The Business Model Canvas (BMC) is a strategic management tool to quickly and easily communicate a business idea or concept. It is a one page document which highlights the fundamental elements of a business or product, structuring an idea in a coherent way. As I unfold the business model canvas, I will relate to one of my favorite examples. That is starting an online store in Zimbabwe. Let’s unfold the BMC and don’t forget to download the BMC template at the end of this article.
Customer segments- dividing or classifying customers
This is a process of defining your target population as a business. Firstly, know who you are targeting and who needs your services. This is essential information you should have at this point in time. In such scenarios, you should put yourself in the shoes of the customer. By so doing you may easily come up with your exact target population. Relating to my example, my customer segment is on consumers, particularly internet users since we will be selling products on our website.
Customer relationships- the kind of relationship your business will share with customers
Customers are the backbone of any business. What kind of relationship do you share with your customers? How do you interact and relate with the customer? Is it based on mass customization, one on one, contractors, online or any other model?
By answering the above questions, a business easily develops the best operating manner to interact with customers. Relating to our example, our relations with customers are mainly based on online mass customization in the sense that we have a broad clientele and we will be interacting with them online.
Channels- possible ways your customers can contact or get to know of you.
Channels are mainly guided by your marketing strategy. On developing a marketing strategy, a business should have a clear understanding where to find its customers. They should establish whether they spent time online, listen to radios, watch television or read newspapers? Thereafter, you can then safely develop a channel. Based on our example, our customers are mainly found on the internet. Hence, they can get to know of us through social media platforms and Google Ads.
Value and services- what are you going to offer your customers.
Services offered largely contribute to commendable achievements in business. It is imperative to be sure of the services you are going to offer and how customers will benefit. One ought to consider these when venturing into business. In my example, we are going to offer buying access to different products at a lower price, from different sellers, inform customers on new products and this will reduce the burden of moving to different physical stores for price or product comparison.
Key activities- actions taken by your business to deliver services or achieve goals
As a part of key activities, a business needs to point out the actions to be taken to deliver its services. It is necessary to ask yourself what the business needs to do in order to achieve the value proposition for the customer, the resources to be used, distribution of products, technical development or strategy. In my scenario, major examples are website development and maintenance, marketing, listing of service providers, uploading products, warehousing and delivery services.
Key resources- resources needed to conduct key activities
In this regard you have to list down what the business requires so as to conduct the key activities. Relating to my example we would need manufacturers for the products, website developers, hosting servers and payment service providers.
Key partners- other parties you may need so as to conduct key activities
In business there is great need for collaboration. In this category you need to think of key partners to help the business achieve the key activities. It is not much different from the key resources and basing on my example we would need to partner with manufacturers and or distributors, payment service providers and advertising agents.
Cost structure- operating expenses
Every business incurs costs in its day to day activities dubbed operating expenses. These helps the business achieve the key activities. You should be certain of the cost of each aspect? All this, include variable and fixed costs. In my own business concept, we would incur costs related to website designing, maintenance and hosting, delivery services, marketing costs and warehousing services.
Revenue structure- how you are going to earn from the problem you have solved?
You cannot afford to not ask how you are going to sustain the business before you even start. A number of entrepreneurs overlook this aspect, yet it is key to survival. We have different models to generate revenue depending on the type of business. Make sure you are subscribed so as to not miss our article on different business models. However, as far as my business example is concerned, revenue will come from commission on sale and promotion of certain products.