach and serve. Customers are the heart of a business model, and without (profitable) customers, a business cannot survive.

Customers are grouped into distinct segments with common needs, common behaviors, or other attributes. Customer groups represent separate segments if:

• Their needs require and justify a distinct offer.
• They are reached through different Distribution Channels.
• They require different types of relationships.
• They have substantially different profitability.
• They are willing to pay for different aspects of the offer.

An organization must make a conscious decision about which segment(s) to serve and which segments to ignore. Once this decision is made, a business model can be carefully designed around a strong understanding of specific customer needs.

The following two questions, if answered with clarity, help a business identify its CS.

• For whom are we creating value?
• Who are our most important customers?
• What are the customer archetypes?

Examples of some of the Customer Segments are shown in the figure:

2. Value proposition (VP)

Value Proposition describes the bundle of products and services that create value for a specific Customer Segment chosen by a business.

A VP is the reason why customers turn to one company over another. VP must solve a customer’s problem or satisfy a need. A business can have more than one VP, but each must consist of a selected bundle of products and/or services that caters to the requirements of a specific Customer Segment.

While some VPs may be innovative and represent a new or disruptive offer, others may be similar to existing market offers but with added features and attributes.

An organization’s VP must answer the following questions with clarity:

• What value do we deliver to the customer?
• Which one of our customer’s problems are we helping to solve?
• Which customer needs are we satisfying?
• What bundles of products and services are we offering to each CS?

Elements from some of the following can contribute to customer value creation:

3. Channels (CH)

Channels describe how a company communicates with and reaches its Customer Segments to deliver a Value Proposition.

Channels are customer touch points that play an important role in the customer experience and serve several functions, including:

• Raising awareness about a company’s products and services
• Helping customers evaluate a company’s Value Proposition
• Allowing customers to purchase specific products and services
• Delivering a Value Proposition to customers
• Providing post-purchase customer support

To establish an effective channel, a company must first answer the following:

• Through which Channels do our Customer Segments want to be reached?
• How are we reaching them now?
• How are our Channels integrated?
• Which ones work best?
• Which ones are most cost-efficient?
• How are we integrating them with customer routines?

There are five distinct phases (figure below) through which a channel passes, and it could cover more than one of these phases at a time.

Channels can be either direct, indirect or hybrid, as shown:

Finding the right mix of Channels to satisfy how customers want to be reached is crucial in bringing a Value Proposition to market and can create a great customer experience.

4. Customer Relationships (CR)

Customer Relationships describe the types of relationships a company establishes with specific Customer Segments. Relationships can range from personal to automated. An organization’s CR strategy may be driven by one of the following motivators:

• Customer acquisition
• Customer retention
• Boosting sales (upselling)

A business can arrive at the optimum CR by asking the following questions:

• What type of relationship does each of our Customer Segments expect us to establish and maintain with them?
• Which ones have we established?
• How costly are they?
• How are they integrated with the rest of our business model?

Several categories of Customer Relationships may co-exist in a company’s relationship with a particular Customer Segment. Some of which are:

5. Revenue Streams (RS)

Revenue Streams represent the company’s cash (earnings) from each Customer Segment and are like the arteries of any business.

There are two distinct categories of Revenue Streams:

• Transaction Revenues which are one-time customer payments
• Recurring Revenues that are ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support

A business can arrive at its ideal revenue stream by asking the following questions:

• For what value are our customers willing to pay?
• For what do they currently pay?
• How are they currently paying?
• How would they prefer to pay?
• How much does each Revenue Stream contribute to overall revenues?

There are several ways a business can generate revenue, such as:

A business may have one or more Revenue Streams, each with different pricing mechanisms. The choice of pricing mechanism greatly influences the revenues generated.

There are two main types of pricing mechanisms, Fixed and Dynamic, as follows:

6. Key Resources (KR)

The Key Resources describe the most important assets required to make a business model work.

These resources allow an enterprise to create and offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues. Different Key Resources are needed depending on the type of business model.

For example, a chip fabrication business like TSMC [9] requires capital-intensive facilities worth billions of dollars, while a chip designer like NVIDIA [10] would need skilled manpower as its Key Resource.

Key Resources can be owned or leased by a business or acquired from its key partners. They can be identified by answering the following questions:

• What Key Resources do our Value Propositions require?
• What resources are required to sustain our Distribution Channels, Customer Relationships and Revenue Streams?

Key Resources can be categorized as follows:

7. Key Activities (KA)

Key Activities describe the most important things a company must do to make its business model work. They are required to create and offer a Value Proposition, reach markets, maintain Customer Relationships, and earn revenues.

Key Activities differ depending on the business model type. For example, Microsoft’s Key Activity is software development, while for Dell, it is Supply Chain Management. For a consultancy firm like McKinsey, Key Activity is problem-solving.

A business can identify its Key Activities by answering the following questions:

• What Key Activities do our Value Propositions require?
• What activities directly contribute to maintaining our Distribution Channels, Customer Relationships and Revenue Streams?

Key Activities can be categorized as follows:

8. Key Partnerships (KP)

The Key Partnerships describe the network of suppliers and partners that make the business model. There are four types of partnerships:

A business must ask the following questions before forming partnerships:

• Who are our key partners?
• Who are our key suppliers?
• Which Key Resources are we acquiring from partners?
• Which Key Activities do partners perform?

Primarily, there are three motivations for a business when creating partnerships, as shown:

9. Cost Structure (CS)

Cost Structure describes all costs incurred to operate a business model. A business incurs costs in creating and delivering value, maintaining customer relationships, and generating revenue. Costs are business-specific, where some are more cost-driven than others.

A business must answer the following questions to arrive at an optimum cost structure:

• What are the most important costs inherent in our business model?
• Which Key Resources are most expensive?
• Which Key Activities are most expensive?

While costs should be minimized in every business model, it is useful to distinguish between two broad classes of business model Cost Structures:

• Cost Driven : This model focuses on minimizing costs wherever possible. This approach aims at creating and maintaining the leanest possible Cost Structure, using low-price Value Propositions, maximum automation, and extensive outsourcing. Examples: No frills airlines like Southwest & easyJet, Fast food joints such as McDonald’s & KFC.
• Value Driven: Premium Value Propositions and a high degree of personalized service usually characterize value-driven business models. Examples: Luxury hotels, Expensive Cars like Rolls-Royce

Cost Structures can have the following characteristics:

Putting-it-all together

The nine business model Building Blocks form the basis for a handy tool, which is called the Business Model Canvas (figure below). This tool resembles a painter’s canvas preformatted with nine blocks that allow painting pictures of new or existing business models. It is a hands-on tool that fosters understanding, discussion, creativity, and analysis.

BMC works best when printed out on a large surface such that groups of people can jointly note, sketch, and discuss business model elements.

Example of Business Model Canvas

Nespresso [17] , a fully owned daughter company of Nestlé, changed the dynamics of the coffee industry by turning a transactional business (selling coffee through retail) into one with recurring revenues (selling proprietary pods through direct channels).

The two-part strategy involved selling their patented coffee machine to retail customers first to lock them into the brand. This generated a recurring demand for coffee refills (pods) that led to constant revenues. These pods were sold directly through mail/website/own stores, thereby eliminating middlemen/dealers, which further increased profits [1] .

Nespresso’s strategy plotted on a Business Model Canvas looks as follows:

Business Model Canvas helped Nespresso establish a solid and enduring foundation by engaging consumers directly and bringing a barista-like experience within the reach of a home or an office.

Advantages & Limitations

• Encourages Collaboration – collaborative framework, which helps put different business stakeholders in sync. This improves the likelihood of generating new ideas and their quality.
• Facilitates testing of ideas before launch – allows business owners, strategists, and managers to think through business ideas as well as test concepts that would otherwise get tested with potential customers where the stakes are higher.
• Customer-centered approach – Key customer segments, relationships, activities, and value propositions are all elements that focus on creating, delivering, and capturing value for customers.
• Clarity – Analyzing the business through the lens of nine blocks brings better clarity and structure to the business model.

Limitations

• Lacks a section for defining the start-up’s mission statement, which is crucial to understanding the goals and objectives of any business.
• Overlooks the importance of a profit mechanism beyond costs and revenues, including decisions on how to use potential profits.
• The order of the canvas is not intuitive, making it difficult to read and understand the strategic decisions in a logical sequence.
• Does not depict interconnections between different elements, which can have a significant impact on the overall business model.
• Fails to acknowledge the company’s role within its ecosystem, including its impact on the environment and local communities.
• External factors such as competition, history, and other industry-specific factors are absent from the canvas, which can greatly influence the success of a business model.

1. “A Better Way to Think About Your Business Model”. Harvard Business Review, https://hbr.org/2013/05/a-better-way-to-think-about-yo . Accessed 01 Aug 2023

2. “Business Model Generation”. Alexander Osterwalder, https://www.strategyzer.com/books/business-model-generation . Accessed 28 Jul 2023

3. “The Apple M1 is a revolution that is changing the computing world”. Citymagazine, https://citymagazine.si/en/apple-m1-is-a-revolution-that-changes-the-computer-world/ . Accessed 29 Jul 2023

4. “Mass Customization”. Corporate Finance Institute, https://corporatefinanceinstitute.com/resources/management/mass-customization/ . Accessed 29 Jul 2023

5. “Moka Pot”. Wikipedia, https://en.wikipedia.org/wiki/Moka_pot . Accessed 29 Jul 2023

6. “NetJets Homepage”. NetJets, https://www.netjets.com/en-us/ . Accessed 01 Aug 2023

7. “Distribution Channels – Definition, Types, & Functions”. Feedough, https://www.feedough.com/distribution-channels-definition-types-functions/ . Accessed 30 Jul 2023

8. “Lease from Hertz”. Hertz, https://www.hertz.com/rentacar/rental-car/car-lease . Accessed 30 Jul 2023

9. “TSMC”. Wikipedia, https://en.wikipedia.org/wiki/TSMC . Accessed 30 Jul 2023

10. “NVIDIA”. Wikipedia, https://en.wikipedia.org/wiki/Nvidia . Accessed 30 Jul 2023

11. “BMW, Daimler, Ford and Volkswagen team up on high-power charging network”. Techcrunch, https://techcrunch.com/2017/11/03/bmw-daimler-ford-and-volkswagen-team-up-on-high-power-charging-network/ . Accessed 31 Jul 2023

12. “Honda And Sony Combine Talents To Build Electric Vehicles”. Forbes, https://www.forbes.com/sites/peterlyon/2022/06/26/honda-and-sony-announce-joint-venture-to-build-electric-vehicles/ . Accessed 31 Jul 2023

13. “Uber and Spotify launch car music playlist partnership”. BBC, https://www.bbc.com/news/technology-30080974 . Accessed 31 Jul 2023

14. “Walmart Has the Scale and Infrastructure to Generate Positive Gains”. Yahoo Finance, https://finance.yahoo.com/news/walmart-scale-infrastructure-generate-positive-201822628.html . Accessed 31 Jul 2023

15. “Demand-Side Economies of Scope in Big Tech Business Modelling and Strategy”. MDPI, https://www.mdpi.com/2079-8954/10/6/246 . Accessed 31 Jul 2023

16. “The Business Model Canvas”. Strategyzer, https://www.strategyzer.com/canvas/business-model-canvas . Accessed 31 Jul 2023

17. “HomePage”. Nespresso, https://www.nespresso.com/us/en/ . Accessed 01 Aug 2023

18. “Business Model Canvas of Nespresso”. Alex Osterwalder, https://www.youtube.com/watch?v=dhQh-tryXOg . Accessed 01 Aug 2023

19. “Nespresso Capsule”. Electromall, https://electromall.net/product/nespresso-capsule/ . Accessed 01 Aug 2023

20. “The Best Nespresso Machine (But It’s Not for Everyone)”. Newyork Times, https://www.nytimes.com/wirecutter/reviews/best-nespresso-machine/ . Accessed 01 Aug 2023

21. “Business Model Canvas”. Think Design, https://think.design/user-design-research/business-model-canvas/ . Accessed 01 Aug 2023

22. “6 Problems with the Business Model Canvas”. The Pourquoi Pas, https://www.thepourquoipas.com/post/problems-with-the-business-model-canvas . Accessed 01 Aug 2023

• McKinsey 7S Model
• Elaboration Likelihood Model of Persuasion
• The Johari Window Model

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How to Create a Business Model Canvas (With Template)

May 19, 2021 - 10 min read

Do you want to create a simple business plan? Something comprehensive, flexible, and easy to scribble on a napkin? You can do that with a business model canvas.

Every business has ever-changing, diverse interests. Illustrating all of this on a single sheet of paper may sound challenging — but by using a business model canvas template, your team can focus on the key elements of your business to ensure nothing slips through the cracks.

Business model canvas explained

"Lengthy business plans often increase the risk of failure," wrote Alex Osterwalder in his 2008 book “Business Model Generation.”

The business model canvas offers a way to avoid this, providing a simplified version of a business plan. A business model canvas is a simple, visual framework that helps teams outline the most fundamental elements of a business.

As a handy business tool, teams can use a business model canvas to map the nine core areas of a business, such as customer needs, value proposition, and platforms for customer acquisition.

This article will explain the business model canvas, its benefits, and how it can help your team develop a successful high-level business strategy and actionable roadmap .

How can a business model canvas help your business?

Many teams are so overwhelmed with operational issues that they don’t have time to focus on the core business strategy .

Utilizing the business model canvas helps create a unified framework that depicts this strategy alongside an action plan that teams can follow.

But how do you know if you need a business model canvas? If you are starting a business or even toying with an idea, a BMC can create a powerful visual representation of your concept. A business model canvas can also be a handy reference for your team as they move towards successful business outcomes. Here are five more ways in which a business model canvas can help your company.

It’s simple and easy to follow

Whether you have a business idea or are managing a large enterprise, having an easy-to-follow business plan can be immensely helpful. As a precise one-page document, teams can modify specific business model canvas elements as they go along without completely redoing a 50- or 100-page document.

Focused on being actionable 

Every business plan needs to be actionable. Using a business model canvas helps you accurately define your organization’s core value proposition and keep it aligned to your business strategy.

Your focus could be to achieve profitability in the first year or gain a large market share. Stay competitive by defining actionable steps for your team within the business model canvas.

Flexible and scalable as the business evolves 

No business stays the same forever but evolves as it interacts with diverse market dynamics, competitors, product innovations, and changing consumer needs.

To take your idea to market, you need a tool that connects the dots between what your customers want, your business's unique offering, and the desired profitability streams.

By creating a business model canvas template, you instantly get an edge over other market players engrossed in lengthy business plan documents.

Puts the customer first

Ignoring customers sets businesses up for failure . Companies flounder if they direct their energies solely towards making a great product or service. With a business model canvas template, your focus stays on the ultimate end-users of your product. 

Having a business blueprint will force team members to think about what customers want, the primary issues they need help with, and how your product or service can do that. 

Helps get team and executive buy-in

23% of businesses fail without the right team on their side. Every company needs team members with a diverse mix of skills, experiences, and talents.

