create a business plan using business model canvas

Business Model Canvas: Explained with Examples

Got a new business idea, but don’t know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan? There is a one-page technique that can provide you the solution you are looking for, and that’s the business model canvas.

In this guide, you’ll have the Business Model Canvas explained, along with steps on how to create one. All business model canvas examples in the post can be edited online.

What is a Business Model Canvas

A business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page.   

The Business Model Canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It’s a one-page document containing nine boxes that represent different fundamental elements of a business.  

The business model canvas beats the traditional business plan that spans across several pages, by offering a much easier way to understand the different core elements of a business.

The right side of the canvas focuses on the customer or the market (external factors that are not under your control) while the left side of the canvas focuses on the business (internal factors that are mostly under your control). In the middle, you get the value propositions that represent the exchange of value between your business and your customers.

The business model canvas was originally developed by Alex Osterwalder and Yves Pigneur and introduced in their book ‘ Business Model Generation ’ as a visual framework for planning, developing and testing the business model(s) of an organization.

What Are the Benefits of Using a Business Model Canvas

Why do you need a business model canvas? The answer is simple. The business model canvas offers several benefits for businesses and entrepreneurs. It is a valuable tool and provides a visual and structured approach to designing, analyzing, optimizing, and communicating your business model.

• The business model canvas provides a comprehensive overview of a business model’s essential aspects. The BMC provides a quick outline of the business model and is devoid of unnecessary details compared to the traditional business plan.
• The comprehensive overview also ensures that the team considers all required components of their business model and can identify gaps or areas for improvement.
• The BMC allows the team to have a holistic and shared understanding of the business model while enabling them to align and collaborate effectively.
• The visual nature of the business model canvas makes it easier to refer to and understand by anyone. The business model canvas combines all vital business model elements in a single, easy-to-understand canvas.
• The BMC can be considered a strategic analysis tool as it enables you to examine a business model’s strengths, weaknesses, opportunities, and challenges.
• It’s easier to edit and can be easily shared with employees and stakeholders.
• The BMC is a flexible and adaptable tool that can be updated and revised as the business evolves. Keep your business agile and responsive to market changes and customer needs.
• The business model canvas can be used by large corporations and startups with just a few employees.
• The business model canvas effectively facilitates discussions among team members, investors, partners, customers, and other stakeholders. It clarifies how different aspects of the business are related and ensures a shared understanding of the business model.
• You can use a BMC template to facilitate discussions and guide brainstorming brainstorming sessions to generate insights and ideas to refine the business model and make strategic decisions.
• The BMC is action-oriented, encouraging businesses to identify activities and initiatives to improve their business model to drive business growth.
• A business model canvas provides a structured approach for businesses to explore possibilities and experiment with new ideas. This encourages creativity and innovation, which in turn encourages team members to think outside the box.

How to Make a Business Model Canvas

Here’s a step-by-step guide on how to create a business canvas model.

Step 1: Gather your team and the required material Bring a team or a group of people from your company together to collaborate. It is better to bring in a diverse group to cover all aspects.

While you can create a business model canvas with whiteboards, sticky notes, and markers, using an online platform like Creately will ensure that your work can be accessed from anywhere, anytime. Create a workspace in Creately and provide editing/reviewing permission to start.

Step 2: Set the context Clearly define the purpose and the scope of what you want to map out and visualize in the business model canvas. Narrow down the business or idea you want to analyze with the team and its context.

Step 3: Draw the canvas Divide the workspace into nine equal sections to represent the nine building blocks of the business model canvas.

Step 4: Identify the key building blocks Label each section as customer segment, value proposition, channels, customer relationships, revenue streams, key resources, key activities, and cost structure.

Step 5: Fill in the canvas Work with your team to fill in each section of the canvas with relevant information. You can use data, keywords, diagrams, and more to represent ideas and concepts.

Step 6: Analyze and iterate Once your team has filled in the business model canvas, analyze the relationships to identify strengths, weaknesses, opportunities, and challenges. Discuss improvements and make adjustments as necessary.

Step 7: Finalize Finalize and use the model as a visual reference to communicate and align your business model with stakeholders. You can also use the model to make informed and strategic decisions and guide your business.

What are the Key Building Blocks of the Business Model Canvas?

There are nine building blocks in the business model canvas and they are:

Customer Segments

Customer relationships, revenue streams, key activities, key resources, key partners, cost structure.

• Value Proposition

When filling out a Business Model Canvas, you will brainstorm and conduct research on each of these elements. The data you collect can be placed in each relevant section of the canvas. So have a business model canvas ready when you start the exercise.  

Let’s look into what the 9 components of the BMC are in more detail.

These are the groups of people or companies that you are trying to target and sell your product or service to.

Segmenting your customers based on similarities such as geographical area, gender, age, behaviors, interests, etc. gives you the opportunity to better serve their needs, specifically by customizing the solution you are providing them.

After a thorough analysis of your customer segments, you can determine who you should serve and ignore. Then create customer personas for each of the selected customer segments.

There are different customer segments a business model can target and they are;

• Mass market: A business model that focuses on mass markets doesn’t group its customers into segments. Instead, it focuses on the general population or a large group of people with similar needs. For example, a product like a phone.  
• Niche market: Here the focus is centered on a specific group of people with unique needs and traits. Here the value propositions, distribution channels, and customer relationships should be customized to meet their specific requirements. An example would be buyers of sports shoes.
• Segmented: Based on slightly different needs, there could be different groups within the main customer segment. Accordingly, you can create different value propositions, distribution channels, etc. to meet the different needs of these segments.
• Diversified: A diversified market segment includes customers with very different needs.
• Multi-sided markets: this includes interdependent customer segments. For example, a credit card company caters to both their credit card holders as well as merchants who accept those cards.

Use STP Model templates for segmenting your market and developing ideal marketing campaigns

Visualize, assess, and update your business model. Collaborate on brainstorming with your team on your next business model innovation.

In this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company.

There are several types of customer relationships

• Personal assistance: you interact with the customer in person or by email, through phone call or other means.
• Dedicated personal assistance: you assign a dedicated customer representative to an individual customer.  
• Self-service: here you maintain no relationship with the customer, but provides what the customer needs to help themselves.
• Automated services: this includes automated processes or machinery that helps customers perform services themselves.
• Communities: these include online communities where customers can help each other solve their own problems with regard to the product or service.
• Co-creation: here the company allows the customer to get involved in the designing or development of the product. For example, YouTube has given its users the opportunity to create content for its audience.

You can understand the kind of relationship your customer has with your company through a customer journey map . It will help you identify the different stages your customers go through when interacting with your company. And it will help you make sense of how to acquire, retain and grow your customers.

This block is to describe how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company.

Channels play a role in raising awareness of your product or service among customers and delivering your value propositions to them. Channels can also be used to allow customers the avenue to buy products or services and offer post-purchase support.

There are two types of channels

• Owned channels: company website, social media sites, in-house sales, etc.
• Partner channels: partner-owned websites, wholesale distribution, retail, etc.

Revenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions.  

A revenue stream can belong to one of the following revenue models,

• Transaction-based revenue: made from customers who make a one-time payment
• Recurring revenue: made from ongoing payments for continuing services or post-sale services

There are several ways you can generate revenue from

• Asset sales: by selling the rights of ownership for a product to a buyer
• Usage fee: by charging the customer for the use of its product or service
• Subscription fee: by charging the customer for using its product regularly and consistently
• Lending/ leasing/ renting: the customer pays to get exclusive rights to use an asset for a fixed period of time
• Licensing: customer pays to get permission to use the company’s intellectual property
• Brokerage fees: revenue generated by acting as an intermediary between two or more parties
• Advertising: by charging the customer to advertise a product, service or brand using company platforms

What are the activities/ tasks that need to be completed to fulfill your business purpose? In this section, you should list down all the key activities you need to do to make your business model work.

These key activities should focus on fulfilling its value proposition, reaching customer segments and maintaining customer relationships, and generating revenue.

There are 3 categories of key activities;

• Production: designing, manufacturing and delivering a product in significant quantities and/ or of superior quality.
• Problem-solving: finding new solutions to individual problems faced by customers.
• Platform/ network: Creating and maintaining platforms. For example, Microsoft provides a reliable operating system to support third-party software products.

This is where you list down which key resources or the main inputs you need to carry out your key activities in order to create your value proposition.

There are several types of key resources and they are

• Human (employees)
• Financial (cash, lines of credit, etc.)
• Intellectual (brand, patents, IP, copyright)
• Physical (equipment, inventory, buildings)

Key partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged in oder to reduce risks and acquire resources.

Types of partnerships are

• Strategic alliance: partnership between non-competitors
• Coopetition: strategic partnership between partners
• Joint ventures: partners developing a new business
• Buyer-supplier relationships: ensure reliable supplies

In this block, you identify all the costs associated with operating your business model.

You’ll need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners.  

Businesses can either be cost-driven (focuses on minimizing costs whenever possible) and value-driven (focuses on providing maximum value to the customer).

Value Propositions

This is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment.

A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes.

Value propositions can be either quantitative (price and speed of service) or qualitative (customer experience or design).

What to Avoid When Creating a Business Model Canvas

One thing to remember when creating a business model canvas is that it is a concise and focused document. It is designed to capture key elements of a business model and, as such, should not include detailed information. Some of the items to avoid include,

• Detailed financial projections such as revenue forecasts, cost breakdowns, and financial ratios. Revenue streams and cost structure should be represented at a high level, providing an overview rather than detailed projections.
• Detailed operational processes such as standard operating procedures of a business. The BMC focuses on the strategic and conceptual aspects.
• Comprehensive marketing or sales strategies. The business model canvas does not provide space for comprehensive marketing or sales strategies. These should be included in marketing or sales plans, which allow you to expand into more details.
• Legal or regulatory details such as intellectual property, licensing agreements, or compliance requirements. As these require more detailed and specialized attention, they are better suited to be addressed in separate legal or regulatory documents.
• Long-term strategic goals or vision statements. While the canvas helps to align the business model with the overall strategy, it should focus on the immediate and tangible aspects.
• Irrelevant or unnecessary information that does not directly relate to the business model. Including extra or unnecessary information can clutter the BMC and make it less effective in communicating the core elements.

What Are Your Thoughts on the Business Model Canvas?

Once you have completed your business model canvas, you can share it with your organization and stakeholders and get their feedback as well. The business model canvas is a living document, therefore after completing it you need to revisit and ensure that it is relevant, updated and accurate.

What best practices do you follow when creating a business model canvas? Do share your tips with us in the comments section below.

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FAQs About the Business Model Canvas

• Use clear and concise language
• Use visual-aids
• Customize for your audience
• Highlight key insights
• Be open to feedback and discussion

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Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

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The 20 Minute Business Plan: Business Model Canvas Made Easy

Table of Contents

What’s the Business Model Canvas?

How do you get started, why use the business model canvas, when should you use the business model canvas, how do you use the canvas to facilitate alignment and focus, step 1 (of 10): customer segments, step 2 (of 10): value propositions, step 3 (of 10): channels, step 4 (of 10): customer relationships, step 5 (of 10): revenue streams, step 6 (of 10): key activities, step 7 (of 10): key resources, step 8 (of 10): key partnerships, step 9 (of 10): cost structure, step 10 (of 10): applications, analysis & next steps, example a: enable quiz (startup), example b: hvac in a hurry (enterprise), using the google doc’s/powerpoint template.

If you’re already familiar, you can skip to the next section, ‘ How do I get started ?’.

The Business Model Canvas (BMC) gives you the structure of a business plan without the overhead and the improvisation of a ‘back of the napkin’ sketch without  the fuzziness (and coffee rings).

Together these elements provide a pretty coherent view of a business’ key drivers–

• Customer Segments : Who are the customers? What do they think? See? Feel? Do?
• Value Propositions : What’s compelling about the proposition? Why do customers buy, use?
• Channels : How are these propositions promoted, sold and delivered? Why? Is it working?
• Customer Relationships : How do you interact with the customer through their ‘journey’?
• Revenue Streams : How does the business earn revenue from the value propositions?
• Key Activities : What uniquely strategic things does the business do to deliver its proposition?
• Key Resources : What unique strategic assets must the business have to compete?
• Key Partnerships : What can the company not do so it can focus on its Key Activities?
• Cost Structure : What are the business’ major cost drivers? How are they linked to revenue?

The Canvas is popular with entrepreneurs and intrapreneurs for business model innovation. Fundamentally, it delivers three things:

• Focus : Stripping away the 40+ pages of ‘stuff’ in a traditional business plan, I’ve seen users of the BMC improve their clarify and focus on what’s driving the business (and what’s non-core and getting in the way).
• Flexibility : It’s easier to facilitate alignment by tweaking the model and trying things (from a planning perspective) with something that’s sitting on a single page.
• Transparency: Your team will have a much easier time understanding your business model and be much more likely to buy in to your vision when it’s laid out on a single page.

