What Is a Business Model Canvas and Why You Need One

What Is a Business Model Canvas and Why You Need One

– Welcome to The Journey. Today we’re talking about what is a business model canvas and why you need one. – If you fail to plan, you’re
actually planning to fail. Anyone that has a business has
heard this statement before. Now, formal business plans can be complicated and intimidating. A business model canvas
can be a visual alternative to understand the different variables you’ll need for your business. – And there are plenty of
ways that you can display your business model
canvas, whether it’s online or on a large whiteboard. That way, it’s out there in front of you with the outline and you can
make adjustments as needed. – Yeah, so we’re actually
going to take you through that business model canvas and do a live demo at the same time. Let’s go check it out. – All righty. – All right, so we’re talking through how to create a business model canvas and we’re actually going
to show it to you live. We’re using Strategyzer,
we’ll have the link below. But it gives you a free
trial to basically create your own business model canvas. So we’re going to show you how to do it for a web design company,
but you can really use these points with any
industry, any type of business. All right, so we’re in Strategyzer. You can see it’s very visual. You can either do this
like Alex was saying, on a whiteboard and map this
out, or online, or a Word doc, whatever works best for you. The point is to make it super visual. Starting with key partnerships. – So here’s where you
round up your key partners, suppliers, basically the people
that you’d be working with. – Yeah, so as a web designer,
I would probably put, say, a graphic designer for
key elements of my site. And then maybe I have an SEO person because I don’t know SEO all that well. I know the basics, but I hire
out to get that professional, so that’s also another
key partner I have here. So start to think of all the people that you’re really working
with on a day-to-day or a week-by-week basis and add that into this key partnership area. – You can also create a
wish list here of things that you want to work
with your suppliers on to really gain that business advantage, like costs or distribution. – So next up on our business
model canvas is key activities. And this is essentially the services that you’re going to be
providing with your business in order for it to operate. – Basically, it’s what you need to do to be a profitable
business and make money. – So since I’m a web
designer, I obviously design WordPress sites, I sell
new maintenance packages, and we’ll keep it simple with that. – Next step is your key resources. So this is basically
what you need physically to actually fulfill those key activities. – Yeah, so think about your business. What are the things that
you need day to day? Whether you sell products,
you might need something to ship them in and a shipping service to go along with that. As a web designer I’m going to
need WordPress as my platform to run on, I need a computer to build on, I need a space to work with. These are all things
that I’m going to need to ensure that I have my
key activities in order. – Next up is your value propositions. So this is basically the
building block of your business. What value are you
providing to your customers? And so here’s some
questions to think about whenever you’re trying to decide
on your value proposition. Here you wanna ask what value are we delivering to our customers? And also, which one of
our customer’s problems are we actually trying to help solve? – Yeah, this is basically the part where you kind of brag about yourself. What makes you unique? Why do people go with
you over a competitor? And really just go all out here. So as a web designer,
I can really talk about a number of things, but
we really want to focus on what I do for my audience. I help create an online presence so they can get new customers. That’s my value proposition. I should probably go a
little bit more in depth but we’re keeping it pretty basic here. You should know your value proposition; why people go with you versus the others. Go ahead and add it right there. So next up, we have customer relationship. This is all about how you
communicate with your audience, with your customers on a daily basis. And it can be a number of things, right? – Right, so it’s not just how are you going to keep your current customers, but how are you going to continue growing and acquiring more customers. So one example would be if you’ve done social media campaigns. You know, which ones of those
campaigns actually worked really well and connected
with your customer base? Things like that are great
to think about with this. – Yep, absolutely. So let me go ahead and jot that down. So social media campaigns. If you have a call center,
if you’re a larger business or maybe you have chat
support direct on your site, email support, whatever that looks like, however you communicate
and continue communicating with your audience, go
ahead and add that there right in the customer relationship column. – And that’s a great segue ’cause now we’re going to go into customer segments. So this is really where you outline who your ideal customer is,
who you’re really trying to reach and connect with. So if you’re a pizza
shop in a college town, obviously your demographic
is really going to be that college age, maybe
people wanting to come in and watch football games or
things along those lines. – Yeah, and this is where
you really dive into who you’re serving because as we know, you can’t serve everyone. You do not want everyone
to be your customer. So the more specific you
get, the better it is that your business will grow. So as a web designer,
my customer is typically between the ages of 40
and 50 for my business. They are looking to rebuild their site. They had a site built many, many years ago so that’s gonna be my
example, looking to rebuild. So who are you trying to
serve with your business? Go ahead and add it down
in the customer segment and then we’ll move on. – Then diving a little bit deeper into those customer
relationships is channels. So these are the specific channels that are really connecting
with your audience. Which channels do they prefer to use? Which ones have you used
and seen success with? – Yeah, and with these you
want to really jot down the costs associated with it too, since not all channels
are going to be free. Like social media is
a free channel to use, but maybe that chat support
software that you use for your business costs $290 a year. You want to really lay that
out so you have that foundation of the communication channels you’re going to have with your audience. – And speaking of costs, let’s
move on to cost structure. So this is where you want to
lay out all the different costs that are gonna be associated
with your business. So you definitely want to include your fixed and variable
costs here as well. We actually just talked
about that in a video that you can check out right
here of pricing strategies to help you make a profit as a business. – Yeah, and these cost structures will, it’s literally everything you pay for, whether it’s your rent if
you have an office location, your hosting, whatever bills that you have in order to maintain and
support your business. Go ahead and lay it out all right here. As a web designer, I’m working from home, I’m freelancing, so I
don’t have an office. So most of my bills are
going to come from like say, hosting, ’cause I gotta
host my clients’ websites. Premium plugins to really
elevate the sites themselves. SEO optimization because I’m again, I have that SEO professional
that’s my key partner. I’m paying him. Optimization, and anything
else that you have here, go ahead and add it in
here and include the costs associated with each one so you
have a visual representation of the bills that you have. – And it’s important to stay updated with those variable costs as well since they are likely to change. – Yeah, it’s like with
the premium plugins, I’m not always going to have the same plugins on every site. Some clients may need more,
some clients may need less. – And last but certainly not
least is revenue streams. So this is the framework of how you’re actually making that money. – Cue the money gun. No money gun? Ah, We lost the budget. But yeah, those revenue
streams are all about how you’re going to be paid. So if you’re an online store,
that’s basically people coming to your site and
buying your products. If you’re a restaurant, it’s
people coming to sit down and eating your food. For me as a service-based business, it’s every client that I get on. So you really want to map out how you see how you’re going to get paid, and basically the services associated. So if a basic site, I charge
3350 for a basic site. Add that down. For e-commerce, 6000, for whatever it is. Continue adding those
services in so then you can kind of get a ratio of,
“Cool, I make this much “from this product but
I have all these costs “in my cost structure.” You can start to really map
out like how many products or services you need
to buy to stay afloat. – Well thanks so much,
Nealey, for showing us how to create a business model canvas. That was awesome. – Yeah, and that business model canvas is a constant work in progress. As you progress through your business, you’re going to constantly
refer back to it and possibly an update and
change it as your business grows. – Yeah, and why not create a
business model canvas today. All right, well, thanks for watching. Be sure to like, comment,
and subscribe to our channel. – While you’re there, ring that bell, so you can see these episodes first. This is The Journey. We’ll see you next time.

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