Companies require a solid business blueprint for hiring team members or bringing in investors. Having a business model canvas can help get everyone on board with your organization’s core vision. Potential employees and investors can visualize how the different organizational parts interact and see how they can become an integral part of the company.

Promotes focus on the unique value proposition of your business

19% of companies fail due to being outperformed by their competitors. If there's no difference between your product and one from another firm, why should customers come to your company? Every business needs a clear value proposition that helps them stand out — that's where a business model canvas template comes in.

When you look at the nine core elements of a business model canvas (explained below), you'll quickly notice some factors are controllable to a certain extent, while others are more fractious.

Your company's core value proposition sits right in the middle. It acts as the central pillar around which all other elements exist, defining the fundamental nature of the business.

What goes into each segment?

To fill out a business model canvas, you should know what goes into each of the nine fundamental segments.

Have a business model canvas template ready before you and your team start brainstorming on each of these elements (you'll find one below) and then add the research and data into the relevant sections. 

Customer segments In this fundamental business area, teams identify the core individuals they will help with their product or service. To do this, they create two to three buyer personas — potential customers that a business seeks to serve.

A buyer persona is a simple but detailed description of a prospective business customer. It assists with capturing the customer’s real-life problems and motivations, helping the business deliver what they want.

Value proposition The value proposition is the ultimate value that a customer will get from your product or service. It seeks to answer the question, “Why will a customer buy?” Here are a few popular value propositions for any organization:

• Customization ability
• Unique product design
• Innovation in product or service
• Exceptional service or product status
• Affordable pricing and clear pricing model definition

Channels In a business model canvas, channels are the platforms through which a company sells its product or service to end-users. To identify the best channel for your business, look at how you plan to connect with your customers.

A few possible channels can be:

• A self-owned retail store
• Direct sales staff
• Affiliate marketing platforms
• Google Adsense

A business can either own its channels or partner with other companies that have their own channels.

Customer relationships Customer relationships in a business model canvas define how the company will obtain, retain, and increase new customers. Let's take a look at how customer relationships are built:

• Identify how to obtain customers and from which platforms (e.g., Google, Facebook ads)
• Gain clarity on how to retain existing customers using different techniques (e.g., exceptional customer service)
• Discover how to increase the customer base of the business (e.g., sending text or email notifications to prompt website visits)

Revenue streams Revenue streams help the business owner decide how to generate revenue and achieve their predefined organizational goals . Key decisions with revenue streams include:

• Choosing from a one-time payment model or monthly subscriptions
• Keeping a free plus paid model or a wholly paid product or service with a free trial
• How payment from customers will be received — website payments, PayPal, or in-store

Key resources Key resources in your business model canvas represent the assets that are vital to your company’s operation. Business assets can include anything from the below categories:

• Physical assets , including machines, buildings, IT hardware, and vehicles
• Intellectual assets , including patents, copyrights, partnerships, brands, and employee skills
• Human assets , including talented employees in knowledge industries such as IT, law, and content marketing
• Financial assets , like cash balances in the bank or lines of credit

Key activities Want to make your business canvas model work? Make sure to list the key activities that will help expand the business's core value proposition. Key activities can come from any of the below categories:

• Production: How you will deliver your end product to the customers. You may need to order more stock or upgrade materials
• Platform: For example, the software used to sell your product, which may require upgrades or maintenance
• Problem-solving: For example, designing innovative solutions for issues that your customers face

Key partners Every business has some non-core activities that should preferably be outsourced. Key partners are the companies or individuals that complete these non-core activities.

Take a company like Facebook, for example — its key activity is to upgrade and maintain its platform. It doesn't create its own ads, so it also needs to strike deals with companies that wish to advertise on its platform. 

Similarly, it doesn’t create its content — the users do. The primary reasons for choosing key partners can be:

• Achieving economies of scale
• Mitigating risk and unpredictability in business
• Acquiring resources and advertisements for its business (e.g., ads for Facebook)

Cost structure Once the key activities are outlined on the business model canvas, it's time to assign cost structures. Be clear and precise with the estimated business costs of the planned activities to ensure you reach your profitability goal.

Business model canvas example and template

• Customer segments: Facebook's customers can be divided into two distinct categories — advertisers and platform users
• Value proposition: The primary reasons platform users come to Facebook. Users feel connected to friends and families, while companies get more leads through advertising on the platform
• Channels: The website where all data is stored
• Customer relationships: Facebook incentivizes users to stay on the platform through notifications and new features, leading more companies to advertise on it
• Revenue streams: Facebook earns money through advertising, while companies gain new customers from Facebook ads
• Key resources: Facebook's key resources are its platforms — Facebook.com, the Messenger application, and Facebook Ads Manager for advertisers
• Key activities: Maintaining the website and its infrastructure are two of Facebook’s key strategic activities
• Key partnerships: Facebook's key partners are its users and advertisers
• Cost structures: Major costs incurred by Facebook include managing the software, backend engineering operations, product development, regular operations, and staff salaries

How to create a business model canvas (with template)

Ready to create your business model canvas? Before you begin, take some time to brainstorm answers to these questions related to the nine core fundamental areas of the canvas. Here's a simple business model canvas template exercise that can help your team get started.

• Customer segments: Can you identify your potential customers?
• Channels: Once the product or service is ready, how will customers discover it?
• Key partnerships: Can any non-core business activities be outsourced?
• Customer relationships: How will your business generate leads and retain and increase your customer base?
• Cost structures: Can the business classify its main costs and expenses into fixed and variable? Is there a way to align costs with the core value proposition and planned revenues?
• Revenue streams: Has the business decided on a profit margin? How will it make money?
• Key resources: Which core resources are critical for the business to succeed?
• Value proposition: Why will customers choose your business? Does the company satisfy any particular need with its product or service?
• Key activities: Are there any activities that help your business deliver its unique value proposition to customers?

Do I need a lean model canvas? 

If your business is still an idea or in its infancy, choosing a lean model canvas makes more sense.

Inspired by the business model canvas, the lean model canvas was created by Ash Maurya . It is a one-page business plan template that distills the lean startup methodology into the original business model canvas. 

Lean model canvas assimilates multiple essential data points to develop a simpler, start-up optimized version of a business model canvas. It adds four more building blocks to the business model canvas, namely:

• Problem: Identify the problem faced by the customer and focus on solving it
• Solution: Start with a minimum viable product that helps solve the customer problem effectively
• Unfair advantage: List the barriers to entry in a specific sector and your company’s competitive advantages
• Key metrics: Focus on one goal at one time to ensure you’re doing a good job

Lean model canvas drops four elements from the original business model canvas — key partners, key activities, key resources, and customer relationships. 

While the original illustrates a more comprehensive business approach, the lean model canvas has a sharper customer orientation. Many start-ups prefer the lean model canvas to a traditional business plan for building an actionable roadmap.

The lean model canvas is a great fit for younger companies or those working with a tight time frame or budget to market with a more targeted problem resolution approach.

Why you should use Wrike to build a business model canvas 

The business model canvas’ nine building blocks clearly illustrate the core business areas and their interrelationships. Whether you're trying to figure out the model for a company with three employees or 50,000, a business model canvas can be very useful.

Begin by mapping out the most crucial information about your business, then link the blocks to ensure every value proposition is linked to a revenue stream and a specific customer segment.

Using Wrike to build your business model canvas template, you can iterate faster, communicate with ease, and enable organization-wide success . With a centralized hub, your teams can configure custom dashboards easily and produce better quality work using premade templates . Implement what you've learned about the business model canvas by trying out a free two-week trial of Wrike today.

Yuvika Iyer

Yuvika is a freelance writer who specializes in recruitment and resume writing.

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What Is Business Process Outsourcing? A Guide

As businesses scale and grow, they often have requirements that cannot be addressed internally — whether because of resource or budgetary constraints. Business process outsourcing (BPO) can be a solution that enables organizations to grow and scale effectively. But exactly what is business process outsourcing? What are the risks associated with the practice, and how can corporate leaders use business process as a service (BPaaS) to their advantage?  BPO meaning: What is business process outsourcing? Business process outsourcing describes a practice where specific tasks, functions, or processes within a company are contracted out to third-party organizations and vendors. These outside organizations have expertise in their specified area, which allows them to manage tasks and processes on behalf of other businesses.  For example, a marketing agency, during their resource planning process, may choose to outsource their payroll and accounting functions in order to focus on the core competencies of their organization.  There are three types of business process outsourcing: offshore, nearshore, and onshore outsourcing.  Offshore outsourcing: The function is managed by an operator or vendor in a different country (often far away and in another time zone) Nearshore outsourcing: The function is managed by an operator or vendor in a neighboring/closeby country Onshore outsourcing: The function is managed by an operator or vendor within the same country — but could be in another state or region  Business functions ideal for outsourcing may include admin, customer service, PR, data entry, HR, content moderation, and more.  Business process outsourcing can improve efficiency and present significant cost savings for companies that may not have the resources to hire a team of in-house customer service specialists or payroll professionals, for example.  In fact, Deloitte research indicates that 59% of companies who outsource say they do so with cost savings as a primary motivator. What is business process as service (BPaaS)? Business process as a service enables BPO by managing specific functions through cloud-based delivery systems. The global BPaaS market is extensive and expected to reach a value of $77.8 billion by 2023. Some well-known names in BPaaS include Accenture and IBM.  BPaaS can help manage:  Finance and accounting  IT services  eCommerce Customer service processes BPaaS leverages the capabilities of infrastructure as a service (IaaS), software as a service (SaaS), and platform as a service (PaaS) solutions in order to help companies manage and address their business objectives.  Business process as a service also relies on automation in many cases, reducing the need for manual intervention. Who needs business process as a service (BPaaS)? Business process as a service can be beneficial for organizations across sizes and industries. For example, instead of hiring an outside firm to manage their finance and accounting needs, a company might instead execute this function via a cloud-based platform licensed through a monthly subscription model.  This naturally brings costs down and offers a more flexible and scalable way of managing operations.  Any company looking to manage processes without the costs associated with hiring, training, and managing an internal team or department may find that BPaaS is an effective solution.  What are the benefits of outsourcing business processes? There are many benefits associated with outsourcing business processes. These benefits include cost and time savings, efficiency gains, the ability to focus on core business competencies, and more. Be sure to keep these in mind when contemplating outsourcing professional services key success factors, and which professional services agency is right for you.Cost savingsHigh costs associated with labor, training, management, and infrastructure can be a barrier as an organization scales and grows its operations. Outsourcing non-core processes can enable businesses to meet their objectives and operational needs while minimizing these internal costs and time commitments. Access to expertise and improved efficiencyBPO gives businesses access to vendors that have the necessary expertise, equipment, and personnel needed to execute a project or function on their behalf. This expertise means they are better equipped to provide cutting-edge, compliant, and effective services.  Ability to focus on key business competencies As a company grows and scales, there is often a need for growth or expansion in other areas of the business.  For example, a high-growth eCommerce company may need increased customer support capabilities to provide quality assistance to customer queries and issues. In this instance, outsourcing customer support staff to an agency or outside vendor allows the business to focus on its main competencies while also addressing customer challenges that can impact the bottom line.  As is the case with most things, business process outsourcing can have its set of challenges and risks. Are there risks to business process outsourcing? Risks in business process outsourcing can include lower than expected or inconsistent quality of service, lack of visibility and collaboration with the vendor, and security considerations. Inconsistent delivery We’ve all been there. A service looks good on paper, but the results turn out to be inconsistent or of a lower standard than expected. This is always a risk, especially when outside vendors are involved.  Lack of visibility and collaboration When handing over the keys to a business function, visibility and communication allow those within the organization to accurately track progress, success, and any challenges. Lack of visibility is a huge risk and could mean that a lower standard of service is inadvertently being passed on to customers.  Privacy and security concerns Privacy and security are a top concern in business process outsourcing. In most cases, BPO will involve some degree of handling sensitive or confidential internal data. Engaging a vendor with lax digital security policies may make an organization vulnerable to breaches or attacks.  As Deloitte notes, the tax implications of business process outsourcing should also be a consideration and factored into any business case. How to choose the right BPO vendor Choosing the right vendor can help avoid headaches, losses, and disputes. Here are some tips for choosing the right BPO partner for your business.  Due diligenceDue diligence will involve researching the vendor and their reputation to determine if they have success and experience with your industry, project type, or company size. Understand costsWhile cost-saving is a major factor when establishing a BPO partnership, unexpected fees may make outsourcing pricier than initially thought. Evaluate security infrastructureWhen determining the suitability of a vendor, be sure to assess their ability to manage and protect sensitive information.  Communicate clear objectives and KPIsClearly communicate objectives, expected outcomes, and KPIs and ensure they have the capacity to deliver.  Ensure stabilityOutsourcing a business function can be risky if the third party is in a financially, legally, or otherwise unstable position. Overreliance on unstable vendors can be a unique challenge to overcome.  How to organize your BPO with Wrike Streamline and simplify your business process outsourcing with Wrike. With Wrike, you can:  Create and manage a risk register for your vendor and the outsourced function Invite vendors as external collaborators to share reports and status updates Share and store vendor meeting minutes using our actional meeting notes template Integrate data from 400+ applications like Salesforce, Marketo, and more  Take advantage of the cost savings, time savings, and expertise that BPO and BPaaS can afford your business. Be sure to track and manage progress, communication, and risk using Wrike.  Sign up for a free two-week trial and discover why 2 million+ people trust Wrike to manage and execute their tasks and projects.  

The Ultimate Guide to Business Process Modeling

Struggling to optimize your business processes? Find out process modeling benefits and techniques for executing business process modeling projects successfully.

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What is business forecasting? Forecasting helps organizations strategize and, when done right, can give you a competitive advantage. Read on to learn more.

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A Better Way to Think About Your Business Model

• Alexander Osterwalder

How Nespresso used a simple business model canvas to change face of the coffee industry.

The business model canvas — as opposed to the traditional, intricate business plan — helps organizations conduct structured, tangible, and strategic conversations around new businesses or existing ones. Leading global companies like GE, P&G, and Nestlé use the canvas to manage strategy or create new growth engines, while start-ups use it in their search for the right business model. The canvas’s main objective is to help companies move beyond product-centric thinking and towards business model thinking.

• Alexander Osterwalder is cofounder of Strategyzer.com , a company that builds practical tools for business strategy and innovation. Together with Yves Pigneur, he invented the Business Model Canvas and co-authored the international bestsellers  Business Model Generation  and  Value Proposition Design .

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How to make a great Business Model Canvas

Most of us are familiar with business models, which are a company’s plan for making a profit. A typical business model identifies the products or services that the company intends to sell, the target market, and any possible expenses.

Since a business model is so high-level, it can be hard to visualize how it might work in practice. It can be even harder to connect an organization’s everyday roles, responsibilities, projects, and functions to the overall business model. That’s where the business model canvas comes in.