The first time you engage with the canvas, I recommend printing it out or projecting it on a whiteboard and going to town (see below for a PDF). However, if you’re ready to put together something a little more formal (for distribution, presentation, etc.) here’s a Google App’s template you can copy or download as MSFT PowerPoint:

*Omnigraffle a popular diagramming program for the Mac. It has a fairly easy to use layering environment which you may find handy as you want to tinker with and produce different views of the canvas. You can try Omnigraffle for free (the basic paid version is $99).

The short answer is this: because it’s simple yet focused and that means more of your audience is likely to pay attention to it. Also, it’s highly amenable to change on the margins.

This matters a lot- more than most people think. A company that wants to innovate has to be ready to be wrong . A good VC in early stage investments succeeds with a prevalence of something like a 1/10. If you think you’re doing a lot better than that with substantial new innovation investments (a startup or a new line of business inside an enterprise) you’re probably throwing good money after bad.

Transparency, simplicity, and focus are great facilitators of the ‘creative destruction’ a good innovation program needs, and the Canvas does a nice job of delivering that across lines of business. For a large corporation with multiple lines of business at various levels of maturity, I actually prefer the Corporate Innovation Canvas as a starting point. However, from there, the Business Model Canvas does an excellent job of bringing clarity to the questions of how, for example, a given line of business creates focus and then implements it in an innovation-friendly way with, for example, ‘objectives and key results’ OKR’s . It’s a central element in the ‘innovation stack’ where an enterprise is able to go from priority innovation areas (with the Corporate Innovation Canvas) to testable business model designs (with the Business Model Canvas) to product charters (with an agile team charter ) to individual learning pathways to cultivate the talent they need to execute.

Even more important than the top down cascading of objectives with testable results and KPI’s is the improvement in the feedback in outcomes that helps the overall innovation program learn and adapt quickly. With layer appropriate innovation metrics, it’s much easier for the achievements of individuals to cohere (or not) to the job of teams and in turn from there to lines of business back up to corporate objectives. This helps both help the company’s talent understand where they might benefit from more practice and learning as well as what constitutes success in their individual roles and collaborations.

Anytime you want to have a focused discussion about what matters to a given line of business, the Business Model Canvas is a good place to start. The Canvas has received a lot of attention as a tool for startup entrepreneurship. While this may be one of the ‘sexier’ and more ostensibly simple applications of the Canvas, I actually think it’s one of the least compelling. For a startup, the only thing that matters is product/market fit, which the Canvas represents as a set of relationships between Customer Segments and Value Propositions. The Canvas doesn’t do a bad job of describing this, but it’s kind of overkill- the whole left side of the Canvas which describes the delivery infrastructure is mostly irrelevant for startups that are still finding product market fit, since all that’s provisional about where (and whether) they arrive at product/market fit.

Where the Canvas really shines is describing an existing line of business to answer questions like: a) What does product/market fit mean for this business? b) Where have we focused our company building and is it still relevant to ‘a’? c) What are our key revenue, cost, and profit drivers, and how do we improve those?

Now we’re taking! Whether you’re an ‘intrapreneur’ exploring a new extension to the business or a ‘digital transformation’/IT consultant trying to facilitate a discussion about what ‘strategic IT’ means and how you’ll know if you achieve it, the Canvas is a quick and productive place to anchor such a discussion.

First and foremost, I’d try it out for yourself. Fill out the elements the business you’re working on and then ask yourself ‘Does this make sense?’ ‘What are the most important linkages and components of the model?’

From there, you may just want to use the Canvas you sketch to facilitate alignment on some other topic. However, if you’re working with a team on a new venture or with a client on a new project, you may then want to take it from the top and facilitate a workshop where you facilitate a fresh take on the Canvas, levering your experience thinking through it once. The link below will take you to a related curriculum item that has workshop slides, prep. items, and agenda.

LINK TO WORKSHOP PAGE

Otherwise, the next sections (10 steps) offer a tutorial on how to think through a business model design with the Canvas. The closing sections offer notes on how to use the Google Doc’s/PowerPoint and Omnigraffle templates.

Output : a list of Personas, organized by Customer Segment if you have more than one segment. I recommend trying to prioritize them- Who would you pitch first if you could only pitch one? Who next? And so forth…

Notes : If you’re spending a lot of time on this first item, that’s OK (and it’s probably good). The Canvas is a tool, not a strategy and not all the nine blocks are equal. The pairing of Customer Segments and Value Propositions is really the ‘independent variable’ that should be driving everything else in your business model. When I use the Canvas in my Venture Design classes, we usually spend all of the first session (plus time for field research) on Customer Segments and Value Propositions.

For example, at Leonid, an enterprise software company I founded, we thought our largest customers worked with us because of the cost savings we offered and our knowledge about best practices. It turned out that was mostly wrong- reducing their time and risk to get new services to market was the most important. It’s not that the other things weren’t important, but they weren’t the top Value Proposition. That made a difference on how we sold the product and how we focused on operationalizing it for customers.

This mapping says ‘We have 3 personas. Persona 1 cares about VP 1 & 2. Persona 2 cares about VP 2; Persona 3 cares about VP3. (One segment only so segments not noted)’.

Output : a prioritized list of Value Propositions and linkages from each Personas to the VP’s relevant to them.

Notes: Again, this pairing is the key driver for most business models and if you want more on how to describe and discovery what to put in this part of the canvas, I recommend this: Tutorial- Personas .

Maybe you feel like you’re in good shape on understanding the customer’s world but you don’t have any validation on whether the Value Propositions are clicking because this is a new venture? If you’re not sure, that’s OK and good for you for acknowledging the uncertainty! It’s the responsible thing to do. The key is to write down those assumptions, prioritize them, and figure out the quickest and cheapest way to prove or disprove them. That’s what Lean/Startup is about and there are resources here to help you with that, if you’d like- Tutorial: Lean Startup .

Channels includes entities you use to communicate your proposition to your segments, as well as entities through which you sell product and later service customers (see AIDAOR journey below). For example, if you sell bulbs for light houses and there’s a website all light house attendants purchase equipment, that site is a sales Channel. If you use Google AdWords, that’s a Channel, too (for getting attention). If you use a third party company to service the bulbs when they break, that’s also a Channel.

Output : a list of important Channels, linked to Personas or Segments if they differ substantially. Make notes on what steps are relevant for each- promotion, sales, service, etc. See Note this section for more structure on this.

Notes: Channels and the next item, Customer Relationships, define your interface with the Customer. It’s important to think all the way through the customer ‘journey’ in specific terms. For most businesses, the way they get a customer’s attention is different than the way they onboard them or support them over the long term. For this, I recommend the AIDA.OR framework (attention-interest-desire-action-onboarding-retention) and storyboarding your way through it. Here’s a post explaining all that- Storyboarding AIDA(OR) . If you don’t want to do the storyboards, I recommend at least making notes about your customer journey through the AIDA(OR) steps.

Another consideration is whether your channels will give you enough visibility into the user, including, for example, a way to follow up with users. Not sure? Document your assumptions Lean Startup style and figure out how you’ll quickly prove or disprove them.

Output : a description of Customer Relationships, with notes if they differ across Customers (between Segments or among Personas within a Segment) or across the customer journey.

Notes: If you’re a startup, be sure to document and review critical assumptions here. Also, the focal items are in a kind of specific order- you should validate your Segments and their relationship to the Propositions above all else. If this means you provide personal support in the early days (a ‘concierge test’ in Lean Startup terms) to do discovery and validation of Segments and Propositions, that’s OK. You can subsequently test the Customer Relationship models. (Here’s a post on using consulting as a concierge vehicle in B2B if you want more detail: Consulting as B2B Concierge Vehicle ).

Notes : If you have a startup or are re-engineering the business, this is a time to look at where you’re driving revenue and whether it aligns with the rest of your focal points. Are you charging on value? Perceived value? They say everyone loves their banker; hates their lawyer. Why is that? Is there an actionable analog in your business?

For a product-driven business, this probably includes ongoing learning about users and new techniques to build better product. If you’re focused on doing a bunch of things for a particular set of customers (ex: comprehensive IT for law offices), this probably includes maintaining superior expertise on the segment(s) and creating or acquiring products and services that are a good fit, whatever that entails. For an infrastructure business (ex: electric utility), it probably includes keeping the infrastructure working reliably and making it more efficient.

Outputs : a list of Key Activities linked to your business’ Value Propositions.

Notes : One question this analysis should raise for you is whether or not certain Activities and Resources are actually core, actually focal to your business, something you’ll want to think through .

Outputs : a list of Key Resources linked to your business’ Key Activities.

Notes : Product-driven businesses have a differentiated product of some sort. Rovio, the company that makes the popular app Angry Birds, is such a company. Key Resources in product-driven businesses are typically key talent in critical areas of expertise and accumulated intellectual property related to their offering.

Scope-driven businesses create some synergy around a particular Customer Segment. For example, if you started a business that would take care of all the IT needs for law firms, that would be a scope-driven business. These businesses typically have key knowledge about their segment, a repeatable set of processes, and sometimes infrastructure, like service centers.

Infrastructure-driven businesses achieve economies of scale in a specific, highly repeatable area. Telecommunications is traditionally an infrastructure business. Retailers focused on retail, like Walgreens or Costco, are primarily infrastructure-driven businesses. The Key Resources for this type of business are, you guessed it, various types of physical or virtual infrastructure.

Let’s take a single product category: diapers. The Honest Company or another innovating around compostable or otherwise more environmentally friendly diapers would be a product-driven take on the category. Procter & Gamble which has a cradle-to-grave strategy for providing consumer products is a scope-based take; so are various baby-focused retailers. Kimberly-Clark (wood pulp) or DuPont (chemicals and polymers) are both infrastructure-based takes: diapers is just another way to sell something they produce at scale with relatively little differentiation.

If there are major cost components that don’t map to a Key Activity, I’d take a closer look at those costs.

Output : a list of Cost Structure elements with notes on their relationship to Key Activities.

Congratulations- you have a working canvas! The section below offers a few analytical ideas and suggestions for next steps.

Core Applications The most core and obvious applications of the Canvas are to ask: – Does it make sense? – Could it be better? – Does the rest of my team understand and agree? Have additional ideas? – (rinse and repeat at least quarterly)

Competitiveness The canvas does a good job of helping you figure out your business, which is a good place to start. You also want to look at the competitive environment and think about if and how you have/maintain a long term competitive advantage.

For this, I like Michael Porter’s Five Forces framework ( Wikipedia Page ; see also Chapter 2 of ‘ Starting a Tech Business ‘). Try walking through the Five Forces for your company and then bounce back to your canvas. How does it all hang together?

Next Steps Every business is a work in progress (sorry, I try to avoid saying things like that but it seemed to fit here). As you go through the canvas, you may encounter areas that give you trouble. The table below summarizes a few of the most common that I see in my work as a mentor and coach:

Want to make innovation an everyday thing?

What is Enable Quiz?

Enable Quiz is a (fictional) startup that’s building a lightweight quizzing application for companies that hire a lot of technical talent (engineers). Their take is:

For hiring managers who need to evaluate technical talent, Enable Quiz is a talent assessment system that allows for quick and easy assessment of topical understanding in key engineering topics. Unlike formal certifications or ad hoc questions, our product allows for lightweight but consistent assessments of technical talent.

Why and how would Enable Quiz use the Business Model Canvas?

They have a small team, but arriving at a clear, shared understanding of what they’re after is still important. That said, it’s important that the way they talk about this is both highly visible and amenable to change. Given that, the Canvas is a good fit.

The Business Model Canvas at Enable Quiz

This page shows Enable Quiz’s current working view of product/market fit:

What is HVAC in a Hurry?

HVAC in a Hurry is a mid-sized enterprise that services commercial HVAC (heating, ventilation, and air conditioning) systems. Their take on the business is:

For facilities managers & business owners who need their heating & cooling systems managed and repaired, HVAC in a Hurry is a full service provider that allows for easy and responsible management of a business’ HVAC systems. Unlike smaller firms, our commitment to best practices and training allows customers to worry less and realize superior total cost of ownership for their HVAC systems.

Why and how would HVAC in a Hurry use the Business Model Canvas?

HVAC in a Hurry has a working version of product/market fit. However, their industry is competitive and successful firms increasingly use technology to improve customer experience (CX) and reduce cost (overhead) in their operations. HVAC in a Hurry has a small ‘digital transformation’ team that’s working on digital applications to improve the company’s performance. This team decided to use the Canvas to ‘manage upwards’ in order to facilitate better discussions about where they should focus, how that aligns with the business as a whole, and what success definition makes sense for them.

The Business Model Canvas at HVAC in a Hurry

Here’s their current view of product/market fit:

If you’re not familiar with it, Google Doc’s is a web-based office suite, similar to MS Office. If you have a gmail account, you can access it (no guarantees- that was the case last time I checked).

First, you’ll want to link to the template file: BUSINESS MODEL CANVAS TEMPLATE IN GOOGLE DOC’S .

Once you’re accessed the file, you can make make it your own by going to the File menu and either ‘Make a copy…’, creating a copy in your own Google App’s domain or you can use the ‘Download as…’ option to download it as PowerPoint (and a few other formats).

