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April 18, 2022

How to Use a Business Model Canvas to Deliver & Capture Value

Diagrams for Businesses
Leadership

What is a Business Model Canvas?

A business model canvas is a great way to visualize and describe how your organization creates and captures value. You can use the canvas when creating a new business or to strategically evaluate your existing model.

It's also a great way to clarify your vision for the organization. That vision is critical if you hope to work through the strategic planning process or implement other business frameworks like a balanced scorecard to set and track your goals.

Get started with the template below or jump ahead to one of the following sections:

Get Started With a Business Model Canvas Template

Filling out the canvas can be a daunting task at first. Rather than doing this exercise alone, grab some of your most strategic teammates to help! With their input, you’ll be able to focus on what’s most important and capture the right amount of detail.

Free business model canvas template

Launch this template in Gliffy Online >> 

The 9 Components of the Business Model Canvas

Each of the nine sections in the canvas are ways to differentiate yourself from other competitors or think about how your primary activities contribute to your success.

Key Partners

Your key partners are external teams, technologies, or organizations that contribute to your business model. If your company chooses to outsource shipping activities, for example, the company responsible for order fulfillment would be considered one of your key partners. 

Key Activities

The day-to-day things your company does to deliver on your value proposition are your key activities. A marketing agency, for example, could specialize in web design, branding, digital marketing, consulting, social media marketing, or combinations of other areas of expertise. 

Key Resources

Your key resources will include everything from intellectual property to machinery or raw materials. For a bakery, an oven, pastry chef, sugar, and a storefront would all fit this section. While that may sound broad, try to be thoughtful about what resources are most critical to your success and capture those in the canvas.

Value Propositions

The value proposition is the problem you intend to solve with your business. It should be directly related to the needs of your customer. You may have multiple value propositions for different audiences. For example, a grocery delivery service could be a fast option for busy students who need snacks as well as a major time-saver for parents who don’t want to bring their children into the store.

Customer Relationships

This section describes how your business interacts with and maintains relationships with customers. In the case of traditional investment advisors, for example, you’ll describe personal phone calls or in-office meetings — a very hands-on service approach focused on relationship-building. A fintech investment app, on the other hand, may aim to support customer relationships via in-app chat with service representatives.

Channels

In this section, you’ll detail where you communicate with your target customer. These could include social media, apps developed for your business, radio advertising, and more. These channels are often where you’ll want to invest in marketing.

Customer Segments

Customer segments are the ways that you define your target customers. Understanding how these segments are unique is critical to your success. If you have an event space, for example, you may have a segment of corporate audiences that has very different needs and priorities than wedding planners. You may know these segments as “personas.” 

Cost Structure

Costs associated with your business activities fit in this section. For a restaurant, this could be payroll, raw ingredients, kitchen equipment rentals, and new furniture for the dining area. Typically, your most important costs will be associated with the activities and resources you outlined in the sections above.

Revenue Streams

These are the ways that your business generates revenue. Revenue models can be things like subscriptions, payments for each purchase, service fees, dividends, and more. A flower delivery service may have both a subscription model generating recurring revenue in addition to individual purchases. Detail any and all revenue streams your business plans to support.

How to Use the Business Model Canvas Framework

This framework will help you describe your business idea or gain a better understanding of an existing business model. But, there are a lot of details to sift through. Follow these steps to make sure you have a productive experience.

Step 1: Assemble a Team

Allocate at least an hour of undisturbed time with a few of your teammates. You can take the old-school route and use a whiteboard and sticky notes, or use online collaboration software like Gliffy to work together from anywhere. Click here to launch the template and start a free trial of Gliffy Online >>

Tip: For an extra-strong start, consider doing some prework, too. Other business frameworks like SWOT analysis, PEST analysis, and value chain analysis can help you better understand the competitive environment and what differentiates key players.

Step 2: Brainstorm High-Level Elements

As you start filling out your canvas, remember that you don’t need to go in any particular order! If anything, start with the teal area of our business model canvas template and focus on the value propositions, your customer relationships and segments, and channels. This is a great way to center your team on the customer and their needs.

Step 3: Dig Into the Details

Take a quick break and then revisit your canvas. What details are missing to give a holistic overview of your business? Complete the picture by adding extra data or details that help describe what makes something unique or particularly important. For example, if you documented two different revenue streams, you may add that one stream accounts for over 70% of your total revenue, while the other is just under 30%. 

Step 4: Look for Gaps

Every customer segment should be connected to a clear value proposition and at least one revenue stream, so there may be a gap in your model or strategy if these things are missing!

You may also want to start considering the future state of your business — use a separate color shape or sticky note to add ideas where you’d like to add resources, channels, or perhaps a new customer segment. (If you want to further explore ideas for the future of your business, you may also want to conduct a gap analysis.)

Review the areas in teal and ask yourself the following questions:

  • Do I have a clear value proposition for every customer? 
  • Am I in the right channels for this value proposition and customer segment?
  • Is there enough demand for this business model?

Review the areas in yellow and ask yourself the following questions:

  • Do I have the resources I need to support this business model?
  • What additional partners or resources should I use?
  • Do all of my key activities support our value propositions and customers?

Last, review the areas in blue to evaluate whether this is a viable business model:

  • Are your costs lower than your revenue? If not, when do you expect this to shift?
  • Are there any unnecessary costs you can minimize?
  • Are there any revenue streams you should add? Based on your customers, how would they be willing to pay for your services in other ways?

Step 5: Share and Refine

If you used a whiteboard or paper to create your canvas, now’s a great time to go digital. Using an online diagramming tool like Gliffy, digitally visualize your work so that you can easily add it to presentations and documentation. It’s also a great resource for employee onboarding or potential investors in conjunction with your business plan.

Once your work is in a more shareable format, be ready to get some feedback and new ideas from your team. Take all of these in stride — there may be some great opportunities that come up! Edit your canvas as needed or create an action plan to address any gaps.

When to Use the Business Model Canvas

This exercise is great whether you’re starting from scratch or analyzing an existing business. It gives you the opportunity to understand your competitors, expand your offering, or identify ways to differentiate yourself.

Create or Evaluate a New Business

Completing this exercise can be a great way to get started on a more detailed business plan. It can also help you identify gaps in your business plan or refine an idea. 

Understand Your Competitors

You don’t have to use a business model canvas for your own business! Learn more about your competitors and their business models by trying to complete the canvas with whatever information you can find about them. Then, you can compare a competitor’s canvas against your own to identify differentiators in how you create value.

Along with business frameworks like a situational analysis or SWOT analysis, the balanced scorecard will give you a more complete view of the competitive environment.

Expand or Refine an Existing Business

This exercise can be a great way to determine how a new product line, service, or revenue stream fits with your existing business activities, relationships, and resources. If an idea easily fits within your existing business model, that can be a great sign that it’s a viable opportunity to pursue.

Use Gliffy to Capture & Share Ideas Across Your Organization

Business model canvasing is a powerful exercise for any leader, but don’t keep that knowledge all to yourself! Use Gliffy Diagrams for Confluence or Gliffy Online to capture and refine your ideas, then share them with the partners you care about most. 

Regardless of your tool of choice, you’ll get a free trial to get started. From there, it’s easy! Just drag and drop the shapes you need to build out the process models, flowcharts, and other business frameworks you need to hit your goals.

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