This blog will introduce you to the business model canvas, a strategic tool that allows you to visually develop and display your business model. By the end of the blog, you’ll have a deeper understanding of what makes a business model canvas so important and how to create your own.

• What is a Business Model Canvas?

The business model canvas was first developed by Alexander Osterwalder in his book Business Model Ontology . Osterwalder broke down the segments that form a basic business model into a one-page canvas.

A business model canvas is a strategic tool that enables you to look systematically at your business model, understand how it works, and keep everyone in your organization aligned. Think of it as a North Star that outlines everything that makes your business tick: key partners and activities, your value proposition, customer relationships and segments, resources, distribution channels, cost structures, and revenue streams.

The Business Model Canvas Explained

Whether you’re at a new business or an established one, a well-thought-out business model is crucial for success. Business models help developing businesses attract investors, recruit talent, onboard new hires, and align employees. They help established businesses stay ahead of trends and anticipate challenges. A good business model can compel investors or partners to work with a company they’re interested in supporting.

The problem, though, is that a business model is a lot to digest. That’s why the business model canvas is such a useful tool.

The business model canvas is a snapshot of all the key components of a business model. It enables you to take those key components and organize them into a format that’s easily digestible. A business model canvas zooms in on a particular product or service to break down how exactly the company expects to derive value from it.

• Business Model Canvas or Lean Canvas?

People often use “business model canvas” and “lean business model canvas” interchangeably, but there are a few differences. The business model canvas focuses on a specific product or service that generates revenue. A lean canvas focuses on a specific problem that the organization is looking to solve.

Lean canvases are popular with startups because they enable you to zoom in on a problem, iterate on potential solutions, and move quickly to the next challenge. Whereas the business model canvas defines the infrastructure, costs, and revenue streams that go into running a business, the lean canvas focuses on the channels that enable you to troubleshoot a specific problem. The broader business model canvas pays close attention to customer segments, channels, and relationships, while the lean canvas deemphasizes these elements.

• What is Included in a Business Model Canvas?

Although you can adapt the business model canvas to your needs, they generally contain nine core components. Here are the building blocks of a business model canvas.

• Key partners. Every business model canvas lists the partners and suppliers that your business leverages for success. The canvas includes any motivations for the partnerships — i.e. what exactly you get out of them.
• Key activities. The canvas summarizes the activities that your business must undertake in order to support your value proposition. It lists the activities that are most important for distribution channels, customer relationships, and revenue streams.
• Value proposition. The value proposition is the core value you aim to deliver to your customer. Think of it as two key components: the need you are serving for your customer, and how that’s different from what your competitors are doing.
• Customer relationships. These include any relationships you have with customers, including how you interact with them, how interactions differ between customers, what needs your customers have, and how you integrate those needs into your business in terms of cost and format.
• Customer segments. These are the ideal customer personas that your value proposition is designed to benefit. A basic business model canvas outlines the potential differences between segments and steps in the customer journey.
• Distribution channels. The canvas details how you reach customers, provide services, and deliver your value proposition. This portion of the canvas answers crucial questions about your customers, such as: Which channels work best for reaching them? How much do they cost? How can you integrate these channels into your workflows and your customers’ routines?
• Cost structures. A business model canvas identifies the primary costs that go into operating your business and providing services. It shows the relationship between those costs and other business functions, including which resources or activities are the most expensive.
• Key resources. These are the resources that your business uses to operate distribution channels, provide services, maintain customer relationships, and build revenue streams.
• Revenue streams. The canvas describes how your business generates revenue by delivering on your value proposition. How do your customers pay? How much does each revenue stream contribute to your overall revenues? And what are you customers willing or unwilling to pay for?
• How to Create a Business Model Canvas

To create a business model canvas, start with your overall business model. At its core, a business model is simply:

• The products and services you plan to sell,
• the expenses you will incur in delivering those products and services, and
• how you expect to make a profit.

Once you have those core components in place, you can break them down even further in your business model canvas. Spell out the partners, activities, resources, and propositions that define your business and allow you to offer your products or services. From there, articulate the relationships you have with your customers, including your customer segments and the channels you use to reach them. Finally, you can spell out the cost structure and revenue streams associated with your business.

• Creating Your Own Business Model Canvas

Want to get started on your own business model canvas? Miro’s free template makes it easy to customize and share a business model canvas with your collaborators. Get started today!

Improve your business value with Miro  

Check out our  business model canvas template, miro is your team's visual platform to connect, collaborate, and create — together..

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By Denis G.

Business Model Canvas Explained with Examples

In this article:

In this article, we’ll examine the nine steps needed to create your first business model using the Business Model Canvas. We’ll also look at the business models of Google, Uber, and Gillette to bring the theory to life and integrate all nine steps.

Before we jump in and look at the Business Model Canvas, let’s take a moment to define what we mean when we use the phrase “business model”.

What is a business model?

A business model is defined as:

• A plan for the successful operation of a business, identifying sources of revenue, the target customer base, products, and details of financing.

Essentially it tells us how the key drivers of a business fit together.

Now if you think about writing all this down in a document, then it’s obviously going to require multiple pages to capture all of that information. Now think about trying to get all of this information into your brain at the same time and its easy for business models to overwhelm us.

That’s where the Business Model Canvas comes in. It gives you a way to create a pretty clear business model using just a single sheet of paper. And what is great about it is it can be used to describe any company – from the largest company in the world to a startup with just one employee.

Advantages of the Business Model Canvas

The reason why you might want to create a Business Model Canvas is that they have the following advantages:

• Easy to understand : Because the canvas on just a single page and is very visual it’s very easy to understand.
• Focussed : It removes any fluff that might have been present in a traditional business model. It’s all killer no filler.
• Flexible : It’s quick and easy to make changes to your model and sketch out different ideas.
• Customer Focused : the canvas forces you to think about the value you’re providing to your customers, and only then what it takes to deliver that value.
• Shows Connections : The single page graphical nature of the canvas shows how the different parts of the model interrelate to each other. This can be really difficult to ascertain from a traditional business plan.
• Easy to Communicate : Because the canvas is so easy to understand you’ll be able to share and explain it easily with your team, making it easier to get them on board with your vision.

Using the Business Model Canvas

The first thing to notice is that there are nine elements or building blocks which make up the canvas:

We’ll look at each building block of the canvas in more detail shortly, but briefly, each segment tries to answer the following questions:

• Customer Segments : Who are your customers?
• Value Proposition : Why do customers buy from you? What is the gain you provide or the need you satisfy?
• Channels : How are your products and services delivered to the market?
• Customer Relationships : How do you get, keep, and grow your customers?
• Revenue Streams : How does your business earn money?
• Key Resources : What unique strategic resources does your business have or need?
• Key Activities : What unique strategic activities does your business perform to deliver your value proposition?
• Key Partnerships : What non-key activities can you outsource to enable you to focus more on your key activities.
• Cost Structures : What are the major costs incurred by your business?

Left/Right Split

Before we dig deeper into the detail of each of these elements, there’s just one thing to be aware of…

Broadly speaking we can say that those elements on the lefthand side of the canvas represent costs to the business, whereas elements on the righthand side generate revenue for the business.

With that, let’s dig into each of the nine building blocks in a little more detail.

1. Customer Segments

In this building block, you enter the different customer segments or that you will serve. If you can, create one or more persona for each segment you serve. A persona is simply a relatable description of each customer type you serve. They try to highlight your customers’ motivations, their problems and capture the “essence” of who they are.

One really important point to get across here is that customers don’t exist for you, but rather you exist to serve your customers.

Many businesses will serve just one customer segment, but not all. For example, Google serves two customer segments, people performing searches as well as advertisers.

If you think about breaking down the advertiser customer segment into personas, then there are many different types of advertisers you might identify. For example, Fortune 500 companies such as Nike with massive advertising budgets might be one persona, whereas small one-man businesses might form another.

2. Value Proposition

The value proposition describes the value that you deliver to each customer segment. What problems do you solve for each customer segment? What needs do you satisfy? The Value Proposition answers the question, “why will customers buy from us?”.

Some of the most common value propositions are:

• High performance.
• Ability to customize.
• Brand/Status.
• Cost reduction.
• Risk reduction.
• Convenience.

3. Channels

Channels refer to how your products or services are sold to customers. To complete this section ask yourself how do your customers want to be reached? How are you reaching them now?

Broadly speaking you can either have your own channels or partner with someone else.

Your own channels might include any combination of stores you own, a sales force you employ, or your website.

Partner channels could include a multitude of options, from using a wholesaler to working with affiliates to sell your products or even using Google Adsense.

4. Customer Relationships

The Customer Relationships building block answers the question of how you get, keep, and grow customers.

• Get : How do customers find out about you and make their initial purchase? For example, this could be through advertising on Google.
• Keep : How do you keep customers? For example, excellent customer service might help keep customers.
• Grow : How do you get our customers to spend more? For example, you could send out a monthly newsletter to keep them informed about your latest products.

The easiest way to define all of this is to walk through the entire customer journey in detail. That is how do customers find out about you, investigate whether to buy your product, purchase it and how are they managed after purchase.

5. Revenue Streams

Where does the money come from? In this building block, you state where your revenue is generated.

This might sound super simple but it isn’t. You’re actually trying to figure out what strategy you’ll use to capture the most value from your customers? Will customers simply pay a one-time fee? Will you have a monthly subscription fee? Perhaps you give away your product for free like Skype and hope that some portion of customers upgrade to the paid premium product?

Consider Google. Advertisers pay Google to place their ads in front of users with buying intent. For example, if you search for “Nike trainers” you will see ads. If you search for something without purchasing intent, such as “picture of flowers” you probably won’t see any ads.

In fact, you could say that Google operates searches without purchase intent as a loss leader to keep people using the Google system.

Taking a Step Back

If you look at what we have done so far we’ve filled in our Value Proposition and the building blocks to the right of it.

In a nutshell, we’ve developed our understanding of everything that relates to our customers.

Now we need to work on the area to the left of the value proposition. We need to build our infrastructure to be able to best provide the value proposition.

So with that let’s move on to the first infrastructure building block, Key Resources.

6. Key Resources

This building block describes your most important strategic assets that are required to make your business model work.

Broadly speaking resources can fall into one of four categories:

• Physical : such as buildings, vehicles, machines, and distribution networks.
• Intellectual : such as brands, specialist knowledge, patents and copyrights, partnerships, and customer databases.
• Human : sometimes your people will be your most key resource, this is particularly true in creative and knowledge-intensive industries.
• Financial : such as lines of credit, cash balances etc.

7. Key Activities

The Key Activities are the most important strategic things you must do to make the business model work. Key Activities should be directly relatable to your value proposition.

If your Key Activities are not relatable to your Value Proposition then something is wrong, because the activities you view as most important aren’t delivering any value to customers.

Key Activities can typically be broken down into three broad categories:

• Production : refers to delivering your product. You will typically do this to either a high quality or a high quantity.
• Problem Solving : Consultancies and other service organizations often have to come up with new solutions to individual customer problems.
• Platform/Network : Networks, software platforms can function as a platform. For example, a key activity for Facebook is updating the platform.

When completing this section, it is a mistake to list all the activities of your business, instead only include activities which are absolutely core to delivering your value proposition.

8. Key Partners

In this building block, you list the tasks and activities that are important but which you will not do yourself. Instead, you will use suppliers and partners to make the business model work.

Let’s look at Spotify. Spotify’s key activity is updating its platform. However, as it doesn’t produce its own music one of the key partnerships of Spotify will be the deals it strikes with record labels and publishing houses, without which it would have no music!

There are usually three reasons for creating a partnership:

• Economies of scale.
• Reduction of risk and uncertainty.
• Acquisition of resources or activities (e.g. music for Spotify).

9. Cost Structure

In the Cost Structure building block, we want to map key activities to costs. We also want to ensure that costs are aligned with our Value Proposition.

It should be straightforward to determine your most important costs and your most expensive after you’ve defined your Key Resources, Key Activities, and Key Partnerships.

Business Model Canvas Examples

That’s the theory out of the way. However, the Business Model Canvas comes to life when you see it in action.

So let’s look at three different examples of the Business Model Canvas so you can see just how useful it can be.

Example 1: Google

The first thing you should know about Google’s business model is that it is multi-sided. This means that it brings together two distinct but related customers.

In Google’s case, its customers are its search users and its advertisers. The platform is only of interest to advertisers because search users are also present. Conversely, search users would not be able to use the platform free of charge were it not for advertisers.

The Business Model Canvas for Google is shown below:

As you can see the diagram gives you an immediate understanding of the key parts of Google’s business model.

We can see that:

• Google makes money from the advertiser customer segment, whose ads appear either in search results or on web pages.
• This money subsidizes a free offering to the other two customer segments: search users and content owners.

Google’s business model has a network element to it. That is, the more ads it displays to web searchers the more advertisers it attracts. And the more advertisers it attracts the more content owners it attracts.

Google’s Key Resource is its search platform including google.com, Adsense (for content owners) and Adwords (for advertisers).

The key strategic activities that Google must perform are managing the existing platform including its infrastructure.

Google’s key partners are obviously the content owners from whom a large part of its revenues is generated. OEMs (Original Equipment Manufacturers) also form a key partner.

OEMs are companies who produce mobile handsets to whom Google provides its Android operating system to for free. In return, when users of these handsets search the internet they use the Google search engine by default, thus bring more users into the ecosystem and generating even more revenue.

A Word on Color Coding

There are no hard and fast rules when it comes to using color within your canvas. Some people prefer to use color to represent the links between elements, as we have done in this article. Others like to use different colored elements or sticky notes to represent related elements.

The choice is up to you. What is important is that any relationships between elements are easy to identify and easy to understand.

Example 2: Skype

In the diagram below you can see the Business Model Canvas for Skype.

From the Business Model Canvas we can see that Skype has two key value propositions:

• The ability to make calls over the Internet, including video calls, for free.
• The ability to make calls to phones cheaply.

Skype operates a freemium business model, meaning the majority of Skype’s users (the Free Users customer segment) use the service for free to make calls over the internet, with just 10% of users signing up to the prepaid service.

We can see from the customer relationship building block that customers typically have a help themselves relationship with Skype. Typically this will be by using their support website.

The channels Skype uses to reach its customers are its website, skype.com, and partnerships with headset brands.

Looking at key partnerships, key activities, and key resources together, the main thing to notice is that Skype is able to support its business model of offering cheap and free calls because it doesn’t have to maintain its own telecoms network like a traditional telecoms provider. Skype doesn’t need that much infrastructure at all, just backend software and the servers hosting use accounts.

Example 3: Gillette

The Business Model Canvas for Gillette is shown below:

Gillette’s business model is based on the “Bait & Hook” business model pattern. This model is characterized by an attractive, inexpensive or even free initial offer that encourages ongoing future purchases of related products or services. With this business model, the bait is often provided at a loss, subsidized by the hook.

In Gillette’s case, an inexpensive razor handle forms the bait, and continued purchases of the blades represent the hook.

The business model is very popular in SaaS (Software as a Service) businesses, where typically a free initial month leads to a monthly subscription.