What’s your experience with the Canvas? How have you used it? What worked? What didn’t? Please consider posting a comment!

Copyright © 2022 Alex Cowan · All rights reserved.

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Business Model Canvas: The Definitive Guide and Examples

Before 2004, entrepreneurs suffered from prolonged and cumbersome business plans. Alexander Osterwalder facilitated the creation of a business model by introducing the Business Model Canvas (BMC) .

By definition, it’s a visual template that illustrates various objects of a business model . Osterwalder’s original canvas includes nine elements, which we will have explained below in the article. They represent vital aspects of business survival.

What to Begin With?

Once you decided to use the Business Model Canvas approach, you need to prepare the essentials:

• Decide on the team members involved.
• Allocate time
• Prepare the tools.

The necessary tools depend on how you decide to brainstorm:

• Offline. Download a PDF Business Model Canvas template, and take several colored markers, sticky notes, and anything else you may need. For example, if you are brainstorming in a big team, a board is a must for enhanced convenience.
• Online. Choose the platform where you will work with a template. It can be Google Docs, Omnigraffle, or the Stratygizer web app.

Why Choose Business Model Canvas?

What makes The Business Model Canvas stand out in an array of approaches to business model creation? Its 1-page nature drives the following advantages:

• Focus – With all the data presented on a single page, business owners don’t spread themselves too thin. They formulate key elements and eliminate unnecessary ones.
• Density – It’s much better to read one dense piece of paper than look through a 30-page report.
• Flexibility – The canvas is easy to customize; therefore, you can fill out several templates, compare them, and choose the best one.

About the Nine Business Model Canvas Elements

Let’s elaborate on what is behind the nine Business Model Canvas blocks:

1. Customer Segment

Daily operations highly depend on customers and their behavioral patterns. That’s why customer segmentation is a must when creating a business model.

In this block, you need to describe the buyer persona. The description includes the following:

• Demographics (age, gender, etc.)
• Professional status
• Motivation and goals
• Shopping preferences

This is a basic list of points. You can add specific parameters. For example, software developers may identify the preferred device type. Already-established brands can also introduce visitors’ tiers that differentiate people according to their level of connection with a brand.

Read an in-depth article about customer segments here .

2. Value Proposition

A value proposition is a brief description of your product and its ultimate value for a client. In other words, write down in a Business Model Canvas why consumers should buy your goods or services. Ideally, it solves a problem or drives additional value for an end-client.

Keep in mind that the wording should be precise and short. Don’t describe your value proposition in several sentences. Limit it to a single but eloquent phrase. Here is a good example from Maps.me : “Fast, detailed, and entirely offline maps with turn-by-turn navigation – trusted by over 140 million travelers worldwide.”

Read an in-depth article about value proposition here.

3. Distribution Channels

Osterwalder, together with Pigneur, described five phases of channel development.

• Awareness includes channels that establish the initial contact with the target audience and develop the connection. It usually involves marketing channels.
• Evaluation implies allowing potential buyers to try your goods and see the value. Popular channels are free samples, reviews, and case studies.
• Purchase is about when and by what means customers can buy your product. The channels vary significantly depending on the prevalence of online or offline communication.
• Delivery describes how an end consumer receives a product.
• After-sales is usually limited to customer support that provides after-sales service and resolves problems.

Read an in-depth article about distribution channels here.

4. Customer Relationship

A customer relationship strategy determines how your target audience interacts with your brand. You can choose from five types of customer relationships in terms of the Business Model Canvas:

• Personal assistance is a traditional approach where a customer interacts with a personal assistant when contacting your brand. It implies a high level of personal care and deep, meaningful relationships.
• Self-service is the opposite of personal assistance: a brand doesn’t directly communicate with a consumer – instead, the consumer can understand the product via guides and FAQs.
• Automated service involves AI-based suggestions and bots that can provide basic assistance. This type is more engaging than self-service.
• Communities are spaces developed by a brand itself to help the audience understand the product better. A good example is Oracle, which practices the approach.
• Co-creation implies educating the customers via user-generated content.

Read an in-depth article about customer relationships here.

5. Revenue Streams

The next block of the Business Model Canvas is about determining where your revenue comes from. Here, you should consider the buyer’s persona to identify what the target audience is ready to pay for.

There can be several methods of monetization:

• Direct sales : Implies selling your service or product for a fee. It’s common for the majority of industries.
• Advertising : It’s relevant for such niches as blogging or IT platforms. The revenue comes from advertisers who want to reach your audience.
• Freemium : This applies to services only. Some features are free, while premium ones are paid for.
• Subscription : It’s similar to a fee-based monetization. The only difference is that a consumer pays for getting access to the service for a limited time, not forever.

Read an in-depth article about revenue streams here.

6. Key Resources

In the Business Model Canvas, key resources are divided into four categories. Here are they explained:

• Tangible – Any physical resources, from real estate to equipment. The stocks also fall in the category.
• Intangible – Intellectual property like patents, copyrights, licenses, and customer knowledge
• Human – Your employees that make the business run
• Financial – All the finance, regardless of whether it’s an obligation or not. It includes cash, bank loans, grants or donations, and other finances.

Read an in-depth article about key resources here.

7. Key Activities

Key activities included in a canvas are the business activities vital for work. They vary from industry to industry. Some design this block by uniting the activities into one out of three categories:

• Problem-solving

For example, software developers fall in the first category as they design new products, while an IT company with its own taxi service is attributed to the third category.

Read an in-depth article about key activities here.

8. Key Partners

Key partners are parties like suppliers who are vital to flawless business operations. In other words, a company can’t survive without them. There are four categories to include in the Business Model Canvas:

• Supplier – A partner who supplies you with raw materials or finished goods
• Non-competitors – Companies you team up with to leverage their resources: for example, you can source goods from several suppliers
• Joint ventures – Partners who help you fill the gap: enter a new market or reach a new niche. The result of a joint venture is enhanced mutual profitability.
• Coopetition – Partnership between two competitors, which may take place as a merger to market a new product

Read an in-depth article about key partners here.

9. Cost Structure

All the mentioned above blocks of the Business Model Canvas aren’t implemented for free. Startups and enterprises spend money on production and accompanying services. To set realistic revenue goals, a company needs to estimate the costs first.

The costs vary depending on the industry. For example, some businesses have to cover R&D expenditures, together with production and post-service. Others, however, exclude this debit from the template.

Read an in-depth article about cost structure here.

Applications and Analysis

Once the Business Model Canvas is ready, you need to analyze it. For this, you should assess the canvas in terms of three points:

• Is it logical and coherent? Are there are misaligned blocks? If yes, address the issue.
• What can be improved? If you find any mediocre blocks, devote more time to improve them.
• Are there any other ideas to consider? Maybe you can add something to the existing template or design a new one?
• Does my team agree with the canvas? If not, reconsider the arguable moments. To prove your point of view, rely on data and facts.
• Have I taken into account a long-term competitive advantage? If no, address the point. You need to consider the market and competitors when building a business plan.

What to Do After?

After you have examined the canvas, you can integrate it into your daily routine. Here is how it can be utilized:

• Track the changes. Any company evolves with time. A plan helps to make sure that changes don’t contravene core principles.
• Onboard top-management. The model communicates who you are and how you live. Instead of describing everything on your own, you can let new hires read everything.
• Guide the brainstorming. Every time you have a meeting where a team is generating ideas, place the canvas in front. It will help to reject unfit ideas.

Besides, you can use the same technique in other areas. For example, if you have several customers, you can describe an approach to them with the help of the BMS.

Some Tips for Beginners

If you have never created the Business Model Canvas before, comprehending all the above-mentioned data may be hard. Here are five tips that will help to navigate across the template easier:

• Prefer teamwork: It’s better to brainstorm side by side with reliable and competent team members rather than alone. You reduce the risk of designing the canvas from one perspective.
• Work on a whiteboard: The more space you have, the better. It allows the whole team to have a good look at the template and facilitates the process.
• Stock up on stationery: Colored markers and stickers will help you to group the ideas when brainstorming. Otherwise, you risk ending up with an incoherent Business Model Canvas.
• Devote enough time: Don’t allocate half an hour or schedule an important meeting right after the brainstorming. You will need a minimum of one hour for a draft.
• Determine the sequence of blocks to fill in: It’s advisable to start with customer segmentation or value proposition. After that, you can determine the sequence as it’s convenient for you.

Software for Business Model Canvas

If you prefer digital solutions to traditional paper and markers, you can opt for software to create the Business Model Canvas. There are many useful tools on the web. These three, however, are the best:

• Canvanizer. The tool is free, simple, and shareable. It allows collaborative brainstorming in Google Docs. Later, the canvas can be exported to an image or other formats.
• Strategyzer. The free software is more advanced with deep analytics and enhanced user experience. For example, the tool can assess the financial viability of a business idea. It also offers additional modes: for example, a dashboard for Lean Startup development.
• CNVS. The software with a simple interface is easy-to-understand. It allows building not only the BMC but also a Lean and Feature Canvas.

What Are the Benefits of the BMC?

Businesses of all scopes choose the Business Model Canvas approach because of four core benefits:

• Enhanced Visibility. Since the canvas involves visual presentation, it facilitates data comprehension. The team has all the information in front of their eyes; therefore, the analysis and decision-making are much easier.
• Customization. You can change some blocks of the canvas in no time if they don’t match with others. It won’t take several hours to retype and reprint a 40-page report.
• Focus on Value. Typically, the value of the product is at the core. It means that all the other blocks are designed with the end-benefit in mind.
• A Single Message. A team gets a clear message of the operation. The Business Model Canvas eliminates risks of failure because of misunderstandings.

What Does the Business Model Canvas Lack?

Although the Business Model Canvas is a popular and recognizable approach, many critics revolve around it. In particular, some executives criticize the model because of the lack of:

• Competitors
• Market analysis
• Brand mission
• Key priorities

While it may bother some people, in reality, there is nothing wrong. The nature of the BMC doesn’t imply focusing on these aspects. Its ultimate objective is to facilitate the process of crafting business models. And the template includes the core blocks only. After all, the market and competitors’ external outcomes aren’t shaping the company’s inner structure.

Why Should Already-Established Companies Implement the Business Model Canvas?

Traditionally, the canvas approach is the prerogative of startups. But it can also be useful for already-established enterprises. The BMC covers the following tasks: Helps to identify gaps in the model and discover new opportunities.

• Allows comparing your model to competitors to identify competitive advantages
• Enhances a presentation of a company to potential investors
• Allows examining and testing new business models
• It helps to unite the model and eliminate misunderstandings in a team
• Allows recreating the company from scratch

As can be seen, the Business Model Canvas helps to effectively analyze the whole company or particular project, map out possible changes or gaps, and address them.

Real Examples of the Business Model Canvas

Examples help executives to grasp the basics of the BMC better. Here are two examples of canvases from different industries:

Airbnb is a provider of affordable accommodation around the globe. Its canvas may look like this:

• Customer segments – budget tourists, unconventional travelers, locals seeking extra income
• Value proposition – easy and fast booking, huge offer, competitive prices, local lifestyle
• Distribution channels – social media, travel bloggers, word-of-mouth
• Customer relationships – self-service with customer support
• Revenue streams – a fee system, affiliate marketing
• Key resources – a community of both landlords and guests, platform, IT-specialists
• Key activities – user research, customer support, maintenance
• Key partners – tourists and travelers, hosts, investors, payments providers, insurance companies
• Cost structure – marketing, platform maintenance

LinkedIn is a professional social network.

• Customer segments – HR, professionals seeking employment, marketing specialists
• Value proposition – building a professional network of contact, sourcing potential employees, blogging.
• Distribution channels – app stores, website
• Customer relationships – self-service, customer support
• Revenue streams – freemium, marketing, and hiring solutions
• Key resources – platform, IT-specialists, user-generated content
• Key activities – platform maintenance
• Key partners – users, SlideShare
• Cost structure – marketing, maintenance

The Business Model Canvas is one of the numerous approaches to business modeling. For more than fifteen years of existence, it has proved its worth in the corporate community. Despite some critics, the method is effective and illustrates the business plan precisely. Moreover, thanks to its visual feature, it’s easy to comprehend and assess.

Download a Business Model Canvas Template

Download our free tools below to create your own Business Model Canvas right now.

BUSINESS MODEL CANVAS TEMPLATE PDF

BUSINESS MODEL CANVAS TEMPLATE PPT

BUSINESS MODEL CANVAS TEMPLATE EXCEL

BUSINESS MODEL CANVAS TEMPLATE WORD

BUSINESS MODEL CANVAS TEMPLATE GOOGLE SHEETS

BUSINESS MODEL CANVAS TEMPLATE GOOGLE SLIDES

You may also be interested in the Value Proposition Canvas template , a complementary tool to the Business Model Canvas.

Who is Daniel Pereira ?

I love understanding strategy and innovation using the business model canvas tool so much that I decided to share my analysis by creating a website focused on this topic.

