Business Model Canvas Meaning
A business model canvas is a strategic visual planning tool that helps companies visualize all the building blocks that go into starting a business and developing a business model. These include customers, value proposition, route to market and funding. The canvas effectively condenses the business plan into a simplified form.
The main building blocks of the canvas are:
- Strategic partners.
- Key activities essential to the business’ smooth operations.
- Resources required to deliver value propositions.
- Value propositions the company looks to give its customers.
- Customer relationships.
- Channels used to deliver the product and value proposition.
- Customer segments the company manages.
- Cost structure detailing spending on business operations.
- Revenue streams
Usually, the left side of the canvas will have building blocks relating to the business itself including strategic partners, key activities, resources and cost structure. The right side will contain customer and market information that is outside the business’ control. These are the customer relationships, customer segments, channels and revenue streams.
The value proposition sits in the middle of the two groups representing the unique solution your business provides to your customer base or target market.
The canvas provides entrepreneurs and business managers a table to structure, evolve and analyze a business without losing sight of the bigger picture. It helps businesses systematically create, design and build a business model.
The canvas allows a high level analysis of the model without getting lost in the intricate details. It is a visual alternative to the lengthy multi-page document that a traditional business plan looks like.
The canvas is a flexible, living document that can be revised and refined to explore the most viable alternatives.