In the diagram above we have used the thickness of the arrows to indicate the size of revenue generated. In Gillette’s case, all revenues are generated by just one customer segment, but the vast majority of revenues come from Frequent Blade Replacements, with just minor revenues coming from the purchase of handles.

If you look at the left-hand side of Gellettes Business Model Canvas you will notice how all major costs are aligned with delivering the value proposition. For example, marketing costs help to build Gillette’s strong brand and R&D costs help to ensure that the blade and handle technology is unique and proprietary.

Key Takeaway

Through these three Business Model Canvas examples, you should be able to see just how easy it is to represent the complete business model of any company on just one single sheet of paper.

Creating Your First Business Model

If you’re going to do create your first Business Model Canvas, then here are some tips to help you get started:

• Don’t go it alone: Don’t try to create your model singlehandedly. Instead get a small team of 3-5 people together so you can brainstorm ideas.
• Use a whiteboard if you can.
• Have plenty of different colored whiteboard pens and sticky notes handy.
• Plan on the process taking about an hour to complete your first draft Business Model Canvas.
• Decide which building block you’re going to fill in first. Usually, it makes sense to start with Customer Segments or Value Proposition and then work from there.

The Business Model Canvas provides a way to show the key elements of any business model on a single sheet of paper. The canvas is based on nine building blocks and the interrelationships between them. You can use the canvas regardless of whether you are trying to understand a startup with two employees or a Fortune 500 company with over 50,000 employees.

Cite this article

Minute Tools Content Team, Business Model Canvas Explained with Examples, Minute Tools, Oct, 2018 https://expertprogrammanagement.com/2018/10/business-model-canvas-explained/

Originally hailing from Dublin, Denis has always been interested in all things business and started EPM in 2009. Before EPM, Denis held a leadership position at Nokia, owned a sports statistics business, and was a member of the PMI's (Project Management Institute’s) Global Executive Council for two years. Denis now spends his days helping others understand complex business topics.

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The 15 Minute Business Plan: Business Model Canvas for Validating Your Startup Idea Fast

If you have ever thought of starting a new business or working on a tech startup idea , then you must definitely have come up with some sort of a plan.

At least in your mind, you may be thinking of a way to execute your idea and achieve the goal you are looking for from your business.

But how should you plan and how much should you plan? After all, with so much uncertainty and ambiguity what if your plan really doesn’t materialize?

Don’t worry, we are here to help you.

If you are brainstorming about the key aspects of your business and don’t know where to begin or if you are an existing manager who needs a better view of your current business, then you must read this article.

Instead of coming up with a 500 page document, articulating each and every aspect of your business plan, there is a wonderful standard template that applies wonderfully to all different kinds of businesses.

Be it an online business like blogging or ecommerce, or a manufacturing based business, retail or aviation, all types of businesses can use the elegant ‘Business Model Canvas’.

A Business Model Canvas will not only save you the time or hassle of complicated planning, but also provide you a brilliant single page look of your business that you can then use to analyse various aspects of it.

But what is Business Model Canvas?

Let’s dive straight in.

What’s the Business Model Canvas?

“ A Business Model Canvas is a tool used to visualize all the building blocks when you want to start a business, including customers, route to market, value proposition and finance. “ – eship.ox.ac.uk

In fact, a Business Model Canvas divides all the key activities, internal processes and stakeholders of a business into 9 building blocks , each representing an important area or aspect of business.

Following are the nine building blocks and the key questions they answer.

• Customer Segments : Who are the key customers of your business? And what are their key characteristics and needs?
• Value Propositions: Why do customers buy your product or service? What is the key benefit that your business offers?
• Channels : How are these benefits communicated to your customers and how is the product or service sold or delivered and why?
• Customer Relationships : What are the key touch points between you and your customers? And how do you connect with them throughout their journey?
• Revenue Streams: How does business actually earn money from various value propositions?
• Key Activities: What are the key things that your business strategically does to deliver this proposition?
• Key resources : What are the assets that business requires in order to stay competitive and create value?
• Key Partnerships: What are the external entities or stakeholders that are key to delivering the product and service to your customer? What are some of the partners to whom you have outsourced certain activities to focus more on your core work?
• Cost Drivers: What are the major cost drivers for your business and how are they linked to your revenue?

Here is an example of a simple Business Model Canvas for an ice cream vendor.

These 9 blocks are essential in order to create, capture and deliver value to your customers and affect each other in various ways.

In fact, a change in one of these building blocks may affect other areas and thus looking at them together will give you a sense of what happens in one area if you change another.

For example, say you are in an ecommerce business selling physical products. Today you manufacture your products yourself, but considering the scale you want to achieve you want to outsource manufacturing to an external vendor.

This may affect your key partnerships, cost structure, key resources and key activities. You can then clearly visualize all the changes that such a decision would require.

Well, this gives you a basic idea of what a Business Model Canvas is and its basic template.

But why should you really use a Business Model Canvas and not some other method? And how will it fit in what you want to do?

Why You Should Use the Business Model Canvas. And Not a Business Plan.

A business plan is like a blueprint of the business with detailed business models and financial projections, typically running into hundreds of pages.

On the other hand a Business Model Canvas is like a single page template with 9 building blocks that are key to delivering value to your customers.

So which one should you use and why?

If you are just starting a business or have started one already and are in a growth phase or an environment that is dynamic, we would recommend using a Business Model Canvas and not a business plan .

In fact, today Business Model Canvas is being used for a variety of reasons. And almost 36% of people who use it, do it for an entirely new business.

Here are a few reasons why using a business model makes better sense than using a business plan.

1. Business Model Canvas is Built for Handling Change

A Business Model Canvas represents all the key aspects of your business in a very simple fashion on a one page model.

If there is any change that happens in any one part of the model then you can easily visualize the trickling effect and understand what other blocks will be affected.

This way you can easily change and adjust everything in one place . This is important because when you are starting out or working on a new problem in your existing business, there is great deal of uncertainty.

Modern day business work in an iterative manner. That is, they start with certain assumptions and then as things become clearer they keep on adjusting according to the changing environment.

A business plan on the other hand requires you to put in a lot of work upfront and come up with projections that may or may not turn out to be true.

Adjusting the whole business plan is also tough as various parts are present in different sections of a lengthy document. It is also possible that you may miss out on understanding how a change in part affects the other.

2. Business Model Canvas is a Simple and Commonly Understood and Proven Template

Do you know, companies like Microsoft and Mastercard actually use Business Model Canvas.

Not only that it has proved to be an important tool for startups as well.

The key point here is that this template is not only simple but also well understood by a lot of people hence it facilitates great discussion .

If you want to discuss some key points to strategize or propose some business model to your colleagues then it surely makes a lot of sense to use the Business Model Canvas.

The issue with a 400+ page document is that you tend to lose focus in skimming through such a heavy file.

And also, there are so many different templates of business plans available and some sections of those may not really make sense for your business.

On the contrary, all the 9 blocks of a Business Model Canvas are inherent and applicable to almost all business models.

This leads to much better collaboration and understanding, better teamwork and a structured conversation.

In fact, according to a research , with a score of 3.5/4 better strategizing and sharing a common language were the top two areas that people believed following a Business Model Canvas helped them in.

3. Business Model Canvas Reduces Risk of Failure

When you look at all aspects of your business in a structured manner in a single page template, you are much better able to understand the bonds or pillars that keep your business stable.

Running a successful business involves both strategic planning and efficient implementation.

In order for both these to work, different departments, areas, resources and customers have to be considered and a balance has to be created.

To avoid the risks of failure, it makes a lot of sense to have a robust Business Model Canvas.

For example, consider that you want to shift your business from offline to online in light of the recent pandemic and your long term vision.

Just cataloging your products and building a website will not make your existing and new customers come to your business.

You may have to revisit your customer segments who now have to be digitally savvy and your channels. Your touch points with your customer or the Customer Relationship block will also evolve.

Since, you can see all these aspects you are now better prepared to execute the plan and make sure that all necessary factors are taken care of while evolving your model.

Now, that you understand the importance and usage of a Business Model Canvas, you need to understand how to really create a Business Model Canvas, and how each of the 9 building blocks can be thought of and filled for best results.

It is important to give careful thought to each of these. Don’t worry we will help you out.

Proceed to the next section of the article.

Practical Business Model Canvas Walk-through

Step 1: customer segments.

Arguably, the most important stakeholders for your business are your customers.

Irrespective of whether you start an online business to earn money , or a business with a physical presence, knowing your customers comes first.

And rightly so, the process of building your Business Model Canvas begins with identifying your customers.

The first step in this exercise is dividing your prospective customers into groups with similar features known as segments .

This is necessary because different groups or segments may have very different needs and hence the product/service that would be most relevant for them may be very different.

Not just for the design of the product or service, but segments are also important when you plan about your marketing communication.

For example, say someone who buys your product in small packs very often may be targeted differently than someone who buys high volumes of your product infrequently.

So, how to go about segmentation.

Deciding between B2C or B2B model

You have to first identify, whether you are going to be in the Business to Business (B2B) or a Business to Consumer (B2C) model .

Typically in a B2B business your customers are other businesses, while in B2C your customers are individual consumers .

The behavior and characteristics of these two types of customers are very different.

B2B customers follow a much more stringent and rational approach towards buying than individual customers and B2B buying is almost never based on impulse.

There are usually clear requirements regarding what a B2B customer is looking for in the product.

On the other hand, a B2C business is mostly driven by brand awareness and the decision making cycle for buying is also much shorter.

In terms of the number of buyers, you may be able to run a very profitable business with a handful of customers in B2B, but you will require a larger base when it comes to B2C.

If you are already an expert in a particular field or have come up with a SaaS product that enterprise can use, you can be in B2B, but if you want to play on brand awareness and individual engagement, then B2C may be a fit for you.

The segmentation strategy will differ according to whether you are in B2B or B2C business. To segment your prospective customers you will need something called a segmentation variable.

Segmentation variables are the basis on which you will divide your customers.

Choosing a Customer Segmentation Variable

Broadly, there are two ways in which you can divide your audience.

Demographics

Psychographics

The number and characteristics of people who live in a particular area or form a particular group, especially in relation to their age, how much money they have and what they spend it on. – Definition of Demographics by Cambridge University

Demographics will help you understand the basic features or characteristics of your customers and are typically easy to understand and collect.

For example, you can source demographic data from the US Census Bureau and the Pew Research .

Alternatively, you can collect this data through primary research, surveys and questionnaires by asking your customers to fill up forms .

If you are in an online business and want to improve your SEO or find out what are the demographics of users who are searching for relevant keywords, we recommend a tool called Demographics.io .

For example, say you own a website that publishes content related to writing blogs. A search for the keyword ‘blog’ on this site tells you that around 27% of people searching for this keyword are between the age group 25-34 and more than 54% are females.

For a B2B business your segments may be something like Industry type, turnover, geography, number of employees etc.

While demographics are an important indicator of some things, for a deeper understanding of your customers you would need a more nuanced understanding of their motivations and behavior.

Market research or statistics classifying population groups according to psychological variables (such as attitudes, values, or fears) – Definition of Psychographics by Merriam-Webster

Here are some of the questions that psychographics can answer for you.

• How do your customers spend most of their time?
• What do they do on weekends?
• What are their hobbies and interests?
• What are their religious inclinations?
• Are they heavy users or light users of your products?

Psychographics are extremely important in order to add value to your customers.

For instance, the same product or service may mean different things for different people and the motivations behind using them may vary.

For example, some people may eat healthy food in order to feel energetic throughout the day, others may be doing it to support their gym routine while some others may just want glowing skin.

Understanding your customers this way will not only help you tailor your products or service according to their specific needs but also help you to create your communication in a way that is the most effective.

Now after this exercise you need to understand your target segments.

Choosing your target customer segments

Two extremely important things that would determine whether you earn money from your customers or not are:

• Ability to pay
• Willingness to pay

Ability to pay depends on the income of individuals or businesses that you want to engage with and can be more or less determined from the demographics data.

On the other hand willingness to pay can be estimated on the basis of the psychographics and whether your product or service has a major value add for the lives of your customers.

Some other factors to consider are:

• High audience revenue potential : The market size for your chosen segment should be high.
• Expected growth rate over time: The growth rate of usage and market over time.
• Customer loyalty: The current loyalty levels of customers to available products.
• Attainable Market Share: What amount of market share is achievable for you?
• Market Profitability: Is there enough margin that you can obtain from customers that justifies your cost and goals?

In a nutshell, you would ideally want to be in a market that has substantial demand, which is expected to grow and you can make the existing customers switch to your product because you serve their needs better, at the same time earning profit.

One important thing to understand is that it is possible that you target different segments, this is especially true if you operate a multi sided platform .

For example, say you own a marketplace platform where you earn through your customers by charging them a subscription fee and charge a fixed price from your sellers for advertisements.

Here both end consumers and sellers become your customer. In order for the platform to succeed, you would need to pay close attention to both these stakeholders.

We would recommend, if you are just starting out, to keep your focus on one particular segment.

For instance, say you want to start a blogging business and are deciding on the niche , it is always better to cater to particular segments. This will increase your chances to earn money and your customers are more likely to draw value and become loyal.

Possibly you would be certain about your target customer segments by now, so you can fill out these details clearly in your Business Model Canvas.

For instance, say you are opening a romantic restaurant targeted at young couples and the theme of the restaurant is adventure and will be situated in California, then your target segment could be…

“Young men and women aged between 25-40, who reside in California and are fond of adventure”.

Step 2: Value Propositions

A value proposition is like a simple statement of benefits that your target customers get from your products or services.

This is extremely important because your customers use your products or service depending on how strong your value proposition is.

If you are starting a new business then this becomes even more important because you would want your customers to switch from your competitors to you.

Only if you meet their needs better and they find more value in what they pay you than your competitors will they think about switching.

So, how do you begin?

Understand Customer Problems and Competition

First thing is to understand the problems faced by your customers .

The idea is to answer and resolve the most pressing issues faced by your customers effectively.

Once you narrow down on the key problems and needs of the customer, study your competition to understand what needs or problems they are solving well and where the gap lies.

For example, say you are starting an ecommerce business and want to sell physical products like portable bluetooth speakers.

One great place to understand the demands of your customers and the performance of your competitors is Amazon.com .

You could develop a good understanding of your competition from the reviews section.

In the image, you can clearly see where your prospective competition is good and where customers expect better.

The number of reviews also give you an indication of how much demand already exists for the product.

In fact, it can provide you information on a lot of categories all the way from electronics to baby care and from automotive parts to groceries.

All you have to do is search for the product you want to research on and study the results.

Here is the list of top product categories on Amazon.com.

Another way to research demand and competition is through keywords .

Estimating Consumer Demand and Competition Through Keywords

The internet today gives you a lot of information about what people are searching.

Do you know, around 48% of online shoppers begin their online journeys through search.

Thus, understanding what keywords are being searched for the most and the competition for advertisements and seo for those keywords is a great first step to estimate demand.

One tool we recommend is SEMRush.com . 