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The Business Model Canvas

The Business Model Canvas is a strategic management and entrepreneurial tool. It allows you to describe, design, challenge, invent, and pivot your business model. This method from the bestselling management book Business Model Generation is applied in leading organizations and start-ups worldwide.

The Business Model Canvas enables you to:

• Visualize and communicate a simple story of your existing business model.
• Use the canvas to design new business models, whether you are a start-up or an existing businessManage a portfolio of business models
• You can use the canvas to easily juggle between "Explore" and "Exploit" business models.

About the speakers

Download your free copy of this whitepaper now, explore other examples.

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Mastering business models

A self-paced online course with 
Alex Osterwalder and Yves Pigneur.

Are you trying to improve your existing business model? Or trying to create a new one that can compete in today’s market?

Business Model Canvas (BMC)

What is the Business Model Canvas

Business Model Canvas (BMC) is a framework that helps determine how a business creates, delivers, and captures values. It is a visual representation of the important aspects or parts to consider when designing a Business Model.

BMC aids in constructing a shared understanding of a business by condensing it into a simple, relevant, and intuitively understandable one-page visual while not oversimplifying the complexities of how enterprises function.

This concept has been applied and tested around the world and is used in organizations such as GE, P&G, Nestlé, IBM, Ericsson, and Deloitte, including Government Services of Canada and many more [1],[2] .

The Nine Building Blocks

BMC describes a business through nine basic building blocks that show the logic of how a business intends to make money. These nine blocks cover the four main areas of a business: Customers, Offer, Infrastructure, and Financial Viability.

BMC acts as a shared language for describing, visualizing, assessing, and changing business models. It is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems.

Each of these blocks is explained in more detail as follows:

1. Customer Segments (CS)

These are the groups of people or organizations that a business aims to reach and serve. Customers are the heart of a business model, and without (profitable) customers, a business cannot survive.

Customers are grouped into distinct segments with common needs, common behaviors, or other attributes. Customer groups represent separate segments if:

• Their needs require and justify a distinct offer.
• They are reached through different Distribution Channels.
• They require different types of relationships.
• They have substantially different profitability.
• They are willing to pay for different aspects of the offer.

An organization must make a conscious decision about which segment(s) to serve and which segments to ignore. Once this decision is made, a business model can be carefully designed around a strong understanding of specific customer needs.

The following two questions, if answered with clarity, help a business identify its CS.

• For whom are we creating value?
• Who are our most important customers?
• What are the customer archetypes?

Examples of some of the Customer Segments are shown in the figure:

2. Value proposition (VP)

Value Proposition describes the bundle of products and services that create value for a specific Customer Segment chosen by a business.

A VP is the reason why customers turn to one company over another. VP must solve a customer’s problem or satisfy a need. A business can have more than one VP, but each must consist of a selected bundle of products and/or services that caters to the requirements of a specific Customer Segment.

While some VPs may be innovative and represent a new or disruptive offer, others may be similar to existing market offers but with added features and attributes.

An organization’s VP must answer the following questions with clarity:

• What value do we deliver to the customer?
• Which one of our customer’s problems are we helping to solve?
• Which customer needs are we satisfying?
• What bundles of products and services are we offering to each CS?

Elements from some of the following can contribute to customer value creation:

3. Channels (CH)

Channels describe how a company communicates with and reaches its Customer Segments to deliver a Value Proposition.

Channels are customer touch points that play an important role in the customer experience and serve several functions, including:

• Raising awareness about a company’s products and services
• Helping customers evaluate a company’s Value Proposition
• Allowing customers to purchase specific products and services
• Delivering a Value Proposition to customers
• Providing post-purchase customer support

To establish an effective channel, a company must first answer the following:

• Through which Channels do our Customer Segments want to be reached?
• How are we reaching them now?
• How are our Channels integrated?
• Which ones work best?
• Which ones are most cost-efficient?
• How are we integrating them with customer routines?

There are five distinct phases (figure below) through which a channel passes, and it could cover more than one of these phases at a time.

Channels can be either direct, indirect or hybrid, as shown:

Finding the right mix of Channels to satisfy how customers want to be reached is crucial in bringing a Value Proposition to market and can create a great customer experience.

4. Customer Relationships (CR)

Customer Relationships describe the types of relationships a company establishes with specific Customer Segments. Relationships can range from personal to automated. An organization’s CR strategy may be driven by one of the following motivators:

• Customer acquisition
• Customer retention
• Boosting sales (upselling)

A business can arrive at the optimum CR by asking the following questions:

• What type of relationship does each of our Customer Segments expect us to establish and maintain with them?
• Which ones have we established?
• How costly are they?
• How are they integrated with the rest of our business model?

Several categories of Customer Relationships may co-exist in a company’s relationship with a particular Customer Segment. Some of which are:

5. Revenue Streams (RS)

Revenue Streams represent the company’s cash (earnings) from each Customer Segment and are like the arteries of any business.

There are two distinct categories of Revenue Streams:

• Transaction Revenues which are one-time customer payments
• Recurring Revenues that are ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support

A business can arrive at its ideal revenue stream by asking the following questions:

• For what value are our customers willing to pay?
• For what do they currently pay?
• How are they currently paying?
• How would they prefer to pay?
• How much does each Revenue Stream contribute to overall revenues?

There are several ways a business can generate revenue, such as:

A business may have one or more Revenue Streams, each with different pricing mechanisms. The choice of pricing mechanism greatly influences the revenues generated.

There are two main types of pricing mechanisms, Fixed and Dynamic, as follows:

6. Key Resources (KR)

The Key Resources describe the most important assets required to make a business model work.

These resources allow an enterprise to create and offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues. Different Key Resources are needed depending on the type of business model.

For example, a chip fabrication business like TSMC [9] requires capital-intensive facilities worth billions of dollars, while a chip designer like NVIDIA [10] would need skilled manpower as its Key Resource.

Key Resources can be owned or leased by a business or acquired from its key partners. They can be identified by answering the following questions:

• What Key Resources do our Value Propositions require?
• What resources are required to sustain our Distribution Channels, Customer Relationships and Revenue Streams?

Key Resources can be categorized as follows:

7. Key Activities (KA)

Key Activities describe the most important things a company must do to make its business model work. They are required to create and offer a Value Proposition, reach markets, maintain Customer Relationships, and earn revenues.

Key Activities differ depending on the business model type. For example, Microsoft’s Key Activity is software development, while for Dell, it is Supply Chain Management. For a consultancy firm like McKinsey, Key Activity is problem-solving.

A business can identify its Key Activities by answering the following questions:

• What Key Activities do our Value Propositions require?
• What activities directly contribute to maintaining our Distribution Channels, Customer Relationships and Revenue Streams?

Key Activities can be categorized as follows:

8. Key Partnerships (KP)

The Key Partnerships describe the network of suppliers and partners that make the business model. There are four types of partnerships:

A business must ask the following questions before forming partnerships:

• Who are our key partners?
• Who are our key suppliers?
• Which Key Resources are we acquiring from partners?
• Which Key Activities do partners perform?

Primarily, there are three motivations for a business when creating partnerships, as shown:

9. Cost Structure (CS)

Cost Structure describes all costs incurred to operate a business model. A business incurs costs in creating and delivering value, maintaining customer relationships, and generating revenue. Costs are business-specific, where some are more cost-driven than others.

A business must answer the following questions to arrive at an optimum cost structure:

• What are the most important costs inherent in our business model?
• Which Key Resources are most expensive?
• Which Key Activities are most expensive?

While costs should be minimized in every business model, it is useful to distinguish between two broad classes of business model Cost Structures:

• Cost Driven : This model focuses on minimizing costs wherever possible. This approach aims at creating and maintaining the leanest possible Cost Structure, using low-price Value Propositions, maximum automation, and extensive outsourcing. Examples: No frills airlines like Southwest & easyJet, Fast food joints such as McDonald’s & KFC.
• Value Driven: Premium Value Propositions and a high degree of personalized service usually characterize value-driven business models. Examples: Luxury hotels, Expensive Cars like Rolls-Royce

Cost Structures can have the following characteristics:

Putting-it-all together

The nine business model Building Blocks form the basis for a handy tool, which is called the Business Model Canvas (figure below). This tool resembles a painter’s canvas preformatted with nine blocks that allow painting pictures of new or existing business models. It is a hands-on tool that fosters understanding, discussion, creativity, and analysis.

BMC works best when printed out on a large surface such that groups of people can jointly note, sketch, and discuss business model elements.

Example of Business Model Canvas

Nespresso [17] , a fully owned daughter company of Nestlé, changed the dynamics of the coffee industry by turning a transactional business (selling coffee through retail) into one with recurring revenues (selling proprietary pods through direct channels).

The two-part strategy involved selling their patented coffee machine to retail customers first to lock them into the brand. This generated a recurring demand for coffee refills (pods) that led to constant revenues. These pods were sold directly through mail/website/own stores, thereby eliminating middlemen/dealers, which further increased profits [1] .

Nespresso’s strategy plotted on a Business Model Canvas looks as follows:

Business Model Canvas helped Nespresso establish a solid and enduring foundation by engaging consumers directly and bringing a barista-like experience within the reach of a home or an office.

Advantages & Limitations

• Encourages Collaboration – collaborative framework, which helps put different business stakeholders in sync. This improves the likelihood of generating new ideas and their quality.
• Facilitates testing of ideas before launch – allows business owners, strategists, and managers to think through business ideas as well as test concepts that would otherwise get tested with potential customers where the stakes are higher.
• Customer-centered approach – Key customer segments, relationships, activities, and value propositions are all elements that focus on creating, delivering, and capturing value for customers.
• Clarity – Analyzing the business through the lens of nine blocks brings better clarity and structure to the business model.

Limitations

• Lacks a section for defining the start-up’s mission statement, which is crucial to understanding the goals and objectives of any business.
• Overlooks the importance of a profit mechanism beyond costs and revenues, including decisions on how to use potential profits.
• The order of the canvas is not intuitive, making it difficult to read and understand the strategic decisions in a logical sequence.
• Does not depict interconnections between different elements, which can have a significant impact on the overall business model.
• Fails to acknowledge the company’s role within its ecosystem, including its impact on the environment and local communities.
• External factors such as competition, history, and other industry-specific factors are absent from the canvas, which can greatly influence the success of a business model.

1. “A Better Way to Think About Your Business Model”. Harvard Business Review, https://hbr.org/2013/05/a-better-way-to-think-about-yo . Accessed 01 Aug 2023

2. “Business Model Generation”. Alexander Osterwalder, https://www.strategyzer.com/books/business-model-generation . Accessed 28 Jul 2023

3. “The Apple M1 is a revolution that is changing the computing world”. Citymagazine, https://citymagazine.si/en/apple-m1-is-a-revolution-that-changes-the-computer-world/ . Accessed 29 Jul 2023

4. “Mass Customization”. Corporate Finance Institute, https://corporatefinanceinstitute.com/resources/management/mass-customization/ . Accessed 29 Jul 2023

5. “Moka Pot”. Wikipedia, https://en.wikipedia.org/wiki/Moka_pot . Accessed 29 Jul 2023

6. “NetJets Homepage”. NetJets, https://www.netjets.com/en-us/ . Accessed 01 Aug 2023

7. “Distribution Channels – Definition, Types, & Functions”. Feedough, https://www.feedough.com/distribution-channels-definition-types-functions/ . Accessed 30 Jul 2023

8. “Lease from Hertz”. Hertz, https://www.hertz.com/rentacar/rental-car/car-lease . Accessed 30 Jul 2023

9. “TSMC”. Wikipedia, https://en.wikipedia.org/wiki/TSMC . Accessed 30 Jul 2023

10. “NVIDIA”. Wikipedia, https://en.wikipedia.org/wiki/Nvidia . Accessed 30 Jul 2023

11. “BMW, Daimler, Ford and Volkswagen team up on high-power charging network”. Techcrunch, https://techcrunch.com/2017/11/03/bmw-daimler-ford-and-volkswagen-team-up-on-high-power-charging-network/ . Accessed 31 Jul 2023

12. “Honda And Sony Combine Talents To Build Electric Vehicles”. Forbes, https://www.forbes.com/sites/peterlyon/2022/06/26/honda-and-sony-announce-joint-venture-to-build-electric-vehicles/ . Accessed 31 Jul 2023

13. “Uber and Spotify launch car music playlist partnership”. BBC, https://www.bbc.com/news/technology-30080974 . Accessed 31 Jul 2023

14. “Walmart Has the Scale and Infrastructure to Generate Positive Gains”. Yahoo Finance, https://finance.yahoo.com/news/walmart-scale-infrastructure-generate-positive-201822628.html . Accessed 31 Jul 2023

15. “Demand-Side Economies of Scope in Big Tech Business Modelling and Strategy”. MDPI, https://www.mdpi.com/2079-8954/10/6/246 . Accessed 31 Jul 2023

16. “The Business Model Canvas”. Strategyzer, https://www.strategyzer.com/canvas/business-model-canvas . Accessed 31 Jul 2023

17. “HomePage”. Nespresso, https://www.nespresso.com/us/en/ . Accessed 01 Aug 2023

18. “Business Model Canvas of Nespresso”. Alex Osterwalder, https://www.youtube.com/watch?v=dhQh-tryXOg . Accessed 01 Aug 2023

19. “Nespresso Capsule”. Electromall, https://electromall.net/product/nespresso-capsule/ . Accessed 01 Aug 2023

20. “The Best Nespresso Machine (But It’s Not for Everyone)”. Newyork Times, https://www.nytimes.com/wirecutter/reviews/best-nespresso-machine/ . Accessed 01 Aug 2023

21. “Business Model Canvas”. Think Design, https://think.design/user-design-research/business-model-canvas/ . Accessed 01 Aug 2023

22. “6 Problems with the Business Model Canvas”. The Pourquoi Pas, https://www.thepourquoipas.com/post/problems-with-the-business-model-canvas . Accessed 01 Aug 2023

• McKinsey 7S Model
• The Johari Window Model
• Elaboration Likelihood Model of Persuasion

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How to Build a Product Roadmap Based on a Business Model Canvas

Could you list all of the key building blocks you need to develop, manage, maintain, market, and sell a product on a single sheet of paper? With the business model canvas, you can! Using the business model canvas approach is a great way to force yourself to focus on the most strategically important elements of your product. As the name suggests, the typical use case for this tool is to outline the fundamental building blocks of a business, but it also can work really well for a product.

