What is a Business Model Canvas?
The Project Management Book of Knowledge (PMBOK) identifies the Business Model Canvas as a strategy artifact. Strategy artifacts are used to define high level strategies at the beginning of a project.
The Business Model Canvas was created by Alexander Osterwalder to streamline the development of business plans for lean startups competing in a fast-paced marketplace. It replaced dozens of pages of complex business plans with a single page document.
It outlines the goals and objectives of a business and includes a description of the value proposition, infrastructure, customers, and finances. It also happens to be a great tool for project management.
The focus and simplicity of the Business Model Canvas template makes it easier to map out a plan and the visual nature makes it easy to follow.
The Difference Between the Business Model Canvas and the Lean Canvas
You may have heard the term Lean Canvas in regard to the Business Model Canvas. It is designed to accommodate the needs of startup businesses in the very early stages. A few of the boxes on the Lean template are different than those of the original to address the needs of a business idea not fully formed.
It may be helpful to think of it this way, the Lean Artifact is good for startups that are still trying to define themselves. The Business Model Canvas is better if you already have a product and are ready to move forward.
What is the Importance of a Business Model Canvas?
For our purposes, the original Business Model Canvas helps managers focus on what is most important. Because it is concise, it requires project managers to zero in on goals, priorities, and their road map to completion. The simplicity of this one-page template keeps the big picture available for quick reference and a nimble change of course if necessary.
What are the 9 Elements of a Business Model Canvas?
Let’s take a closer look at what belongs in the boxes of this template and where to start. We’ll use the example of an accounting firm that wants to create a customer portal to make life easier for its clients and to attract new clients.
Think of the right side of the template as being “customer facing.” Who will your project serve? What is the goal? The value proposition is how you will uniquely address the goal to achieve success. The left side deals with what needs to happen internally to deliver on the value proposition. If done correctly, there is accountability in the template.
Let’s say you have a plan to create a customer portal that encourages engagement and long-term relationships with your customers. In answer to that, there will be items listed in the Key Activities box and Cost Structures box that will reflect actions to make that possible.
When used for business startups, the Business Model Canvas starts with filling in the Customer Segments and Value Propositions boxes, as these are at the core of everything else. That may make sense for your project, as well.
- Customer Segments. Will you have one type of user, or several different types? If your project will serve a fairly large audience, it might be helpful to break the group into segments according to their similarities.
For our example, the customer segment that would use the portal would be one group— small and medium businesses. This group of people is likely juggling many balls at once and may have little to no tax expertise. They will appreciate being able to pass this ball to someone else they can trust to make sure all happens as it should.
Following the lead of the business community, you may find it helpful to create a persona to represent each segment. The more detailed you get, the easier it may be to create a product that will best serve their needs. Think beyond the typical details such as age, race, income, etc. Think also about what they’re goals may be and the obstacles they face.
- Value Propositions. This box falls in the middle of the template for a reason. It is the core of the matter. Value propositions are akin to unique selling points. What will set this product or service apart? What benefits are you offering the customer? What problem are you solving for them? Think in terms of gain creators and pain relievers.
A tax portal for the accounting firm can serve as a one-stop shop for the client. Not only will they have someone monitoring their tax schedule to keep them on track with tax payments, someone to prepare and file their taxes, but they can also have a secure place to store documents should they be needed in the future. And with a customer service piece, they also have a resource should they run into a question concerning their taxes or if they need technical support.
- How will you acquire users? Will you get them through social media, referrals, or advertising? How will they access your services? Will you strictly use owned channels such as a website. Or will you use partner channels that send business your way?
Initial users will come from existing clientele, but we will use social media, referrals, and potential partnerships with related businesses to reach new users. The service will be accessed through our website.
- Customer Relationships. How do you plan to interact with your customer? Do you want a personal connection? Perhaps an account representative to serve as the touchpoint? Or will you have a general customer service staff to field questions and provide technical guidance? Or do you envision a completely automated process?
Clients will meet with their accountant at least once a year, but they will have the portal to upload information, monitor their account, and access past records. In addition, a customer service/tech support team will answer questions and give guidance on using the website.
- Revenue Streams. How will the project make money for the business? Will income be generated from one product, subscriptions, or different levels of service with different price points?
The tax portal will be a value-added benefit for customers. It will help differentiate it from other accounting firms helping to increase market share and allow the business to charge above-market rates.
- Key Resources. What do you need to fulfill your value proposition? This does not include mundane items. It is meant to capture the essential resources needed.
To launch this service, the firm will need additional programmers, people with certain web expertise as it relates to taxation and integrating the two, and funding to hire them.
In order to cultivate a personal relationship, there is also a need for staff that can provide customer service and tech assistance to users.
- Key Activities. These are all the tasks and items you need to deliver on the value proposition.
These will include things like the development of new software, making sure there is sufficient data storage, training customer service staff, and announcement of new services to existing and potential customers.
- Key Partners. Who are the external buyers and suppliers that are necessary to carry out your key activities? Do they supply raw materials or finished goods? Which are essential? Are there any that could be absorbed internally to save money?
The tax portal will need a reliable and secure web host. It will also need to integrate with the IRS, and appropriate local tax entities. It may also find additional clients through strategic partnerships such as financial planners.
- Cost Structure. This box is easier to fill out after you have completed the other boxes because you’ll know what you have to achieve. You’re looking at big expenses associated with your project. How much does it cost to create and deliver your product or service? Also, what does it cost to maintain customer relations if that is a goal?
The tax portal will need a budget that supports the hiring of numerous web-related positions for the development of the portal. And it will have to account for the ongoing cost of secure storage for an increase highly personal data and tech support staff to help clients use the portal.
What is a Business Model Canvas Example?
Our free Business Model Canvas template includes questions to guide your thinking (green lettering) and examples of content (black lettering). This sample template will give you ideas of what to include in yours.
How Do I Make a Business Model Canvas?
Our Business Model Canvas template makes it easy for you to create a canvas for your project. Simply download the template and replace our content with your project information as you work through each box.
Some people like to recreate the canvas on a white board so they can use sticky notes. That makes it easier to work through boxes if you’re doing this as a group.
Download this template by clicking on the orange “Download Template” button at the top of the page.