This tool not only gives you an idea of the total volume of search, but also of how much competition exists for the keyword.

For instance, searching for the keyword ‘bluetooth speakers’ clearly gives the exact volume of search.

The ‘keyword difficulty’ and ‘Com.’ metrics tell you how difficult it would be for you to rank in the first page of Google search if you are new to business.

In our case keyword difficulty level is 92% which is on the higher side.

Now that you know the key questions your customers are asking and what is required in order to beat the competition, next is to decide how you are going to differentiate yourself.

Building a Strategy to Make Your Customer Switch to Your Product/Service

To make the customers switch to your products you can choose one of the four quadrants from the above matrix.

A narrow focus means that you concentrate on a particular segment or niche rather than a mass market.

If you are just starting out, it is better to focus on a narrow approach because you will be able to meet the needs of a particular segment better.

The other option you have to choose from is whether you want to beat your competition on price or by offering a better product .

You can make the customers switch to your product by selling the available product in the market at a lesser price. But to follow this strategy you would either need scale or a way to produce your goods and services at a lesser cost than the competitor.

Hence, we would suggest to first differentiate your product and give benefits and features that are not provided in the market by your competitors.

Writing a Value Proposition Statement

Now that you have a fair idea of what your consumer needs and how you will beat the competition.

You have to come up with clear value proposition statements .

If you are catering to multiple target customer segments, then you should have a clear and simple value proposition mapped to each of these customer segments in your Business Model Canvas.

For instance, say you start a blog that offers tips on making regular food healthy.

The typical target customer segments you have are the people who want to build muscles and stay at home moms.

Now these are two very different segments and your value proposition would be very different.

A good value proposition statement would look like this:

We help stay-at-home moms lose 14 pounds of fat in 45 days without having a jojo-effect .

We help muscle building enthusiasts reduce fat by 5 percent in 60 days without lowering energy .

Now you just have to enter these in the value proposition segment of your business model canvas.

Here is a quick checklist to validate if your value proposition is good or not.

• Are the benefits explicit and clearly stated?
• Is the target customer segment clearly identified?
• Is the value proposition clear and simple?
• Is the value proposition supported by evidence of demand?
• Is the value proposition viable in light of competition?

Step 3: Channels

The third building block of the business model canvas is ‘channels’.

Channels refer to the touch points through which the company delivers value to its customers .

The primary functions of a channel are:

• Educate the prospects regarding services and products that a company offers
• Provide an opportunity to prospects to try these services/products
• Facilitate the purchase of products or services for the customers
• Helping the customers realize and benefit from the value proposition
• Providing the after sales services for the clients

But how do you go about planning your channels and what are the factors to be considered. Don’t worry we have you covered.

First let us classify the channels to be decided.

Broadly we can divide the channels into two types:

• Acquisition Channels : These are the channels that help you acquire your customers and bring to the point of sale.
• Delivery Channels : These are channels through which the product or service is actually delivered to your customers

Let us see how to go about deciding each of these.

Acquisition Channels

Your acquisition channels help you generate more leads that eventually become paying customers.

This part consists of deciding how you will advertise and communicate about your products to the customers and guide them into buying your products .

You can choose to advertise on billboards, television, radio and other physical areas to make a large number of people aware about your offering. However, these channels help you reach a large audience but are also extremely expensive.

Today the internet offers you various avenues where you can get these leads in a very cost effective manner.

If you want to make money online and are in a digital business, it makes even more sense to try digital channels for advertising and generating leads.

Your methods of traffic acquisition could be either organic , which means natural growth and acquisition of your customers without paying. Or inorganic , which includes paid media and channels online.

The main way to acquire traffic online in an organic manner is through SEO .

Search engine optimization or SEO involves making your content search friendly and relevant so as to feature in the top results when someone searches for a product/service you offer.

With most online journeys beginning with search, SEO is the one of most effective ways for long term victory online.

Only downside is that it may take a while before you build your SEO to promising levels.

The next option you have is to advertise on social media channels like Facebook , Instagram, Youtube, Pinterest etc.

The great advantage that these channels offer is that they have sophisticated ways to target customers and you can customize who you want to target based on a variety of factors like demographics, geography and interests.

But how to decide between these channels?

First you have to make sure that the kind of traffic or leads you are looking for are actually logging into these sides.

For instance, if you are in a B2B business then advertising on LinkedIn would be more relevant, given that most decision makers from corporates actually spend time on it or have their profiles there.

While for B2C other channels may make more sense.

It is best to start with multiple channels and then invest more money into the ones which give you better results .

For example, say you invest $50 each on Facebook and Youtube. From Youtube you get 100 leads but only 20 from Facebook.

20 of the 100 leads from Youtube become paying customers and only 5 from Facebook eventually purchase.

Clearly Youtube is offering you better return on investment. Hence it makes sense to pump in more dollars into this channel.

Distribution Channels

Next comes distribution channels. These channels enable the delivery of goods or services to a customer.

For example, if you are in a business of selling clothes. Then how do these clothes reach the end customers? Is it through a retail outlet, or can they purchase online?

All these questions are answered by what channels you choose to distribute your products.

Broadly speaking there are two different types of channels:

• Direct Channels
• Indirect Channels

Direct channels are those wherein you as a company directly interact and sell to your end consumers.

For example, say you own a website which sells physical products. Your customers ‘directly’ purchase from you online.

Similarly, if you own the brick and mortar retail stores where your customers come and get your products then also you are directly interacting with your consumers.

On the other hand if you sell to some middlemen and they in turn reach your consumers then it counts as an indirect channel.

While you have more control over your margins in a direct channel approach, indirect channels usually offer less margins.

But the flip side is that indirect channels usually buy in bulk and hence are good for volumes.

To choose a particular channel you should consider these factors.

• Number of consumer segments and types of market you are targeting : You want to be selling at a place where your target customers are most likely to visit. For instance, notice how Coke and Pepsi sell their soft drinks at fast food outlets like McDonalds or Burger King.
• Total cost for each channel: There is an associated cost for each channel that you wish to set up . For example, the cost of setting up an ecommerce website or leasing or building your own retail channel could result in higher costs than simply selling your products to a wholesaler.
• Type of product being sold and the consumer's awareness about it: If the product you are selling is fairly standard then you may need much explanation to be given to customers. But a complicated product may require the company to be in direct contact with customers to explain the offering.
• Amount of control required over experience: Channels owned directly offer more chances of making the experience in line with the brand and product, while indirect channels will offer a similar experience for you and competitor products.
• Duration of partnership: How long you intend to sell through the same customers also has a bearing on which channel you would choose. Hence, it is important to negotiate your terms in case you employ indirect distributors for your products.

Once you are sure of which channels to choose you can simply write them in the block. Make sure it is extremely convenient to find and buy your products for all your target customer segments.

Remember, the easier it is for customers to get the products, the more you will sell .

Step 4: Customer Relationships

This is an important block of the Business Model Canvas and helps you engage with customers in one or several ways .

Customer relationships block mentions all the ways in which a company chooses to maintain relationships with the customers.

Customer relationships are maintained with a primary motive of selling more to the customers while keeping the customer satisfied.

The goal of customer relationship management is to assist the customer in three stages of his journey with the company.

Customer Acquisition

Customer retention.

Your first task here is to guide a prospect to become a customer .

Typically this happens through different steps in a customer journey.

Let us see how each step in this journey may require different efforts on your part for customer relationship management.

Your customers mainly follow four broad steps before they become paying customers.

These stages are awareness , desire , interest and action .

The first step is to make your target customer segment aware about your offering. This includes letting your customers know that you have a potential solution to a problem that affects them.

Based on the type of business this may be done either in an automated or a manual way.

For instance, if you are in a B2B business you may choose to send over a sales representative or a solution expert to a customer.

Or wait for leads to show up themselves after you publish about your expertise in places like magazines or blogs where these prospective customers find you themselves.

Mostly awareness is built through advertising, SEO and word of mouth for a B2C business .

For instance, to build awareness about your offering you may choose to show a video ad to users who see a music video regarding your online music course.

While many users may become aware about your business, some of them may actually be convinced of its value or at least become curious about your product or service.

Consider that you showed an ad which generated 10,000 impressions or 10,000 users saw the ad. Now say 2,000 of them clicked and visited your website to read about your offering.

These 2,000 have now moved up the funnel by showing interest to buy the product.

At this stage, you may choose to save their email addresses for a more personalized conversation. You may even assign a sales rep to contact them if they choose to leave their details.

All these touch points become part of your customer relationship management strategy.

Now say that the person from your company who contacted the user showing interest manages to explain the value proposition you offer to around 500 of these users who now desire to buy your product.

The next step is to seal the deal with an action on the prospect’s part. The action of purchase by which they become your paying customers.

The goal of CRM (Customer Relationship Management) here is to make this journey as smooth as possible and convert the maximum number of prospects into paying customers.

There are certain goods and services that provide continuous value to customers and so customers keep buying them.

This stage deals with creating loyal customers who stick to your brand .

For instance, say you run an ecommerce website selling gifts. You realize that on an average a person buys gifts for someone at least once every two months. You would ideally want your customers to keep coming back for more orders every second month.

To do this your customer relationship program will have to make sure that you keep communicating with the users, apprising them of latest offers and products.

These are the few ways in which you can increase the chances of customer retention:

• Create a brand image that your customers associate with.
• Deliver the quality you promise.
• Always solve problems and reduce friction for your customers.
• Incentivize them for buying regularly from you with points or freebies.
• Promptly resolve all their complaints.

Your sales will increase by either getting new customers or selling more to the existing customers.

Upselling deals with making your existing customers buy more from you. You can do this by increasing their usage of the existing products or by selling different kinds of products to them.

For example, if you have an online business that helps people find relevant jobs and you charge a subscription fee for sending them relevant openings. You can add more value to them by offering resume making services and earn more for yourself as well.

In a B2B setup, your engagement manager can actively look for opportunities to sell more.

If you are an independent consultant, then you can offer more services to your customers if you have some expertise.

Maintaining Customer Relations through Touchpoints

Now that you understand the main objectives that you can accomplish with this block, you may want to know how to maintain relationships with your customers for different touch points.

There are broadly six ways of engagement:

• Personal Assistance : In this method you personally contact the customers through a human touch. These contacts may be made through call center agents or other employees.
• Dedicated Personal Assistance: For buyers who are very valuable, for example, take people with high net worth for a bank who deposit millions of dollars. A bank may have a dedicated person to maintain the relationship.
• Self Service: The ‘do it yourself’ method works great for reducing cost, but isn’t as strong as a human touch. This can be accomplished through videos explaining a process or an FAQ section on the website.
• Automated: These include all the automated methods like an IVR or a chatbot that interacts to solve problems for your customers.
• Communities: You may create communities and forums with your best customers playing a key role to solve problems for other customers. For example, there are tech groups that help all the users related to a particular technology.
• Co-creation: There are products and services where you engage with your customers to co-create services that suit them. In this method the customer actively participates in the process to add value to himself/herself. For instance, an interior designing service which actively asks customers to define their taste and be involved in the designing process.

You have to focus on the cost of each of these methods and whether the value that the customer brings to you justifies it or not.

For instance, you may not want to have a dedicated person who you pay $1,000 a month for a customer who only gives you $100 business a month.

All you have to do now is enter your chosen ways maintaining customer relations and put it in the block. Remember you should have touchpoints mapped to each of the customer segments.

So for example, if you have an SaaS (software as a service) online business wherein you charge for monthly usage of the product and have individual users as well as enterprise users.

You can map ‘automated’ service of individual users and ‘dedicated’ personnel for enterprise.

Step 5: Revenue Streams

The revenue streams block covers the various ways in which you monetize your business and earn money from your customers.

There are multiple ways of earning money. Some these are:

• Sale of Assets : You can completely transfer the goods or property for a price to a buyer. For example, a hotel chain selling one of the hotels to raise some cash.
• Usage : Payment collected for each usage of a product or service.
• Subscription: When payment is made for a repeated use of a service over a particular period. For instance, Netflix, Amazon Prime etc.
• Leasing/Renting: Renting out an asset for use for a fixed period. For example, renting an apartment for a fixed period.
• Licensing: Allowing the use of your intellectual property for usage by another company or person.
• Brokerage Fees: Acting as an intermediary between two parties and earning a commission as a result. For instance, stock brokers who earn a commission by enabling sale and purchase of equity shares.
• Advertising: Allowing your medium to be used as an advertising platform for other companies. For example, Google, Facebook and other platforms that earn money for allowing other companies to advertise on their platform.

Which method and price will work for you, depends on what kind of business you are in.

Pricing your product or service

The basic rule is that your customers pay you when the ‘perceived value’ they get from your product/service is more than what they pay.

From your perspective, you have to sell higher than the cost on an average so you earn money for yourself.

While this is the basic rule, other things to consider is the price at which competition offers similar products and the supply and demand for the kind of product/service you offer.

If your value proposition is very strong, then you can charge a higher price than your competition. Otherwise to make the customers switch you will have to keep your prices lower.

It is possible that you don’t get your pricing right the first time. You can start with some assumptions and planning, and adjust your prices as you go forward. It is important to have a learning mindset.

Here is a quick snapshot of various pricing strategies that can help you.

One you decide on the price of the service, then next is to choose one of the methods of charging.

Method of charging customers for your product/service

• Transaction Revenue : Charging for each transaction that customer does. For example, each time a user buys an item from your website you charge a fixed amount.
• Recurring Revenue : Similar to a subscription based service where the revenue is collected automatically every month (or any fixed period) depending on usage. For example, your electricity service that charges every month based on usage.

Onboarding customers to services where the charges are recurring is tougher than transactional method because the customer is worried about committing for a longer duration to a service which is new for him/her.

Hence, you see companies offering a free trial before asking the customers to pay.

This way they try to reduce the ‘cost of trial’ for the customer.

You can decide which method will work for you based on the usage of your offering. For example, if you offer a product that is used only once in a long time, then a subscription based charging may not be the best for you.

Thinking long term with pricing

Most businesses exist to earn profit. So, remember no matter what pricing method you choose it should result in a positive cash flow for your business.

It should also be sustainable and should lead to long term success of your business.

With a dynamically evolving environment, various new offerings may be released in the market and you may get new competitors from time to time. Hence, it is possible that you may have to revisit your pricing strategy from time to time.

The important thing is that you keep the customer at the core of your decisions and be extremely clear about the value that you are adding.

If your customer is also convinced of the value, then it will be easy to make them pay.

Managing multiple revenue streams

Different customer segments may contribute to your revenue in different ways.

Take the example of Microsoft, they sell licenses for softwares like Windows, Microsoft Office for individual customers and also earn from enterprises by offering bulk deals or enterprise services through cloud.

You should be aware about what percentage of revenue is contributed by which customer segment, basis the value proposition.

For example, if you are in an ecommerce business, you may have a corporate gifting option specifically for office going people which contributes 10% of revenue .

This is important for you to understand which part of business contributes the most amount of cash for you.