Today we’ll show you how the business model canvas works and how you can use it to come up with a high-level product strategy.

What is a Business Model Canvas?

As you can see from the sample example below (thanks, Strategyzer.com), a business model canvas is a one-page summary describing the high-level strategic details needed to get a business (or product) successfully to market.

The categories or buckets contained in a canvas can be customized. But most will look similar to the one here—covering such key areas as:

• The product’s value propositions (what it does and promises)
• Customer segments (who it’s for)
• Key activities (the steps the team must complete to make it successful)
• Key resources (what personnel, tools, and budget the team will have access to)
• Channels (how the organization will market and sell it)
• Customer relationships (how the team will support and work with its customer base)
• Key partners (how third parties will fit into the plan)
• Cost structure (what it costs to build the product as well as how to sell and support it)
• Revenue streams (how the product will make money)

If you think about it, that’s a fairly comprehensive set of building blocks you’ll need to think through for your product before you begin developing it. There will certainly be additional factors that’ll affect your strategy, but if you can fill in these high-level details—which, as you can see, should fit comfortably on a single page—you’ll have a useful strategic guide for developing your product roadmap.

Why Should I Use a Business Model Canvas to Develop a Product Roadmap?

Okay, but why? What’s the benefit of building a business model canvas (or the, even more, stripped-down variation, the lean canvas) to guide my product roadmap ?

There are plenty of reasons. But simply put, you can think of a business model canvas as a mission statement for your product roadmap. It’s a handy reference you can refer to, to make sure your roadmap always reflects all the strategic elements needed for your product’s success.

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Our co-founder Jim Semick has a couple of great short videos explaining the business model canvas concept, which you can check out in the player below.

As Jim explains, here are a few of the benefits of using a business model canvas to think through product strategies:

1. You can use a business model canvas to roadmap quickly.

You can use this canvas approach in just a few hours (and as Jim says, you can even do it with sticky-notes).

This way, rather than trying to write out every detail about your product plan beforehand, you can just document the highlights—and then you can get rolling translating the canvas into your product roadmap.

2. A business model canvas will be more agile.

One problem with the old structure of documenting a business model—the traditional business plan—was that it was almost always inaccurate as soon as the author finished drafting it.

These meaty plans included detailed cost estimates, revenue projections going years into the future, and long-term plans for growing the staff. How could any of that remain accurate for long?

In product terms, you can think of the business plan as resembling an MRD (Market Requirements Document). It’s long, detailed, and probably mostly untrue by the time it’s done.

But because you can put a canvas together so quickly, it will much more accurately reflect your strategic thinking and your company’s current reality. And if things change, it’ll be easier than a long and detailed plan to adjust. This brings us to Jim’s third benefit…

3. Business model canvas roadmaps allow you to pivot as needed.

If you build a business model canvas to guide your business roadmap , and something happens that forces you to re-prioritize or pivot your product , it will be a lot easier to update this short, high-level document than it would be if you had some monster MRD or business plan to tear apart and edit.

With a one-page business model canvas acting as the strategic undergirding for your roadmap, you’ll always be able to quickly spot any items or plans that need updating whenever priorities change or new realities demand that you adjust your approach.

How Can I Use A Business Model Canvas to Guide My Product Roadmap?

The alexa example.

Let’s talk through a hypothetical example, using Amazon’s Echo device (“Alexa”) as our guide.

Imagine that as they were talking through what belonged in the “Revenue Streams” bucket of the business model canvas, Amazon’s Echo team came up with three sources of revenue to start with:

1) Selling Echo devices.

2) Using the device to sell other stuff as customers ask it to connect to the Amazon marketplace. (“Alexa, please add laundry detergent pods to my shopping cart.”)

3) Licensing Echo’s proprietary speech-recognition technology to other businesses.

Now, if the Echo product team put these on their business model canvas, they’d know that they need to make room for budget, time, and resources on their product roadmap for all of these revenue streams.

Another Hypothetical Example of the Business Model Canvas: Channels

Or think about the Channels bucket in the business model canvas. If your team was building out a canvas, maybe you’d have several ideas for reaching customers:

1) The in-house sales team. 2) Affiliate partners. 3) Word-of-mouth advertising from users.

It’s easy to write. But how are you going to translate that “word-of-mouth” strategy into an actual plan?

Maybe you’ll need to budget time and resources for developing things right into your product that make it easier for users to share their experiences with friends, such as a handy tool to help them tweet about it. Maybe you’ll even want to include an “Invite a friend” feature that lets users easier send a trial license to friends, or a couponing feature that offers some reward to a user who brings in two more users.

The point is, your business model canvas can serve as a great strategic reminder of the things you’ve determined are important enough to make it onto your product roadmap .

So you can always look back and see immediately—it’s just one page, after all—if you’re still working on all of the essential elements of your product, or if you’ve inadvertently strayed from them and gotten lost in the wrong details.

That’s why we’re big proponents of the business model canvas approach to guiding your product roadmap .

Do you have an opinion about using the business model canvas approach for developing and documenting your product’s strategy? Feel free to share them in the comments section.

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How to Create a Business Model Canvas (With Template)

May 19, 2021 - 10 min read

Do you want to create a simple business plan? Something comprehensive, flexible, and easy to scribble on a napkin? You can do that with a business model canvas.

Every business has ever-changing, diverse interests. Illustrating all of this on a single sheet of paper may sound challenging — but by using a business model canvas template, your team can focus on the key elements of your business to ensure nothing slips through the cracks.

Business model canvas explained

"Lengthy business plans often increase the risk of failure," wrote Alex Osterwalder in his 2008 book “Business Model Generation.”

The business model canvas offers a way to avoid this, providing a simplified version of a business plan. A business model canvas is a simple, visual framework that helps teams outline the most fundamental elements of a business.

As a handy business tool, teams can use a business model canvas to map the nine core areas of a business, such as customer needs, value proposition, and platforms for customer acquisition.

This article will explain the business model canvas, its benefits, and how it can help your team develop a successful high-level business strategy and actionable roadmap .

How can a business model canvas help your business?

Many teams are so overwhelmed with operational issues that they don’t have time to focus on the core business strategy .

Utilizing the business model canvas helps create a unified framework that depicts this strategy alongside an action plan that teams can follow.

But how do you know if you need a business model canvas? If you are starting a business or even toying with an idea, a BMC can create a powerful visual representation of your concept. A business model canvas can also be a handy reference for your team as they move towards successful business outcomes. Here are five more ways in which a business model canvas can help your company.

It’s simple and easy to follow

Whether you have a business idea or are managing a large enterprise, having an easy-to-follow business plan can be immensely helpful. As a precise one-page document, teams can modify specific business model canvas elements as they go along without completely redoing a 50- or 100-page document.

Focused on being actionable 

Every business plan needs to be actionable. Using a business model canvas helps you accurately define your organization’s core value proposition and keep it aligned to your business strategy.

Your focus could be to achieve profitability in the first year or gain a large market share. Stay competitive by defining actionable steps for your team within the business model canvas.

Flexible and scalable as the business evolves 

No business stays the same forever but evolves as it interacts with diverse market dynamics, competitors, product innovations, and changing consumer needs.

To take your idea to market, you need a tool that connects the dots between what your customers want, your business's unique offering, and the desired profitability streams.

By creating a business model canvas template, you instantly get an edge over other market players engrossed in lengthy business plan documents.

Puts the customer first

Ignoring customers sets businesses up for failure . Companies flounder if they direct their energies solely towards making a great product or service. With a business model canvas template, your focus stays on the ultimate end-users of your product. 

Having a business blueprint will force team members to think about what customers want, the primary issues they need help with, and how your product or service can do that. 

Helps get team and executive buy-in

23% of businesses fail without the right team on their side. Every company needs team members with a diverse mix of skills, experiences, and talents.

Companies require a solid business blueprint for hiring team members or bringing in investors. Having a business model canvas can help get everyone on board with your organization’s core vision. Potential employees and investors can visualize how the different organizational parts interact and see how they can become an integral part of the company.

Promotes focus on the unique value proposition of your business

19% of companies fail due to being outperformed by their competitors. If there's no difference between your product and one from another firm, why should customers come to your company? Every business needs a clear value proposition that helps them stand out — that's where a business model canvas template comes in.

When you look at the nine core elements of a business model canvas (explained below), you'll quickly notice some factors are controllable to a certain extent, while others are more fractious.

Your company's core value proposition sits right in the middle. It acts as the central pillar around which all other elements exist, defining the fundamental nature of the business.

What goes into each segment?

To fill out a business model canvas, you should know what goes into each of the nine fundamental segments.

Have a business model canvas template ready before you and your team start brainstorming on each of these elements (you'll find one below) and then add the research and data into the relevant sections. 

Customer segments In this fundamental business area, teams identify the core individuals they will help with their product or service. To do this, they create two to three buyer personas — potential customers that a business seeks to serve.

A buyer persona is a simple but detailed description of a prospective business customer. It assists with capturing the customer’s real-life problems and motivations, helping the business deliver what they want.

Value proposition The value proposition is the ultimate value that a customer will get from your product or service. It seeks to answer the question, “Why will a customer buy?” Here are a few popular value propositions for any organization:

• Customization ability
• Unique product design
• Innovation in product or service
• Exceptional service or product status
• Affordable pricing and clear pricing model definition

Channels In a business model canvas, channels are the platforms through which a company sells its product or service to end-users. To identify the best channel for your business, look at how you plan to connect with your customers.

A few possible channels can be:

• A self-owned retail store
• Direct sales staff
• Affiliate marketing platforms
• Google Adsense

A business can either own its channels or partner with other companies that have their own channels.

Customer relationships Customer relationships in a business model canvas define how the company will obtain, retain, and increase new customers. Let's take a look at how customer relationships are built:

• Identify how to obtain customers and from which platforms (e.g., Google, Facebook ads)
• Gain clarity on how to retain existing customers using different techniques (e.g., exceptional customer service)
• Discover how to increase the customer base of the business (e.g., sending text or email notifications to prompt website visits)

Revenue streams Revenue streams help the business owner decide how to generate revenue and achieve their predefined organizational goals . Key decisions with revenue streams include:

• Choosing from a one-time payment model or monthly subscriptions
• Keeping a free plus paid model or a wholly paid product or service with a free trial
• How payment from customers will be received — website payments, PayPal, or in-store

Key resources Key resources in your business model canvas represent the assets that are vital to your company’s operation. Business assets can include anything from the below categories:

• Physical assets , including machines, buildings, IT hardware, and vehicles
• Intellectual assets , including patents, copyrights, partnerships, brands, and employee skills
• Human assets , including talented employees in knowledge industries such as IT, law, and content marketing
• Financial assets , like cash balances in the bank or lines of credit

Key activities Want to make your business canvas model work? Make sure to list the key activities that will help expand the business's core value proposition. Key activities can come from any of the below categories:

• Production: How you will deliver your end product to the customers. You may need to order more stock or upgrade materials
• Platform: For example, the software used to sell your product, which may require upgrades or maintenance
• Problem-solving: For example, designing innovative solutions for issues that your customers face

Key partners Every business has some non-core activities that should preferably be outsourced. Key partners are the companies or individuals that complete these non-core activities.

Take a company like Facebook, for example — its key activity is to upgrade and maintain its platform. It doesn't create its own ads, so it also needs to strike deals with companies that wish to advertise on its platform. 

