You have a great idea for a business, and you’re ready to get it off the ground. Step one? Many people think it’s to sit down and write a business plan. That may be good advice in many cases, but when you're dealing with new business products or concepts, it may be more beneficial to iron out your business model first.
Traditional business plans are great for franchises or other business products or services that operate within a well-defined market and target a well-defined audience. But when your product, concept, or service is less well-defined, you need to spend time with the nuts-and-bolts of the underlying model on which your plan will operate.
A Business Model Canvas (BMC) is the solution you're looking for—a visual template for developing new business models (or refining existing ones) which can be used in lieu of a full business plan or as a complementary visual.
The BMC was introduced in the book Business Model Generation by Alexander Osterwalder and Yves Pigneur. The authors detail the entire approach to bringing a product or service to market. This is done through a series of questions, including:
Who are the key partners you need to be successful?
What is your true value proposition?
What is your pricing strategy?
Who are your customers and what type of relationship do you expect to maintain with them?
The answers to these questions form the foundation of a business model and help identify the mechanisms through which the business will generate profit. The following video details how a canvas works:
The BMC is a popular template for plotting out your business model because it's easy to understand at glance and can be easily edited—that's why we included it in our guide, SBN 101: How to Start Your Business. You can learn more tips and tricks for launching your business by downloading the entire guide for free here.