Step 6: Key Activities

This block consists of all the activities that are key to delivering your value proposition to your customers .

The span of control and how you handle the key activities will vary depending on what kind of business you are in.

Some parts of your activities may be outsourced while some may be controlled internally.

To understand the key activities carried out by your business you should focus on the value chain of your business.

Following are the key activities and how to decide if they are key to your competitive advantage. While these activities may differ depending on your business model, the basic flow and idea will remain similar.

Let’s dive.

Research and Development

The value of R&D is particularly high in technology based companies and big companies spend billions of dollars on it.

Here are the top 10 spenders on R&D (values in million dollars)

Nevertheless, to stay relevant and innovative you always need to research and improve your products.

There are three basic things for which you will use R&D.

• New Product Development : For growth, one of the ways to increase revenue is by offering more products in the market. Imagine a company like Apple, which first came up with iPods, then iPhones and iPads, and then Airpods. With each of these products it was able to grow its revenues multifold.
• Modifications to Existing Product: With the needs of the users changing and improvement in other areas you may choose to make modifications to your existing product. The goal of this exercise may be to reduce cost, earn more revenue, stay relevant or a combination of these factors. For instance, Android comes up with a new version of their operating system with added functionalities and increased efficiencies.
• Radical Innovation: Radical innovation gives you an opportunity to completely disrupt the current ways of working. This innovation may be to develop a product or a process that completely changes the status quo.

Though the chances of success are less in this scenario the gains may be very high. Consider how Uber and Airbnb changed the world, or the invention of smartphones revolutionized the mobile phone industry. If you manage to get a patent, then you can monetize it even better.

This part deals with manufacturing or procuring the end product that your customers may use.

There are three basic models that you can use:

• Producing everything in house: You may choose to produce everything in your factories or facilities by procuring raw materials. The benefit here is that you are able to control the quality of your product extremely well and if you have some specialized technology this can become your competitive edge. The downside is that it is usually very capital intensive and scaling your business may also be difficult using this approach.
• Outsourcing production: The next option you have is to completely outsource production and procure the end product through manufacturing partners. This reduces your overheads, allows you to scale quickly while also covering your risks. The only reason to not follow this approach is when you have some proprietary technology you don’t want to share or when the product is so different that it is difficult to find manufacturing partners.
• Outsourcing a part of the production process: You can also follow a mixed approach where you can outsource a part of the production process. In this case you procure some part of the product and then process it to make the final product. For example, say you manufacture smartphones. You can procure all the parts from outside and just assemble them in house.

This part of the activity will also include handling logistics and inventory.

Logistics include all the transportation including bringing in the raw materials to your facilities, moving the unfinished products between factories (if required), moving the finished products to inventory and then finally delivering to the end customer.

Inventory includes the storage of your products in warehouses that is needed to fulfil demand of the customers. You will have to estimate demand and then plan your inventory to avoid stock outs.

Remember, managing inventory is essential as it is a major cost and you may want to minimize wastage while also maximizing sales.

Sales and Marketing

The key activities that will be performed by this function range from designing the strategy to enabling the last mile fulfillment.

• Strategy : This includes the overall planning for what the company is trying to achieve from the marketing perspective and how it will go about doing it. For instance, say you are targeting a million dollars in revenue in a year, then the strategy would include everything from what products you will sell, how it will be advertised and so on.
• Product Development: The marketing team works together with R&D or product development team to validate consumer demand for the new products being developed and help them design features that are most relevant to customers.
• Communications and Advertising : All the communication to the customers and messaging about the company and product offerings are controlled by marketing. This includes the events that will be arranged for activations of products like exhibitions etc.
• After Sales Support: These set of activities include helping your customers in the post purchase journey. Your customer support departments, automated chatbots and other ways in which you help your customers maximize the value from products they have bought and solve the required problems are covered here.

These sets of activities are just indicative. It is possible that some of them may not be relevant to your business model.

For example, if you are in a blogging business then production may not apply to you like a manufacturing process. Instead it would mean the development of content, which again you can choose to do by yourself or by hiring external help.

Similarly if you are in an ecommerce retail business then you may or may not own inventory depending on your model. In that scenario, partner management would become your key activity.

Step 7: Key Resources

This building block comprises the assets that help you unlock and create value for your customers. Key resources deal with the operational aspects of your business and are responsible for bringing the value proposition to life for your customers.

There are various kinds of key resources that act as enablers for your business.

These key resources should be well differentiated from your customers in order to be better than them

Types of Key Resources

Broadly there are four different kinds of key resources.

Physical Resources

Physical resources, like equipment, machinery, buildings etc, are tangible resources which are used to create the products and services for the customers.

While these may not be extremely vital for an online business, they have great importance when it comes to businesses which have to deal with the physical world.

For example, Amazon will need to have large warehouses, where the products are sorted and stored. Similarly, a giant like Apple would need labs to experiment on its devices and manufacturing facilities to deliver value.

A telecom company would need towers, switching centers and servers to ensure continuity of services. A cloud company like Oracle will need data centers to meet the demands of the customers.

Depending on the type of industry, these assets may comprise a large portion of the capital required for setting up business.

Intellectual Resources

Intellectual resources are powerful intangible tools that enable a company to maintain its edge over competitors.

Do you know, Coke has a secret formula for producing the syrup that eventually translates into the beverage. Similarly, Google has its proprietary page rank algorithm that retrieves the most relevant search results for you.

In the world of pharmaceuticals, this is even more important when producing medicines which have been patented.

Another intellectual resource that an online business has is the data that it collects over a period of time. With analytics and machine learning uncovering insights and patterns, data can unlock great opportunities. This also includes the customer lists or emails that you collect over a period of time.

In fact, intellectual resources are a great way to get a competitive advantage . No wonder the number of patents granted in the US is increasing year on year.

Human Resources

Employees are the key enablers of value in an organization. In fact, hardly any company can run successfully without its employees.

Imagine, would the big machines in so many industries function without any operators or maintenance staff? Would Dominos be able to deliver pizzas without delivery guys?

In service industries the role of employees is even more profound. The quality of work delivered by consulting organizations like McKinsey, BCG, Bain or the Big4 is highly dependent on the quality of consultants they have (no wonder they hire the best of people).

Hence, this block should include the key human resources that are important to your business.

In online business, content creators or people who write code for you are very important. Google may not have been the giant that it is, if it did not have expert coders.

This will also give you an idea of what kind of hiring your business would need to deliver the key products.

Financial Resources

Financial resources include the capital , the sources of debt (or line of credit) and the stock owned by a company. The requirement of this kind of resource will vary depending on the kind of business that you choose to do.

For example, the capital requirements of a bank may be completely different from that of a business that makes money through online sale of educational courses.

If you are just starting a business, you may choose to raise funds from friends and family in the beginning. Once it gets established you may turn to investors and venture capitalists.

If your business has massive requirements of advertising or needs rapid expansion to various geographies then financial resources will be the key to your success.

Another important consideration here is working capital . Working capital is the money required to meet your day to day operations like paying your vendors and buying inventory etc to keep your business running.

Which resources are most important?

To decide which resources are the most important for you, you will need to evaluate the resources without which you cannot continue your business and those which contribute greatly to your success.

Hence, employees may be more important than machinery when it comes to consulting business. Similarly, power generation will have a major dependence on plants that produce electricity.

Step 8: Key Partnerships

This block consists of entities which are not internal to your business but are extremely important in delivering value .

Consider the supplier of goods for your business, or the manufacturer to whom you have outsourced business, or the investor who has promised to back your venture.

All these are important partners for your business and are critical to the success of your model.

In fact, with the rise of outsourcing partnerships have become even more important.

Would Kindle be a successful product if book writers don’t agree to publishing their content in the format? Or would the Apple iPod be successful without the music producers selling their music on the platform.

Hence, these outside partners are equally important and this justifies their place in the Business Model Canvas.

There are four broad types of partnerships that you will have:

• Strategic Alliances : These are partnerships between non competitors that benefit both the parties. For example, an automobile manufacturer may give exclusive rights to a partner in one country to distribute its products.
• Coopetition : These are alliances between competitors for mutual gain. For example, two video content creators may collaborate for an even greater share of audience, leading to increase in popularity of both influencers.
• Buyer-Seller Relationships: You may procure raw materials or sometimes finished products from outside. These types of relationships or partnerships are referred to as Buyer-Seller relationships. Sometimes, these relationships can also become a great source of competitive edge. For example, say you have exclusive rights to buying a superior quality of coffee in a particular region with a seller. Outsourcing relationships with partners also fall under this category.
• Joint Ventures: Joint ventures are partnerships between two separate companies when they have some sort of a mutual gain in working together. This could include sharing of resources, sharing of technology or if they produce complementary products. For instance, a data storage company may partner with an enterprise software firm to offer an end to end solution to the customer.

Key questions to ask before getting into partnerships

• Have I researched my partner well? The first thing to do is to research your partner well. This includes the history of the company, financial stability, integrity and the quality of products delivered.
• Is it a win win agreement? The partnership should be mutually beneficial. A good long term relationship cannot be built if one loses and the other wins. Therefore, there should be enough money to be made for both the parties.
• How long should the partnership be? Your contract duration should be negotiated on the basis of length of the relationship required to make your business successful.
• Are the key expectations and deliverables well defined? You should be clear about the terms of agreement and they should specifically contain what is to be expected from the partnership.
• Is the process being outsourced part of my core activity? As long as possible you should have direct control of the most key core activity of your business.
• Are my financial resources enough to cover the cost of partnership? You will need to pay your vendors on time to stay in business. Hence, be sure that the rate being negotiated is something you can easily pay for.
• Do I have quality checks in place? Getting work done from partners may require strict levels of quality control. Hence, make sure you have dedicated employees to validate quality.

Why Should You Choose Partners for Some Activities?

We should remember that some types of outsourcing in business process are more common, and there are specific reasons why companies choose to delegate some work to partners.

The major reasons are reducing costs and focussing on core activities.

For instance, you may choose to focus on the core activities that generate value and outsource the ones that can be easily done by others.

Do you know, Coke mostly focuses on its marketing activities and outsources bottling to another company?

Some other reasons are improving quality , conserving capital and increasing speed to market .

Step 9: Cost Structure

This brings us to the last building block – the block for cost structures.

Cost structures include the major sources from which your business incurs cost.

The first step is to understand what are the costs contributed by each of the key activities and key partners. In order to be cash positive you should collect your revenues on time and have cost under control.

Now, different business models will have different kinds of costs attached to it. While some business businesses will be capital intensive, that is, they will require a large amount of capital in order to function (e.g. telecom) while others may not require a lot of capital to begin with (e.g. software development).

There are two major kinds of costs associated with a business:

Fixed Costs

Variable costs.

Fixed costs are costs which are paid upfront and do not vary with the number of customers served by a business.

For example, consider the money that the airlines pay to the airports. There is usually a fixed component to it known as the yearly fee. No matter how many customers fly, this cost will always exist.

Another example is rent. Consider a restaurant which pays monthly rent for the building it operates in. No matter how many customers come to dine in, this cost always remains the same.

Now, fixed cost doesn’t always have to remain fixed, it only means that it remains fixed for a particular period of time.

Example of fixed costs:

• Advertising and marketing expenses
• Depreciation

Contrary to fixed cost, variable cost varies with the number of customers served. For example, sales commissions paid for each dollar of sales or shipping charges per item delivered to the customers.

The biggest portion of variable costs in most businesses are the raw materials and utility bills.

Examples of variable costs:

• Raw material cost
• Labor costs
• Shipping costs
• Packing supplies
• Utility bills like electricity

Your business model will decide whether you have a larger proportion of fixed costs or variable costs.

For example, consider a brick and mortar apparel business and an ecommerce based apparel business.

A brick and mortar based business will have rent as the major fixed cost while the cost of operations is the major driver of cost in an ecommerce business.

Another way to classify costs is categorizing them as Capital Expense (CAPEX) or Operational Expense (OPEX). Capital expenses are costs which are spent in order to acquire an asset.

Operational costs are costs which are expensed. Consider a company buying stationery, this will be counted as an operational expense. On the other hand the expenditure done to buy a big server to support operations will be classified as a capital expense since the acquired server becomes an asset.

Ideally, the margin that you obtain from your revenue over variable costs should be enough to cover your fixed costs in order to generate positive cash for you.

This can be done in two ways:

• Economies of Scale : Economies of scale occur when you sell enough quantities of an item such that the cost of serving each customer reduces. This happens due to multiple reasons. A first that operates on scale is able to negotiate better prices with the vendors. This is because they get volume discounts. Since, the scale is big, fixed costs are much better covered.
• Economies of Scope: Economies of scope occur when the same fixed costs are covered by different products and services. For example, consider a firm that operates its own logistics network. If it enters multiple product categories then the same trucks can now transport these multiple products sharing the cost for each of them.

How conservative should you be with costs?

This will depend on whether you consider yourself as a cost driven business or a value driven business .

A cost driven business focuses more on reducing cost. For example, consider ‘Ryanair’, the airline is based on removing all the frills and just offering the basic airline services in order to cut costs.

On the other hand a luxurious hotel business will focus less on cost and more on providing the best of comfort and facilities to its guests.

Usually luxury products are focused more on value and basic products that have less differentiation focus more on cost.

Once you decide your major cost heads, jot them down in the cost driver block and see them in conjunction with revenue from various sources.

It is important to validate whether your business model will be successful in generating cash and what level of scale you will require to make it work and whether it is doable or not.

Business Model Canvas FAQ

A business model canvas is a one page visual template that covers the key aspects required to make a business work. It consists of 9 building blocks which should work in conjunction with each other in order to deliver the key value proposition of business to the target customer segments.

A business model canvas has 9 building blocks. These are: 1. Customer Segments: Who are the key customers of your business? And what are their key characteristics and needs?  2 . Value Propositions: Why do customers buy your product or service? What is the key benefit that your business offers? 3 . Channels : How are these benefits communicated to your customers and how is the product or service sold or delivered and why? 4 . Customer Relationships : What are the key touch points between you and your customers? And how do you connect with them throughout their journey? 5 . Revenue Streams: How does business actually earn money from various value propositions? 6 . Key Activities: What are the key things that your business strategically does to deliver this proposition? 7 . Key resources : What are the assets that business requires in order to stay competitive and create value? 8 . Key Partnerships: What are the external entities or stakeholders that are key to delivering the product and service to your customer? What are some of the partners to whom you have outsourced certain activities to focus more on your core work? 9 . Cost Drivers: What are the major cost drivers for your business and how are they linked to your revenue?

Instead of coming up with a 500 page document that describes your business model, you should start with a quick business model canvas. This will give you an idea of the key parts that are required to make your business work. Start with a business model and come up with an initial version of your business model canvas. Then test your key hypothesis through experiments and take the learning from those experiments to adjust your business model canvas. Use this as an iterative process for learning and keep adjusting your business model canvas till it becomes perfect. Business model canvas is better for testing model assumptions because it is easy to change. It is also a standard template and is well understood by all. Many companies have successfully used it especially in dynamic environments.