Similarly, it doesn’t create its content — the users do. The primary reasons for choosing key partners can be:

• Achieving economies of scale
• Mitigating risk and unpredictability in business
• Acquiring resources and advertisements for its business (e.g., ads for Facebook)

Cost structure Once the key activities are outlined on the business model canvas, it's time to assign cost structures. Be clear and precise with the estimated business costs of the planned activities to ensure you reach your profitability goal.

Business model canvas example and template

• Customer segments: Facebook's customers can be divided into two distinct categories — advertisers and platform users
• Value proposition: The primary reasons platform users come to Facebook. Users feel connected to friends and families, while companies get more leads through advertising on the platform
• Channels: The website where all data is stored
• Customer relationships: Facebook incentivizes users to stay on the platform through notifications and new features, leading more companies to advertise on it
• Revenue streams: Facebook earns money through advertising, while companies gain new customers from Facebook ads
• Key resources: Facebook's key resources are its platforms — Facebook.com, the Messenger application, and Facebook Ads Manager for advertisers
• Key activities: Maintaining the website and its infrastructure are two of Facebook’s key strategic activities
• Key partnerships: Facebook's key partners are its users and advertisers
• Cost structures: Major costs incurred by Facebook include managing the software, backend engineering operations, product development, regular operations, and staff salaries

How to create a business model canvas (with template)

Ready to create your business model canvas? Before you begin, take some time to brainstorm answers to these questions related to the nine core fundamental areas of the canvas. Here's a simple business model canvas template exercise that can help your team get started.

• Customer segments: Can you identify your potential customers?
• Channels: Once the product or service is ready, how will customers discover it?
• Key partnerships: Can any non-core business activities be outsourced?
• Customer relationships: How will your business generate leads and retain and increase your customer base?
• Cost structures: Can the business classify its main costs and expenses into fixed and variable? Is there a way to align costs with the core value proposition and planned revenues?
• Revenue streams: Has the business decided on a profit margin? How will it make money?
• Key resources: Which core resources are critical for the business to succeed?
• Value proposition: Why will customers choose your business? Does the company satisfy any particular need with its product or service?
• Key activities: Are there any activities that help your business deliver its unique value proposition to customers?

Do I need a lean model canvas? 

If your business is still an idea or in its infancy, choosing a lean model canvas makes more sense.

Inspired by the business model canvas, the lean model canvas was created by Ash Maurya . It is a one-page business plan template that distills the lean startup methodology into the original business model canvas. 

Lean model canvas assimilates multiple essential data points to develop a simpler, start-up optimized version of a business model canvas. It adds four more building blocks to the business model canvas, namely:

• Problem: Identify the problem faced by the customer and focus on solving it
• Solution: Start with a minimum viable product that helps solve the customer problem effectively
• Unfair advantage: List the barriers to entry in a specific sector and your company’s competitive advantages
• Key metrics: Focus on one goal at one time to ensure you’re doing a good job

Lean model canvas drops four elements from the original business model canvas — key partners, key activities, key resources, and customer relationships. 

While the original illustrates a more comprehensive business approach, the lean model canvas has a sharper customer orientation. Many start-ups prefer the lean model canvas to a traditional business plan for building an actionable roadmap.

The lean model canvas is a great fit for younger companies or those working with a tight time frame or budget to market with a more targeted problem resolution approach.

Why you should use Wrike to build a business model canvas 

The business model canvas’ nine building blocks clearly illustrate the core business areas and their interrelationships. Whether you're trying to figure out the model for a company with three employees or 50,000, a business model canvas can be very useful.

Begin by mapping out the most crucial information about your business, then link the blocks to ensure every value proposition is linked to a revenue stream and a specific customer segment.

Using Wrike to build your business model canvas template, you can iterate faster, communicate with ease, and enable organization-wide success . With a centralized hub, your teams can configure custom dashboards easily and produce better quality work using premade templates . Implement what you've learned about the business model canvas by trying out a free two-week trial of Wrike today.

Yuvika Iyer

Yuvika is a freelance writer who specializes in recruitment and resume writing.

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How to create and use a business model canvas

Reading time: about 8 min

We’ve all had those flashes of entrepreneurial inspiration. You know, that brief moment when you think, “Hey, that would make a great business.” Most of the time, that’s as far as it goes. But say you want to take it a step further. (After all, every business, from tech giants to the lemonade stand down the street, started with a similar thought!) What’s your next step?

The business model canvas is essentially a framework for trimmed down business plans—and when we say trimmed down, we mean really trimmed down. As you use the business model canvas, you’ll take the crucial elements of your business model and put them into a single-page template. 

Unsure what those crucial elements are? Don’t worry—we’ll break down the whole process for you. 

What is a business model canvas?

The business model canvas is a template—think of it as a framework for organizing information about a business model. Alexander Osterwalder of Strategyzer came up with the method in the mid-2000s and it has been a staple of the Lean startup methodology ever since. 

At the center of the business model canvas is your value proposition: What do customers get from your product? That’s your starting point. From there, you’ll fill in the canvas with additional information about your company and your customers. The information in a business model canvas should be treated like a hypothesis: Under the conditions presented, could your business survive? It’s a quick and easy way to determine the viability of your model. 

Elements of the business model canvas

As mentioned above, the business model canvas is a template. No matter who is using the template, every business model canvas will look more or less the same. And they all consist of the same nine elements: 

• Value proposition 
• Key partners 
• Key activities 
• Key resources 
• Customer segments 
• Customer relationships 
• Cost structure 
• Revenue streams

Each of these elements is represented by a box on the page and these boxes are always organized in the same way. Everything related to business infrastructure (partners, activities, and resources) falls on the left side of the page. Customer-related elements (segments, relationships, and channels) go on the right. Finance-related elements go on the bottom. In the center of the page, the value proposition ties everything together. 

Layout is the easy part—it’s already been done for you. So let’s talk a little bit more about content: What do you actually include in each piece of your business model canvas? 

Value proposition

What are you offering customers? What problem or pain point are you solving? How are you going to do it? Answer those questions as succinctly as possible (one sentence is best!) and there’s your value proposition.  

Treat your value proposition like a guiding star: It should inform every other aspect of your business plan. 

Key partners

It’s unlikely that you’ll be able to provide your product or service all your own. Whether it’s suppliers or distributors, a parent company, or other partners, someone else is going to be involved. 

Think about a neighborhood lemonade stand: The kids running the stand aren’t growing their own lemons—they rely on a grocery store. Similarly, they probably get the table and pitchers from a parent. Both would be key partners. 

To determine if a partner is a key partner, ask this simple question: Could the business model function without them? If things would fall apart without them, they’re a key partner. 

Key activities

Activities are the actions required to actualize your value proposition.

Remember the lemonade stand from the last section? (It’s going to come up a lot.) What activities go into producing the product and bringing it to customers? Someone needs to make the lemonade, pour it, and take money from customers. These are all key activities.

To determine if an activity is “key,” ask the same question as before: Could the business model function without that action being performed?

Key resources

As you list your resources, be sure to consider more than just physical resources. You’ll likely also require human resources (employees), intellectual resources (know-how), and financial resources. 

Customer segments

Who is your solution for? A lemonade stand employee doesn’t have any need for a product developed for software engineers. (At least not your average lemonade stand employee.)

Your customer segments are the people and companies who would receive value from your product. As you list your customer segments, it might be helpful to think in terms of buyer personas. 

Customer relationships

Think about how you are first reaching potential buyers: Is it through social media? SEO? Conferences? These methods of contact are your channels. Whereas sales teams are typically responsible for building and maintaining customer relationships, channels are, for the most part, the responsibility of the marketing teams. 

Cost structure

As you operate your business, you’ll have to spend money—probably more than you’d like. To maintain your key activities, resources, and partners, you will need to pay employees, cover material costs, etc. These expenses make up your cost structure. 

Revenue Streams

Hopefully you’re not just spending money, though. For your business to be successful, you have to generate revenue. Your revenue streams refer to the ways in which you bring money in: How are you converting your value proposition into revenue? Perhaps you offer a subscription based service, or maybe customers pay a one time fee. Whatever model you use, be sure to list all of your revenue streams—when it comes to planning out finances, you want to be especially thorough. 

How to create a business model canvas

Now you’re ready to learn how to fill out a business model canvas for yourself. Understanding each element of the business model canvas is the hardest part, and that’s behind you: All that’s left is to fill out the canvas with your specific business plan.

1. Gather stakeholders and materials

Whether you’re creating a digital or physical business model canvas, you’ll need to be able to fill in the boxes on the template. This could mean typing your info into a digital template or drawing the business model canvas on a whiteboard or paper. (You should really just stick to a digital template—it’s 2020 after all. And a digital business model canvas means more collaboration, easier sharing, and cloud-based storage!)

As you fill in the business model canvas, you’ll likely need input from marketing, sales, and other teams. Schedule a meeting with the necessary individuals and fill out the template together. It’s a quick process—this meeting should only take between thirty minutes to an hour!

2. Fill out the canvas

Do you have your blank template and representatives from necessary teams? Good. You’re ready to start filling out the canvas. Remember: Your goal is not to create an exhaustive business plan. You’re trying to clarify the essential aspects of your business model and make any adjustments you feel necessary.

Start with your value proposition and work from there. If you need a refresher on any specific element, review the list above!

3. Test your assumptions

Your filled out business model canvas is a plan, but it’s not set in stone. As your team gathers information and offers insights, you may realize certain aspects of your model need to be changed. Perhaps you’ve listed a supplier as a key partner, only to find a different supplier with more competitive pricing. Or maybe you decided that a subscription model wasn’t the best payment plan after all. The business model canvas is meant to help you identify such adjustments—don’t hesitate to change things around!

4. Adapt and maintain

The business model canvas is often thought of as a planning tool—and it is a great one!—but its uses extend beyond the planning stages. As you adapt your business model based on insights from your business model canvas, update the canvas to reflect those changes. If you make drastic adjustments, you might even want to create a whole new business model canvas.

An up-to-date business model canvas is a valuable asset to have, regardless of where you are in your business plan. Whether it’s to show stakeholders your business model to gain buy-in or to onboard new employees, the simple format of the business model canvas makes it a flexible and versatile resource.

Now it’s your turn to create a business model canvas in Lucidspark.

About Lucidspark

Lucidspark, a cloud-based virtual whiteboard, is a core component of Lucid Software's Visual Collaboration Suite. This cutting-edge digital canvas brings teams together to brainstorm, collaborate, and consolidate collective thinking into actionable next steps—all in real time. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidspark.com.

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How To Create and Use a Business Model Canvas

Updated August 6, 2024 by Xtensio

Welcome to our step-by-step guide on the Business Model Canvas! This powerful tool helps you turn innovative ideas into actionable business plans with ease. Our guide includes practical tips, real-world examples you can copy, and a free instructional template to follow along . With Xtensio, you can visualize, design, and adapt your business model online, effortlessly. Let’s dive in!

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Table of Contents

Introduction to the business model canvas, what is a business model canvas.

The Business Model Canvas is a strategic management tool that helps you visualize and design your business model. It breaks down your business into nine essential components, providing a clear, visual overview of how your company creates, delivers, and captures value.

Purpose and Benefits

Using the Business Model Canvas streamlines your planning process, making it easier to identify strengths, weaknesses, and opportunities. It encourages collaboration, fosters creativity, and ensures that all aspects of your business are aligned with your strategic goals. With Xtensio, you can effortlessly create, share, and refine your business model, keeping your team on the same page and driving success.

Overview of the 9 Building Blocks

Customer segments.

These are the different groups of people or organizations your business aims to reach and serve. Understanding your customer segments helps you tailor your value proposition to meet their specific needs.

Value Propositions

This defines the unique value your products or services provide to your customer segments. It explains why customers should choose your business over competitors.

Channels describe how your company communicates with and reaches its customer segments to deliver your value proposition. This can include various distribution, sales, and marketing channels.

Customer Relationships

This element outlines the type of relationship your company establishes with specific customer segments. It can range from personal assistance to automated services.

Revenue Streams

Revenue streams represent the cash your business generates from each customer segment. This can come from direct sales, subscriptions, leasing, and other revenue models.

Key Resources

These are the critical assets required to deliver your value proposition, reach your markets, maintain customer relationships, and earn revenue. Key resources can be physical, intellectual, human, or financial.

Key Activities

Key activities are the crucial actions your business must perform to operate successfully. These activities directly relate to creating and delivering your value proposition.

Key Partnerships

This component identifies the network of suppliers and partners that help your business model work. These partnerships can optimize operations and reduce risks.

Cost Structure

The cost structure outlines the major costs involved in operating your business model. It includes expenses related to key resources, key activities, and key partnerships.

Filling Out the Canvas: Step-by-Step Guide

Key partners.

The first building block of your business model is to identify the key partners you need to conduct your business. Who would you like to have as your partners, suppliers, or collaborators on your business idea? It is helpful to target specific examples but it’s also helpful to have general lines of businesses you want to focus on.

What actions or activities do your value proposition require you to make? Identify the key steps you need to take in order for your business to deliver on its promises and make sure development rolls out smoothly. For a product-driven business, a key activity may be learning about users and how to build a better product. For an infrastructure business, it would be important to maintain that infrastructure and research ways to increase efficiency.