There are various kinds of business models depending on what method of monetization you use and how charge your customers for your value proposition. Here are a few of them you can adopt if you don’t have a completely new business model. 1. Brokerage : Bring together buyers and suppliers and charge a commission for the transaction. 2 . Bundling: Offer a few products or services together as one package (eg. iPod and iTunes) 3 . Crowdsourcing : Raise funds from a group of people who are interested in supporting your offering 4 . Disintermediation : Sell directly by cutting out the middlemen 5 . Freemium: Charge a few customers for specialized service and offer a free version with limited functionality 6 . Auction: Sell products through an auction rather than a fixed price (Eg. eBay) 7 . Subscription: Charge for a fixed period of time for unlimited usage of service (Eg. Netflix) 8 . Leasing: Lease or rent an asset for a fixed period of time for money 9 . Usage : A simple model where you charge per transaction or usage of product/service 10. Advertising : Charge other businesses for advertising on your platform. 11. Affiliate: Earn a commission by selling someone else’s products.  This list is just indicative, you can have a lot of business models based on one or many of these ideas.

Business model canvas was invented by Alexander Osterwalder. He is a Swiss theorist, author, consultant, speaker and entrepreneur.

A lean canvas is just an adapted version of the business model canvas which is more suited for startups. It was created because there are some blocks of the business model canvas which are difficult for a startup to know when it starts doing business. This is because by definition a startup tries to do something that no one has done before making the whole model extremely uncertain. Here is a complete list of differences between the two.

Source: canvanizer.com

Ready to Launch Your Startup using the Business Model Canvas?

Having read this article in detail, you must now be well versed with a business model canvas and how to create a quick one for your business.

If you are looking to start a side business to earn some money online or any full time business then this template is going to be very useful for you.

A lot of learning about your business and whether your assumptions are true or not will become clear only when you start your venture.

The important thing is to think like an entrepreneur and have a learning mindset and you will definitely succeed.

If you are short on money you can apply the business model canvas to earn money from a blogging business with less than a $100 investment or you can choose any business model that suits you.

The important thing is to take the dive and begin, and if you follow all the tips and tricks shared here, you will definitely succeed.

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Anastasia belyh.

Anastasia has been a professional blogger and researcher since 2014. She loves to perform in-depth software reviews to help software buyers make informed decisions when choosing project management software, CRM tools, website builders, and everything around growing a startup business.

Anastasia worked in management consulting and tech startups, so she has lots of experience in helping professionals choosing the right business software.

The Business Model Canvas: Better Than a Business Plan [+ Free Templates]

Some links included here may be affiliate links, meaning we may earn a small monetary bonus from referring you to them. In no way does this increase the price you pay.

Do you have a great idea for a business or a new product/service but don’t know how to get started?

The business model canvas is an easy-to-use tool that can help you understand your idea and make it more concrete. It’s also a great way to talk about your idea with others, so they can give feedback on what works and what doesn’t.

The Business Model Canvas will help you identify the key components of your venture and map out the relationships between them. You’ll be able to see all aspects of your venture in one diagram—from customer segments, value propositions, channels, revenue streams, costs structures to team roles and organizational structure.

While it’s often used by startups, larger businesses, and more “refined” companies, this honestly is a great tool, no matter how large or small your company is.

I’ve created a free toolkit that includes a business model canvas template and more helpful tools. You can grab it below:

In June I was accepted into a business coaching/learning program called “Power Up Your Business.” It’s sponsored by a local community college and essentially they teach you the framework for a powerful business, along with offering business coaching, working on tactical business plans, and more.

I had heard of this before, and even tried to use it for a “business” I was going to run about 4 years ago ( which clearly didn’t go anywhere).

When I previously used the canvas, I was really confused on everything and I kind of just put it to the side and never thought about it again. So when I heard the topic for the day I wasn’t wildly impressed. I was thinking it wasn’t worthwhile, and was just another “exercise” some trainers and professors make you do.

But this class was one of those times where you go from “yeah, I already know this” to “holy crap, I have a LOT of work to do.”

I felt energized and excited, and THAT NIGHT I went home and was thinking about this before bed. This led to an episode of entrepreneurial insomnia , and I woke up at 3am with my mind RACING about all kinds of ideas for my business.

I actually started a new note on my phone, wrote down everything that came to mind, and by the time I got done it was quite long!

I got out of bed around 5am and filled out an entirely new business canvas for a pivot I was going to be making in my business.

This exercise gave me so much clarity on how I’m going to be moving forward, so I had to share it with you.

What is the Business Model Canvas?

The Business Model Canvas was created by Alexander Osterwalder, and is a strategic management and entrepreneurial tool used to capture the essence of your new venture. It will help you determine if you are on the right path, saving valuable time, energy, and resources in the process. This tool helps entrepreneurs build businesses that can evolve over time with ease.

In short, the Business Model Canvas is a way to quickly put together a business plan without the need for writing a traditional 80-page business plan detailing every aspect of a business you have yet to create.

It’s a method that allows you to quickly iterate and make changes to the plan without having to start a new business plan.

A lot of you might be thinking:

“But Chenell, I just run a [blog, website, ecommerce store, freelancing business, etc] why would I need something like this?”

I’d say if you’re asking the question of whether or not you need to complete this exercise, that you probably need it more than you think.

Having a plan and strategy for going into business and knowing who your customers are and how you can help them is CRITICAL to success.

This tool is used as a template for lean startups and as a strategic management tool.

The 9 Blocks of the Business Model Canvas

If you’ve been following along, I put together a post about each of these throughout the last week or so.

If you look at the canvas as a whole,  the right half of the canvas is essentially the “front of the house” stuff, like what kind of customers you’re helping, how you keep them as customers, etc.

The left half of the canvas is like the “back of the house” where you’re focusing on the activities you are doing in the business, what resources you need, who your key partners are, etc.

Both sides meet in the middle at your value propositions,  which are essentially what kind of offering you have for your clients and customers.

There are nine blocks that make up a business model canvas.

1. Customer Segments

Who are your customers? Who are you creating value for?

This section is about figuring out who you are going to provide value for. In this block of the canvas, fill in characteristics of the people you are targeting.

I know you’ve heard all about determining your niche, and choosing your avatar for your business. This is building upon those exercises.

A customer segment is a group of people (or businesses if you’re a B2B company) that you are looking to sell your products and services to.  It’s essentially the common characteristics your target market has that will allow you to find and market to them more easily.

2. Customer Relationships

How do you get, keep and grow/upsell customers? How do you interact with your current and potential customers? What type of relationship do they expect from working with you?

Customer Acquisition

How are you getting new customers ? This could be anything from email marketing to search engine optimization (SEO) to going out and doing direct sales.

Think about the methods you are going to use to attract the right people to your business. Where are your customers currently hanging out? Are they on Facebook, or are they lingering in an industry-specific forum asking questions?

Customer Retention

Acquiring customers can be challenging, and it’s always easier to sell again to a current customer than to get a new one. How are you going to keep your customers around?

Are you going to mail out postcards for special occasions, have monthly check-in calls, or just surprise and delight them with free stuff? Maybe you’re promoting your customers on social media, whatever it is, take note of it.

Grab the Business Model Canvas Toolkit to more easily follow along. This includes a PDF template of the canvas, along with a step-by-step guide to completing your own canvas:

3. Channels

How do you deliver your product or service? Is it B2B, B2C? How are you reaching your customers and prospects?

There are a few phases of channels to keep in mind:

• Awareness  – these channels could be search engines, social media, etc.
• Evaluation  – Your website, review sites, and again social and search
• Purchase  – Merchant accounts, invoicing platforms, your website
• Delivering Value Proposition – postage or mail, email providers, systems you use to deliver the product or service. Are you going to be delivering value with an online course , consulting and coaching, or do you have a “done for you” kind of offering?
• Post-Purchase Support – your email newsletter, chat platforms, content marketing, and customer service reps.

4. Value Proposition & the Value Proposition Canvas

“A value proposition is a promise of value to be delivered, communicated, and acknowledged . It is also a belief from the customer about how value (benefit) will be delivered, experienced and acquired.” – Wikipedia

What value do you deliver to the customer? Which problem(s) are we helping to solve for the customer?

This is one of the more important exercises to do because if you don’t know what you’re providing and to who, you’re going to fall down a lot more than you need to.

It’s so important, that half of the business model canvas is actually called the value proposition canvas (I know, ALL of the canvases!).

Pause here, and go figure out your value proposition.

5. Key Activities

What do you need to do well to make money? What kind of activities do you need to do to provide that value to the customer?

How exactly are you going to provide value and what kinds of activities need to happen in order for your customer to get what they expected?

As we determined in the value proposition phase, there are certain things customers are going to expect from your business. The key activities block of the canvas helps us figure out what those are and what we should be paying attention to that might not necessarily drive value.

6. Key Resources

What key resources do you need to deliver that value proposition?

Key Resources are the important things your business needs to build out the value proposition you promise customers.  Without these resources, you wouldn’t be able to deliver value, and you wouldn’t have a business to build a business model canvas for.

There are four types of key resources: financial, intellectual, human and physical. These can be things like machinery, systems and processes, patents, salespeople, credit cards, and business loans.

7. Key Partners

This piece of the canvas can get a little confusing once you read through all the types of partnerships there are. But if you take a really granular look, these strategic partnerships can be as simple as a virtual assistant (VA) you’re going to hire, or someone you are going to get into an affiliate relationship with.

Having a partner can be as easy as referring customers to each other.  Or it can be as complicated as two businesses creating a third company together because they found a need in the market and can each contribute a piece of that new pie.

Partnerships are one of the essential building blocks of the business model canvas, and for any business. It’s almost impossible to have a business that provides value for its customer and doesn’t require some kind of partner.

Essentially, we are answering these questions: who is going to help you deliver on that value proposition? A business can’t be all things to all people, so what kind of partnerships do you need to deliver the best service?

8. Cost Structure

This piece is where we should be looking at your fixed costs and variable expenses. But also looking at whether you’re going to be a cost-driven or value-driven business. In short, this means  are you going to be focused on providing the lowest cost solution, or will you be focused on providing value and not worry so much about low costs.

There are a few types of cost structures, including cost-driven, value-driven, fixed costs, variable costs, etc.

What the major cost drivers for the business? Include key resources and key activities in this. What type of cost structure are you going to be using?

9. Revenue Streams

How is the business earning revenue from customers and delivering the value proposition?

There are a few main types of revenue streams (these are not exclusive):

• Subscription fees  – i.e. Netflix
• Fees for usage – i.e. cell phone companies
• Selling assets  – i.e. Amazon
• Lending/renting/leasing  – i.e. Airbnb, Zipcar, Turo
• Licensing  – photography and music
• Brokerage   fees  – i.e. real estate brokers
• Advertising  – i.e. Google Adsense or partnerships

When to Use the Business Model Canvas

The Canvas can be viewed as a one-page business plan, that can be easily updated. I think it’s extremely helpful for these business situations:

When you’re launching a new product or service.

Sure, it may seem as easy as saying, I’m going to start selling bread at my pastry shop. But then you dig deeper by filling out the canvas and realize you’re going to need new ovens, new employees (or at the very least  extensive training for current employees), new marketing strategies, a different managerial schedule (baking usually happens in the wee hours of the morning), and on, and on.

When you’re starting a new business (or blog!)

Many of us have literally “fallen into” entrepreneurship because we had a skill people wanted to pay us for, and we just started selling it without thinking strategically. It’s time to take a step back and get that clarity you’re missing. This will take a few hours out of your day, but it will add so much relief to your life, trust me!

When you need clarity on your current business (this was me!) and don’t have a serious business plan in place.

Similar to the one above, I fell into offering marketing services because the people around me needed help. I knew nothing about running a business, and have just been guessing my way through most of it. Not anymore!

When you want to compare a few different ideas for a new business, service, or product to sell.

This one is so critical! We always have a million ideas running around in our heads, why not narrow it down to the 2 or 3 we are most excited about and really dive deep into those ideas? Do we have a strong business model? Do people actually need what we are offering? Can we actually make a living from this?

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Business Model Canvas

What is the business model canvas.

A business model canvas provides a high-level, comprehensive view of the various strategic details required to successfully bring a product to market. The typical use case for this tool is to outline the fundamental building blocks of a business, but it can be used effectively for individual products as well. The exact ingredients may vary, but these are some of the typical components included:

• Customer segments —Who is going to use this product?
• Product value propositions —What is this going to do for the customer to make their life/job better?
• Revenue streams —How will the company make money from this product?
• Channels —How will the product be sold or distributed?
• Customer relationships —What is the success and support strategy for new customers?
• Key partners —What other companies or individuals are part of the development and go-to-market strategy?
• Key activities —What must happen internally to release this product?
• Key resources —What people, materials and budget are required to pull this off?
• Cost structure —How much will it cost to develop, manufacture, distribute, and support the product?

Asking and answering these questions should be de rigueur for any new product, but this particular framework is useful for distilling the supporting business case down into something easily digestible. By forcing everything to be on a single page, each question must be answered succinctly, which often cuts through any grandstanding to illustrate whether each area is truly addressed and viable.

How do product managers use the business model canvas?

The business model canvas serves two primary purposes for product managers : focusing their thinking during its creation along with expediting and framing the conversation when communicating with others.

Because the business model canvas is a comprehensive summary of what the product will do, who will use it, why they’ll use it, how it will happen, and how the money works, it requires a lot of thinking and homework to put it together. This exercise is very helpful for product managers to fully understand the market opportunity and refine their story while uncovering potential problem areas and fully vetting their impact. Plus the process of boiling everything down to a single page ensures that what is included is as truthful and well supported as possible.

The business model canvas can serve as a continually referenceable touchstone for the product development process and beyond, essentially serving as a mission statement for the product. As conditions on the ground change and more is learned about the product’s market reception and usage, the canvas can be updated to accurately reflect the latest information; reviewing the canvas periodically is a worthy activity in and of itself.

As a communication tool, the business model canvas is an ideal document for our short attention span world and is as useful with the executive team as it is with a junior developer. Since it only contains the most salient and relevant information, the audience won’t be drowning in details or distracted by supporting evidence or non-sequiturs. The canvas can also create a universal vocabulary for the product and get everyone using the same language and concepts going forward.