Consider what strategic assets you’ll need to begin and run your company. Use these tried-and-true frameworks to identify your key resources and find your differentiating factor among your competitors. For product-driven identify your core resources and discover what sets you apart from your competition. Specialized personnel in important areas of knowledge, such as experienced graphic designers and developers, as well as intellectual property, are critical resources for product-driven organizations. For scope-driven businesses or businesses that create synergy around a particular Customer Segment , it is important that key resources include knowledge about your target audience and a standard set of procedures for interaction and assistance with the group. For infrastructure-driven businesses, strategic assets could include the physical or virtual infrastructure involved with the business.

Fun Fact: A 2009 study conducted by IBM Institute for Business Value revealed that 7 out of 10 companies are engaging in “business-model innovation,” and an incredible 98% are modifying their business models to some extent. So even if you already have an existing business model, it’s beneficial to reevaluate it.

Unique Value Proposition

What is your business promising to its audience, and how does your product or service stand out? Carefully consider what is unique about your value proposition and why customers would prefer your product or service to alternative options. Then rank your propositions in relation to the needs of your customers. This will help you determine which  value proposition is the highest priority and align your vision with your customers’ needs.

Your UVP statement should:

• Quickly and clearly convey the value of your service or product
• Explain how your product or service is better than the competition
• Talk about the benefits and features that define your product or service
• Avoid superlatives such as “the best” or “world-class”. Instead, include talking points that are carefully defined and factually correct

Go Deeper: Forbes suggests creating your UVP within the context of the 3Ds:

• Discontinuous innovations – offer transformative benefits over the status quo by looking at a problem differently
• Defensible technology – offer intellectual property that can be protected to create an unfair competitive advantage
• Disruptive business models – yield value and cost rewards that help catalyze the growth of your business

Customer Relationship

First, figure out how your customers will engage with your company. Do you deal with your consumers over the internet, do they have a personal relationship with a representative, or do you rely on customer service calls? It’s critical to lay down criteria for developing, maintaining, and growing your customer base after you’ve established the type of relationship.

Distribution Channels

What are the most effective mediums to reach your audience? What are the channels you use to communicate, sell, or provide service for customers? Make a list of the different channels that you plan on building a relationship with customers. Remember to think through the lens of the “customer journey.” The channels with which you grab a customer’s attention will be different from the way you onboard or support them.

In order to understand your customers, you need to understand several facets of your target segment. Is your customer segment a single or multi-sided market? Then you can move deeper to analyze who your individual customers are. Use our user persona template  to create an in-depth analysis of your customer segments. With personas, you can investigate the problems and needs of your customers and use these insights to refine your business model.

Use personas to gain insight into your customer segments by

• Collecting and displaying information about your customers’ background, lifestyle, and behavioral practices
• Exploring the needs and desires of your customer and what they are using your product or service for
• Documenting the user journey

Bonus Tip: Use  Google Analytics  to quickly find consumer demographics. Collect data such as bounce rate, daily visits, visit duration, and any additional relevant information.

Now that you’ve worked through the Key Activities, you have a better understanding of the actions your business needs to take. It’s time to think about how your Key Activities affect costs and whether they’re in line with your value propositions. It’s also crucial to think about the types of expenses your company may face. Are these costs set in stone or are they subject to change? Will your business’s costs be linear or fixed as it grows?

Take a careful look at your different customer segments and value propositions and mentally map out the patterns that may occur. For example, Persona 1 may engage with Value Proposition 1 and 2 or Persona 2 may engage with Value Proposition 2 and 3. Carefully look at where your business is driving revenue and whether it aligns with your value propositions.

Bonus Resource!  George Washington University emphasizes the necessity of analyzing your answers to the business model before moving on to cost structure, pricing and quantity, and revenue models. They integrate a payment flow diagram and pricing strategy into their process in this  slideshare .

Additional Resources

Remember, with Xtensio you can collaborate with anyone, anywhere in the world, and all of your folios are completely flexible — create it with the ease of a web builder, drag and drop building blocks. Share it like a web page, present it like a slideshow or download it as a PDF/PNG.  Additionally, if you want to take a look at your business through a lean startup lens, you can use our lean canvas . And be sure to utilize our user personas to thoroughly investigate your customer segments.

Identifying and Testing Assumptions

Methods and examples.

• Define Key Assumptions : Identify the critical assumptions about your business model that need validation.
• Conduct Experiments : Create small-scale tests to validate or invalidate these assumptions. For example, run A/B tests on different pricing models or pilot programs with a subset of customers.
• Gather Data : Collect feedback and data from your experiments to understand the effectiveness of your assumptions.
• Analyze Results : Evaluate the data to determine if your assumptions hold true or if adjustments are needed.

Adapting Your Strategy

Updating and refining the canvas.

• Review Results : Regularly review the outcomes of your tests and experiments to identify what is working and what isn’t.
• Make Adjustments : Update your Business Model Canvas to reflect new insights and changes in strategy. This may include altering your value proposition, targeting new customer segments, or changing your revenue streams.
• Iterate Continuously : Treat the Business Model Canvas as a living document that evolves with your business. Continually refine and improve each component to stay aligned with your strategic goals and market changes.

This structured approach ensures that your business model remains relevant and effective, helping you navigate challenges and seize opportunities as they arise.

Examples and Case Studies

Real-world examples.

Explore how various businesses have successfully implemented the Business Model Canvas. These examples illustrate different industries and business sizes, showcasing the flexibility and effectiveness of the canvas.

• Description: A tech startup used the Business Model Canvas to refine their value proposition and identify key customer segments.
• Outcome: Improved customer engagement and streamlined operations.
• Description: A retail business applied the canvas to enhance their distribution channels and customer relationships.
• Outcome: Increased sales and customer satisfaction.

Case Studies of Successful Implementations

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The Business Model Canvas: Better Than a Business Plan [+ Free Templates]

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Do you have a great idea for a business or a new product/service but don’t know how to get started?

The business model canvas is an easy-to-use tool that can help you understand your idea and make it more concrete. It’s also a great way to talk about your idea with others, so they can give feedback on what works and what doesn’t.

The Business Model Canvas will help you identify the key components of your venture and map out the relationships between them. You’ll be able to see all aspects of your venture in one diagram—from customer segments, value propositions, channels, revenue streams, costs structures to team roles and organizational structure.

While it’s often used by startups, larger businesses, and more “refined” companies, this honestly is a great tool, no matter how large or small your company is.

I’ve created a free toolkit that includes a business model canvas template and more helpful tools. You can grab it below:

In June I was accepted into a business coaching/learning program called “Power Up Your Business.” It’s sponsored by a local community college and essentially they teach you the framework for a powerful business, along with offering business coaching, working on tactical business plans, and more.

I had heard of this before, and even tried to use it for a “business” I was going to run about 4 years ago ( which clearly didn’t go anywhere).

When I previously used the canvas, I was really confused on everything and I kind of just put it to the side and never thought about it again. So when I heard the topic for the day I wasn’t wildly impressed. I was thinking it wasn’t worthwhile, and was just another “exercise” some trainers and professors make you do.

But this class was one of those times where you go from “yeah, I already know this” to “holy crap, I have a LOT of work to do.”

I felt energized and excited, and THAT NIGHT I went home and was thinking about this before bed. This led to an episode of entrepreneurial insomnia , and I woke up at 3am with my mind RACING about all kinds of ideas for my business.

I actually started a new note on my phone, wrote down everything that came to mind, and by the time I got done it was quite long!

I got out of bed around 5am and filled out an entirely new business canvas for a pivot I was going to be making in my business.

This exercise gave me so much clarity on how I’m going to be moving forward, so I had to share it with you.

What is the Business Model Canvas?

The Business Model Canvas was created by Alexander Osterwalder, and is a strategic management and entrepreneurial tool used to capture the essence of your new venture. It will help you determine if you are on the right path, saving valuable time, energy, and resources in the process. This tool helps entrepreneurs build businesses that can evolve over time with ease.

In short, the Business Model Canvas is a way to quickly put together a business plan without the need for writing a traditional 80-page business plan detailing every aspect of a business you have yet to create.

It’s a method that allows you to quickly iterate and make changes to the plan without having to start a new business plan.

A lot of you might be thinking:

“But Chenell, I just run a [blog, website, ecommerce store, freelancing business, etc] why would I need something like this?”

I’d say if you’re asking the question of whether or not you need to complete this exercise, that you probably need it more than you think.

Having a plan and strategy for going into business and knowing who your customers are and how you can help them is CRITICAL to success.

This tool is used as a template for lean startups and as a strategic management tool.

The 9 Blocks of the Business Model Canvas

If you’ve been following along, I put together a post about each of these throughout the last week or so.

If you look at the canvas as a whole,  the right half of the canvas is essentially the “front of the house” stuff, like what kind of customers you’re helping, how you keep them as customers, etc.

The left half of the canvas is like the “back of the house” where you’re focusing on the activities you are doing in the business, what resources you need, who your key partners are, etc.

Both sides meet in the middle at your value propositions,  which are essentially what kind of offering you have for your clients and customers.

There are nine blocks that make up a business model canvas.

1. Customer Segments

Who are your customers? Who are you creating value for?

This section is about figuring out who you are going to provide value for. In this block of the canvas, fill in characteristics of the people you are targeting.

I know you’ve heard all about determining your niche, and choosing your avatar for your business. This is building upon those exercises.

A customer segment is a group of people (or businesses if you’re a B2B company) that you are looking to sell your products and services to.  It’s essentially the common characteristics your target market has that will allow you to find and market to them more easily.

2. Customer Relationships

How do you get, keep and grow/upsell customers? How do you interact with your current and potential customers? What type of relationship do they expect from working with you?

Customer Acquisition

How are you getting new customers ? This could be anything from email marketing to search engine optimization (SEO) to going out and doing direct sales.

Think about the methods you are going to use to attract the right people to your business. Where are your customers currently hanging out? Are they on Facebook, or are they lingering in an industry-specific forum asking questions?

Customer Retention

Acquiring customers can be challenging, and it’s always easier to sell again to a current customer than to get a new one. How are you going to keep your customers around?

Are you going to mail out postcards for special occasions, have monthly check-in calls, or just surprise and delight them with free stuff? Maybe you’re promoting your customers on social media, whatever it is, take note of it.

Grab the Business Model Canvas Toolkit to more easily follow along. This includes a PDF template of the canvas, along with a step-by-step guide to completing your own canvas:

3. Channels

How do you deliver your product or service? Is it B2B, B2C? How are you reaching your customers and prospects?

There are a few phases of channels to keep in mind:

• Awareness  – these channels could be search engines, social media, etc.
• Evaluation  – Your website, review sites, and again social and search
• Purchase  – Merchant accounts, invoicing platforms, your website
• Delivering Value Proposition – postage or mail, email providers, systems you use to deliver the product or service. Are you going to be delivering value with an online course , consulting and coaching, or do you have a “done for you” kind of offering?
• Post-Purchase Support – your email newsletter, chat platforms, content marketing, and customer service reps.

4. Value Proposition & the Value Proposition Canvas

“A value proposition is a promise of value to be delivered, communicated, and acknowledged . It is also a belief from the customer about how value (benefit) will be delivered, experienced and acquired.” – Wikipedia

What value do you deliver to the customer? Which problem(s) are we helping to solve for the customer?

This is one of the more important exercises to do because if you don’t know what you’re providing and to who, you’re going to fall down a lot more than you need to.

It’s so important, that half of the business model canvas is actually called the value proposition canvas (I know, ALL of the canvases!).

Pause here, and go figure out your value proposition.

5. Key Activities

What do you need to do well to make money? What kind of activities do you need to do to provide that value to the customer?

How exactly are you going to provide value and what kinds of activities need to happen in order for your customer to get what they expected?

As we determined in the value proposition phase, there are certain things customers are going to expect from your business. The key activities block of the canvas helps us figure out what those are and what we should be paying attention to that might not necessarily drive value.

6. Key Resources

What key resources do you need to deliver that value proposition?

Key Resources are the important things your business needs to build out the value proposition you promise customers.  Without these resources, you wouldn’t be able to deliver value, and you wouldn’t have a business to build a business model canvas for.

There are four types of key resources: financial, intellectual, human and physical. These can be things like machinery, systems and processes, patents, salespeople, credit cards, and business loans.

7. Key Partners

This piece of the canvas can get a little confusing once you read through all the types of partnerships there are. But if you take a really granular look, these strategic partnerships can be as simple as a virtual assistant (VA) you’re going to hire, or someone you are going to get into an affiliate relationship with.

Having a partner can be as easy as referring customers to each other.  Or it can be as complicated as two businesses creating a third company together because they found a need in the market and can each contribute a piece of that new pie.

Partnerships are one of the essential building blocks of the business model canvas, and for any business. It’s almost impossible to have a business that provides value for its customer and doesn’t require some kind of partner.

Essentially, we are answering these questions: who is going to help you deliver on that value proposition? A business can’t be all things to all people, so what kind of partnerships do you need to deliver the best service?