Tips for using the business model canvas

Here is how to make the most of the business model canvas and the process of creating and maintaining it:

• Note assumptions and challenge them —Since a business model canvas is developed while a product is still “theoretical” there is often a lack of actual facts to rely on. Instead, educated guesses, informed opinions and assumptions are utilized to build it out. While there’s often no escaping these, anything in the canvas that is an assumption versus a proven fact should be called out, with every effort made to both challenge the assumption and anticipate the impact if the assumption turns out to be incorrect.
• Bounce it off a virgin audience —Fellow employees and even board members will approach a business model canvas with a trunkload of inherent biases. To truly test the veracity and completeness of a canvas, allow some outside parties to validate it independently. It should be a self-explanatory document, so allowing them to review it and provide feedback without any dialogue or explanations is a great test of its worthiness and thoroughness.
• It’s easy to update, so keep it current —Unlike longer, weightier documents, the single-page nature of the business model canvas means there’s no excuse for it to languish and fall behind the business’s current line of thinking or newly gathered information. Reviewing it on a regular basis and maintaining its accuracy enhances its usefulness and is a helpful process to note when assumptions or plans have changed.
• An ever-present reminder —Thoughts, plans, goals, and assumptions were laid out succinctly in the canvas with great care and deliberation. Going forward the canvas can be continually referred to for guidance, inspiration, and level setting as folks become swept up in the momentum of product development, sales, and marketing.
• Present it in pieces —Sure, the entire business model canvas fits on one piece of paper, but there is a lot of things on that 8 ½ x 11 inch page. When presenting it, discuss each piece individually, gradually revealing the entire contents. This will prevent information overload and allow the team to convey things narratively instead of an information dump.
• Reference all the evidence —Any hard data should be clearly referenced (if not included) in the canvas to give the arguments and statements as much legitimacy as possible. Reviewers will be trying to poke holes (as they should), so firm things up whenever there’s a chance.
• Be specific —No one needs a business model canvas to understand fundamental business case elements; it is intended to tell the story and rationale for this particular product. Cut out anything generic and make it as relevant to this exact opportunity as possible. In particular, link individual customer segments with their respective value propositions, since a product won’t be all things to all people.
• Create multiple canvases —During the early phases, generating more than one business model canvas based on divergent assumptions, target markets, or value propositions can be a useful tool for exploring different directions the product could head. After the plans are firmed up, multiple canvases can still be employed, this time to see how different scenarios pan out when key factors change… it can be used as a wargaming tool to prepare for different potential outcomes.
• Who, what, and why first. How and how much second —Although a business model canvas includes everything from a value proposition and personas to implementation costs and resources, everything should be driven from the market opportunity and rationale for bringing a product to market. If those aren’t solid, spending cycles on technology and costs is a waste of time.

Creating a business model canvas puts new product ideas under the microscope and pulls together disparate sources of intelligence, opinions, hunches and research into a single piece of paper. It forces critical thinking and analysis of assumptions and guesses and provides an excellent reference point for the entire organization.

Once the canvas is approved and productization begins, the canvas can also serve as a straw man for the product roadmap, lining up future features and functionality based on the priorities laid out in the document to achieve market success.

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Free PowerPoint Business Model Canvas Templates

By Courtney Patterson | April 3, 2024

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We’ve collected the top PowerPoint business model canvas templates for entrepreneurs, startup leaders, and strategy architects. These customizable templates offer a comprehensive layout to define, evolve, and polish your business strategies.  Included on this page, you’ll find a  lean business model canvas template for PowerPoint, a  business capability model canvas template for PowerPoint, a  customer-focused business model canvas template , an  e-commerce business model canvas template , and more. These PowerPoint business model canvas templates will help you effectively organize and present your business strategies.

PowerPoint Simple Business Model Canvas Template

Download the Sample Simple Business Model Canvas Template for PowerPoint Download the Blank Simple Business Model Canvas Template for PowerPoint

When to Use This Template:

This simple business model canvas template for PowerPoint is ideal for swift strategic sessions and perfect for startups, entrepreneurs, and educators that need a quick yet comprehensive overview of their business or project’s core aspects. Use the template with or without sample data during initial planning phases or workshops, or when refining an existing business model for clarity and direction.  Notable Template Features:

This template’s streamlined layout highlights essential business model components — value propositions, customer segments, key activities, and more — in an easily digestible format. Its intuitive design facilitates quick modifications and collaborative discussions, making it a standout tool for visual strategy planning and presentation.  Download our  free business model and business model canvas templates to gain a clear, structured visualization of your business’s core components, so you can innovate, strategize, and align your operations for enhanced growth and competitiveness.

PowerPoint Lean Business Model Canvas Template

Download a Sample Lean Business Model Canvas Template for PowerPoint Download a Blank Lean Business Model Canvas Template for PowerPoint  

When to Use This Template:  

This Lean business model canvas template for PowerPoint with or without sample data is best suited for agile startups and innovators looking to rapidly test and validate their business ideas. The template is particularly useful in fast-paced environments where the focus is on pinpointing the most critical elements of your business model to quickly adapt to market feedback.  Notable Template Features:

This template distills the business model canvas to its essence, prioritizing lean startup principles such as problem-solution fit, unique value propositions, and key metrics for success. Its design encourages dynamic interaction and iteration, making it an invaluable asset for teams committed to Lean methodologies and continuous improvement.  Need business model canvas templates in Google formats? Check out our article on free, editable Google Slides business model canvas templates to systematically understand, design, and refine your business strategy for improved clarity and strategic focus.

PowerPoint Business Capability Model Canvas Template

Download the Sample Business Capability Model Canvas Template for PowerPoint Download the Blank Business Capability Model Canvas Template for PowerPoint

When to Use This Template: 

This multi-slide business capability model canvas template for PowerPoint is designed for comprehensive strategic planning and analysis, ideal for evaluating your organization’s core business functions in detail. With or without sample data, the template is particularly useful for aligning business strategies with operational capabilities and identifying areas for improvement or investment.  Notable Template Features: 

This template offers a detailed breakdown of business capabilities across multiple slides, from operational processes to customer engagement strategies. The structured format supports a systematic approach to identifying strengths, weaknesses, and opportunities for growth, facilitating clear communication and strategic alignment within teams and departments.

PowerPoint Social Enterprise Business Model Canvas Template

Download the Sample Social Enterprise Business Model Canvas Template for PowerPoint Download the Blank Social Enterprise Business Model Canvas Template for PowerPoint

Tailored for social enterprises and mission-driven organizations, this social enterprise business model canvas template for PowerPoint with or without sample data is the go-to resource for blending social impact with financial sustainability. Use it when brainstorming or strategizing how to effectively address social issues while remaining economically viable.  Notable Template Features: 

Distinctive for its focus on social value alongside traditional business elements, this template enriches your strategic planning with sections dedicated to social goals, impact measurement, and community engagement. The holistic approach helps you visualize both the societal benefits and the economic model of your enterprise, fostering a balanced strategy for both making a difference and achieving business success.

PowerPoint Customer-Focused Business Model Canvas Template

Download the Sample Customer-Focused Business Model Canvas Template for PowerPoint Download the Blank Customer-Focused Business Model Canvas Template for PowerPoint

Deploy this customer-focused business model canvas template with or without sample data for PowerPoint while creating or reevaluating your business strategy with a focus on the customer. This template excels in environments where understanding and meeting customer needs are pivotal to crafting competitive advantages and personalized experiences.  Notable Template Features: 

Uniquely designed to elevate the importance of customer insights in strategic planning, this template incorporates sections for customer journeys, preferences, and feedback loops. It enables a deep dive into how each aspect of your business model serves the customer, ensuring that customer satisfaction and engagement are prioritized during decision-making.  

PowerPoint E-commerce Business Model Canvas Template

Download the Sample E-commerce Business Model Canvas Template for PowerPoint Download the Blank E-commerce Business Model Canvas Template for PowerPoint 

This e-commerce business model canvas template for PowerPoint is your ally when diving into the online retail world, whether you’re launching a new e-commerce platform or optimizing an existing one. With or without sample data, the template is particularly effective for sessions aimed at dissecting and enhancing the online shopping experience, from initial click to post-purchase support.  Notable Template Features:  

With a design that caters specifically to the digital marketplace, this template allows for an in-depth analysis of online customer behavior, digital marketing strategies, and logistics. Its comprehensive layout ensures that every facet of the e-commerce ecosystem — including user experience, payment processing, and customer service — is meticulously planned and aligns with your business objectives.

PowerPoint Tech Startup Business Model Canvas Template

Download the Sample Tech Startup Business Model Canvas Template for PowerPoint Download the Blank Tech Startup Business Model Canvas Template for PowerPoint

This tech startup business model canvas template for PowerPoint is most useful when preparing your new idea for market entry or when adapting your technology venture to evolving market demands. The template, with or without sample data, is specially crafted for taking into account the interplay between innovative tech solutions and market needs. Notable Template Features: 

This template is uniquely tailored to the dynamics of the tech industry, spotlighting areas such as R&D, IP strategy, and user acquisition. It helps you visualize how your technology fits within the market, and ensures that elements such as scalability, cybersecurity, and technological advancements are front and center in your planning process.

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The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

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(Virtual) Business Model Canvas Workshop

Have a business idea in your head that you want to get on paper or communicate to potential partners? This workshop can help you do that.

Date and time

About this event.

This is for the online version of the Business Model Canvas Workshop. If you want to attend in-person, please visit this page instead.

Have a business idea in your head that you want to get on paper or communicate to potential partners? The Business Model Canvas Workshop can help you do that.

Designed as part of the lean startup method , the Business Model Canvas simplifies the traditional business plan. In this in-person and online workshop, we will break down the sections and discuss what is needed to help develop your idea into an actual launched business.

Who Should Attend?

This workshop is ideal for those with a business idea, considering starting a business, or who have already launched a business but need to revisit the basics and rework their plan.

Lakehead University and the Town of Innisfil

In Partnership with:

The Town of Bradford West Gwillimbury, Nottawasaga Futures and County of Simcoe

This initiative is funded in part by the County of Simcoe Entrepreneurial Innovation Fund

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Tesla's earnings report was worse than expected, but Elon Musk has a plan

• This post originally appeared in the Insider Today newsletter.
• You can sign up for Business Insider's daily newsletter here .

Hi! Costco shoppers who scooped up the store's gold bars are learning that being an amateur commodities trader is actually really hard !

In today's big story, we're looking at Tesla's earnings report and what comes next for the EV maker.

What's on deck:

Markets: Cathie Wood's investors are jumping ship .

Tech: Threads now has more daily US users than X .

Business: America produces 40 million tons of plastic waste a year. It's running out of places to put it .

But first, the man with the plan.

If this was forwarded to you, sign up here.

The big story

Tesla's turnaround plan.

Bad news: Tesla's earnings report was worse than expected.

Good news: Elon Musk has a plan.

Tesla's disappointing earnings illustrated how bad a year it's having . The EV maker missed profit and revenue estimates , but those weren't the only ugly numbers.

Tesla's free cash flow was negative $2.5 billion in the quarter, a shocking 674% year-over-year drop. (The company did point out it spent $1 billion on AI infrastructure investments this quarter.)

Those figures aren't what you want to see from a public company. And even though Tesla tried to pin the blame on hybrids , such a bad earnings miss isn't usually something Wall Street overlooks.

Except… that's exactly what investors did .

Details on its robotaxis plan and news of expediting the release of an affordable model were all Wall Street needed to get back in on Tesla. Shares popped nearly 11% in premarket trading, a big win for a company down more than 40% on the year.

Tesla's ambitions around robotaxis and an affordable model tap into key trends.

Speeding up the launch of cheaper Tesla models — whenever that may be; details on a timeline were relatively scant — addresses a consumer that has shifted away from wanting big, expensive EVs .

Discussion of robotaxis, meanwhile, allows Tesla to ride the stock market's AI wave that has sent other companies' stock prices skyrocketing over the past year.

Perhaps that's why Musk spent so much of the earnings call discussing autonomy and the progress made with Tesla's Full Self-Driving software .

But having a plan is one thing. Executing it is something else entirely. Musk, for all his accomplishments, hasn't always held firm to future milestones he's targeted.

To that point, Business Insider's Linette Lopez suggested an even bigger initiative Tesla consider: Musk stepping down .

The CEO, she argues, is ultimately responsible for Tesla squandering its lead in the EV market and not better insulating itself from threats when things were going well.

Considering Musk's close ties with some of Tesla's board members, such a drastic move is a long shot. A more realistic request might be Musk pulling back on other responsibilities , but that also seems unlikely. Musk told analysts on the earnings call that Tesla is the majority of his work .

Ultimately, Musk's fate could be decided by investors. Tesla is seeking shareholder approval for Musk's $55 billion pay package, which a Delaware judge has already struck down .

If investors vote against the package at Tesla's annual meeting in June, who knows where Musk — and his AI ambitions — will end up .

3 things in markets

The March sell-off in stocks could be the start of something bigger. JPMorgan's Marko Kolanovic highlighted a "problematic backdrop" in equities that investors seem to be ignoring . Stubborn inflation and geopolitical concerns aren't going anywhere and "put additional pressure on investors to de-risk," Kolanovic wrote.

Cathie Wood's investors are heading for the exits. Outflows for Wood's ARK funds are ramping up after a three-year decline . This year alone the suite of ARK ETFs has net outflows of $2.2 billion, triple what it endured last year.

Stocks for a strong economy. Goldman Sachs highlighted 30 names that they think will outperform the market because they're investing heavily in future growth opportunities like artificial intelligence. Meta, Intel, and Micron Technology were among the stocks the bank flagged.

3 things in tech

Microsoft is blocking employee access to Perplexity AI . Perplexity AI is one of the largest customers of Microsoft's Azure OpenAI service. Other AI tools, like Google's Gemini chatbot, are also blocked on Microsoft's employee devices .

Threads has overtaken X in one key metric. New data shows Meta's Threads is consistently surpassing Elon Musk's X in daily users in the United States. While X still has more monthly users, Threads could be on its way to becoming bigger than its competitor.

Scoop: Navan's IPO. The a16z-backed travel and expense platform, which was valued at $9.2 billion back in October 2022, is targeting an April 2025 public listing , a person with direct knowledge of the matter told BI.

3 things in business

America is drowning in plastic. In 2018, China stopped taking the United States' plastic imports. The US is now scrambling to find alternatives for the 40 million tons of plastic it produces each year.

How Amazon won over skeptical advertisers. Since launching three months ago, Prime Video's ads have made a positive impression on advertisers, luring them in with generous price incentives and sponsorships .

The Senate passed a bill that could ban TikTok. Joe Biden has signaled that he'll sign the legislation, which would effectively ban TikTok from the US app store . The final vote was 79 senators in favor, and just 18 opposed.

In other news

The FTC is fighting for your right to job-hop .

These 18 senators voted against Ukraine and Israel aid .

The American Kennel Club's pedophile problem .

Patriots owner Robert Kraft yanks support for Columbia as Israel-Gaza protests intensify .

Trump may be held in contempt Tuesday after hush-money DA cites at least 10 gag-order violations .

Apple sinks to 3rd place in China as iPhone sales slide .

A hospital in Australia is begging snakebite victims to stop bringing the snakes in with them .

I went on a date with an AI chatbot. He fell head over heels in love with me, but I got the ick .

What's happening today

Today's earnings: Boeing, Meta, IBM, and other companies are reporting .

The US Supreme Court will hear the Idaho abortion ban case.

The Insider Today team: Dan DeFrancesco , deputy editor and anchor, in New York. Jordan Parker Erb , editor, in New York. Hallam Bullock , senior editor, in London. George Glover , reporter, in London.

Watch: What happens when Elon Musk moves markets with a tweet

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