8. Cost Structure

This piece is where we should be looking at your fixed costs and variable expenses. But also looking at whether you’re going to be a cost-driven or value-driven business. In short, this means  are you going to be focused on providing the lowest cost solution, or will you be focused on providing value and not worry so much about low costs.

There are a few types of cost structures, including cost-driven, value-driven, fixed costs, variable costs, etc.

What the major cost drivers for the business? Include key resources and key activities in this. What type of cost structure are you going to be using?

9. Revenue Streams

How is the business earning revenue from customers and delivering the value proposition?

There are a few main types of revenue streams (these are not exclusive):

• Subscription fees  – i.e. Netflix
• Fees for usage – i.e. cell phone companies
• Selling assets  – i.e. Amazon
• Lending/renting/leasing  – i.e. Airbnb, Zipcar, Turo
• Licensing  – photography and music
• Brokerage   fees  – i.e. real estate brokers
• Advertising  – i.e. Google Adsense or partnerships

When to Use the Business Model Canvas

The Canvas can be viewed as a one-page business plan, that can be easily updated. I think it’s extremely helpful for these business situations:

When you’re launching a new product or service.

Sure, it may seem as easy as saying, I’m going to start selling bread at my pastry shop. But then you dig deeper by filling out the canvas and realize you’re going to need new ovens, new employees (or at the very least  extensive training for current employees), new marketing strategies, a different managerial schedule (baking usually happens in the wee hours of the morning), and on, and on.

When you’re starting a new business (or blog!)

Many of us have literally “fallen into” entrepreneurship because we had a skill people wanted to pay us for, and we just started selling it without thinking strategically. It’s time to take a step back and get that clarity you’re missing. This will take a few hours out of your day, but it will add so much relief to your life, trust me!

When you need clarity on your current business (this was me!) and don’t have a serious business plan in place.

Similar to the one above, I fell into offering marketing services because the people around me needed help. I knew nothing about running a business, and have just been guessing my way through most of it. Not anymore!

When you want to compare a few different ideas for a new business, service, or product to sell.

This one is so critical! We always have a million ideas running around in our heads, why not narrow it down to the 2 or 3 we are most excited about and really dive deep into those ideas? Do we have a strong business model? Do people actually need what we are offering? Can we actually make a living from this?

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What is a Business Model Canvas: A Miro Insider Guide

Table of Contents

Diving into the business strategy and innovation world introduces various tools and methodologies to navigate current markets. Among these, the Business Model Canvas (BMC) stands out as a strategic management tool that has revolutionized how entrepreneurs, innovators, and business leaders visualize, design, and reinvent their business models.

The BMC provides a concise, visual framework that encapsulates how organizations create, deliver, and capture value. This article aims to explore the BMC in-depth, offering insights and practical advice on leveraging this tool to its fullest potential.

Decoding the Business Model Canvas

What is the Business Model Canvas? At its core, the Business Model Canvas is a strategic management tool designed to visualize, design, and reinvent business models. It's your canvas (pun intended!) to paint a comprehensive picture of how your organization creates, delivers, and captures value. Alexander Osterwalder pioneered this concept, making it a cornerstone for entrepreneurs, innovators, and business leaders worldwide.

Key components of the Business Model Canvas:

1. value propositions.

Your value proposition is the core of your Business Model Canvas. It essentially answers the question: What sets you apart from your competitors, and why would customers choose you over them? It's more than just your products or services; it's about your exclusive benefits and solutions. A compelling value proposition is concise, straightforward, and directly addresses the customer's problem or need. So, it's like your pitch to your target market that you can deliver in an elevator ride.

2. Customer segments

Who are you creating value for? This section requires you to segment your market into groups of customers with similar needs, behaviors, or characteristics. Understanding your customer segments allows you to tailor your value propositions, communication, distribution channels, and more to each specific segment. It's about being precise in whom you serve to maximize your impact and efficiency.

3. Channels

Channels are the touchpoints through which you communicate with your customer segments and deliver your value propositions. They cover the entire customer journey, from awareness and evaluation to buy and post-purchase. Channels can be direct, like your website, or indirect, like retail partners. The goal here is to find the most effective and efficient way to reach your customers where they are.

4. Customer relationships

How do you intend to establish and sustain relationships with your customers? This aspect involves identifying the kind of relationship you wish to maintain with each customer group, ranging from personalized assistance to self-service, automated services, communities, and co-creation. Your chosen relationship strategy should align with customer expectations and your business model's cost structure.

5. Revenue streams

Revenue Streams refer to how your business can generate income by converting value into financial returns. These streams may include selling assets, lending, leasing, subscription fees, licensing, and advertising. It is important to associate each revenue stream with a specific customer segment and to clearly understand what your customers are willing to pay for and how they prefer to pay.

6. Key resources

Key resources are the assets required to make your business model work. They can be physical (buildings, vehicles), intellectual (brands, patents, data), human (expertise, knowledge), or financial. Identifying and securing these resources is vital for delivering your value propositions, reaching markets, maintaining customer relationships, and earning revenue.

7. Key activities

What must you do to ensure your business model functions effectively? Key activities in the Business Model Canvas could involve production, problem-solving, or platform/network maintenance, depending on your business type. These are the most important tasks your company must undertake to fulfill its value propositions, reach markets, and sustain operations.

8. Key partnerships

Few businesses operate in isolation. Key partnerships and networks can help you optimize your business model, reduce risks, or acquire resources and activities. Partners can include suppliers, manufacturers, collaborators, and even competitors in some cases. The aim is to forge alliances that help your business focus on its core value proposition and outsource or collaborate on the rest.

9. Cost structure

Finally, the cost structure outlines the major costs of operating your business model. Understanding your cost structure is crucial for ensuring your business is financially viable. Costs can be fixed (unchanged regardless of output), variable (scale with production volume), or a mix of both. The goal is to create a cost structure that allows your business to deliver its value propositions sustainably and competitively.

Each of these components interconnects to paint a comprehensive picture of your business model. When thoughtfully completed, the Business Model Canvas not only guides your strategic planning but also serves as a dynamic blueprint that evolves with your business.

Do you need a Business Model Canvas?

Whether you're a startup or an established company, BMC is your Swiss Army knife for business model innovation. It's particularly useful when:

Launching a new product or service, providing a holistic view of its potential.

Entering a new market , helping you understand your unique value proposition.

Pivoting your business , enabling rapid conceptualization of new directions.

Benefits of using a Business Model Canvas:

Clarity and focus.

The BMC provides a clear, concise framework that condenses complex business models into a single visual document. This clarity is invaluable, as it allows you to see the relationships between different business model components—how your value propositions align with your customer segments, how your channels and customer relationships support your value delivery, and how your revenue streams fit with your cost structure. This focused overview enables you to identify your business model's strengths, weaknesses, and opportunities for innovation.

Alignment and communication

One of the BMC's greatest strengths is its ability to facilitate alignment and communication within teams and across departments. By having a shared, easily understandable visualization of the business model, everyone from the CEO to the newest intern can have a common understanding of the company's strategic direction. This alignment ensures that all efforts are coordinated towards the same objectives, reducing conflicts and enhancing productivity. It also makes it easier to onboard new team members and communicate with external stakeholders.

Flexibility and adaptability

Adaptability is key to survival and growth in today's fast-paced business environment. The BMC is inherently designed for flexibility, making it easier to pivot and iterate on your business model as market conditions change, new technologies emerge, or customer preferences evolve. This adaptability allows for rapid experimentation and validation, enabling businesses to effectively innovate and respond to opportunities or threats.

Streamlined strategy development and execution

The BMC streamlines the process of strategy development and execution. Breaking down the business model into nine fundamental components simplifies complex strategic considerations, making it easier to identify which areas require attention, improvement, or innovation. This streamlined approach helps businesses more efficiently allocate resources, prioritize initiatives, and execute their strategies more precisely.

Enhanced customer understanding

The BMC encourages a deep dive into who your customers are, what they need, and how they want to interact with your business. This enhanced understanding is crucial for creating value propositions that truly resonate with your target audience and developing customer relationships that foster loyalty and advocacy. You can maintain a customer-centric approach that drives sustained business growth by continuously refining your customer segments and value propositions based on feedback and market research.

Risk management and cost efficiency

The BMC helps identify potential risks and areas where costs can be optimized by providing a holistic view of your business model. Understanding the key activities, resources, and partnerships essential to your business model allows you to make informed decisions that minimize waste and reduce vulnerabilities. This proactive approach to risk management and cost efficiency can significantly improve your business's operational effectiveness and financial health.

Innovation and competitive advantage

Lastly, the BMC is a powerful tool for fostering innovation. By visualizing your business model, you can easily spot opportunities for disruptive innovation, whether through new value propositions, untapped customer segments, novel revenue streams, or more efficient channels. This ongoing pursuit of innovation helps maintain a competitive edge, ensuring that your business remains relevant and capable of capturing new market opportunities.

Application of BMC in different roles

Product managers.

Scenario: Launching a new app.

Validate customer needs and tailor the app's value proposition.

Identify key features as Key Activities.

Design a user acquisition strategy through Channels.

Business managers

Scenario: Expanding into a new market.

Assess the market's Customer Segments and adapt the value proposition accordingly.

Reevaluate Key Partnerships for local market access.

Adjust Cost Structure for market entry.

Strategists

Scenario: Exploring new revenue streams.

Analyze current Revenue Streams and brainstorm alternatives.

Evaluate new Customer Segments for expansion.

Consider innovative Channels and Customer Relationships to enhance value delivery.

How to complete a Business Model Canvas: Step-by-Step

1. start with the value propositions.

Clearly define the unique benefits your product/service offers.

Tools/Frameworks: The Value Proposition Canvas is an excellent tool here. It allows you to get into your customers' shoes, understanding their needs, pains, and gains deeply. This detailed exploration helps craft compelling value propositions that resonate strongly with your target market.

2. Identify your customer segments

Understand who your customers are and what they need.

Tools/Frameworks: Market Segmentation Analysis is crucial. Use data analytics tools like Google Analytics for an online audience or customer surveys and interviews for direct feedback. Personas and empathy maps also offer valuable insights into customer motivations and behaviors, helping you to segment your market more effectively.

3. Map out channels

Determine how you'll reach your customers.

Tools/Frameworks: The Five Channels Framework by Clayton Christensen is a powerful way to think about how you reach your customers. Additionally, A/B testing platforms can help you experiment with different channels and measure their effectiveness in reaching your customer segments.

4. Design customer relationships

Plan how to interact with your customers.

Tools/Frameworks: Customer Journey Mapping tools enable you to visualize the entire customer experience and identify key touchpoints where you can strengthen relationships. CRM (Customer Relationship Management) software can then help you manage these relationships at scale.

5. Define revenue streams

Explore how you'll make money.

Tools/Frameworks: For this component, Business Model Scenarios can be particularly useful. This involves creating various "what-if" scenarios to explore different revenue models and their implications. Financial modeling software or spreadsheets are essential tools for quantifying these scenarios and projecting their financial outcomes.

6. List key resources

Identify what you need to operate.

Tools/Frameworks: Resource Analysis is a systematic approach to identifying your essential resources. Tools like SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis can help you critically assess your internal capabilities and resources.

7. Outline key activities

Pinpoint what actions are necessary.

Tools/Frameworks: Process Mapping tools can help you visualize and optimize the key activities required for your business model to succeed. Lean methodology and Kanban boards effectively identify and focus on value-adding activities, minimizing waste in your processes.

8. Select key partnerships

Choose who will help you succeed.

Tools/Frameworks: Partnership Mapping is a strategy that can clarify how and with whom you should collaborate. Tools like the Partner Ecosystem Canvas can help you identify potential partners and define the nature of these partnerships in alignment with your business objectives.

9. Analyze cost structure

Break down your costs.

Tools/Frameworks: Cost Analysis Tools , such as cost-benefit analysis frameworks and financial modeling software, are invaluable. They allow you to break down your costs into fixed and variable components, understand your cost drivers, and explore ways to optimize your cost structure for efficiency and sustainability.

Avoid these pitfalls when building your BMC

Overcomplication.

Problem: Adding too much detail or too many elements can make the BMC confusing and less actionable. It's essential to keep the model clear and concise to maintain focus and ensure it's easily understood by all stakeholders.

Solution: Stick to the core elements of your business model. Use simple language and avoid industry jargon. If necessary, create additional documents for in-depth analyses, but keep the BMC as your strategic overview.

Ignoring customer feedback

Problem: Building a BMC based on assumptions without validating these assumptions with real customer feedback can lead to a misalignment between your business model and market needs.

Solution: Regularly engage with your customers through surveys, interviews, and prototype testing. Use these insights to continually refine your value propositions and customer segments in your BMC.

Inflexibility

Problem: Treating the BMC as a static document rather than a living, evolving tool can stifle innovation and responsiveness to market changes.

Solution: Periodically review and update your BMC to reflect new insights, changes in the market, and strategic pivots. Encourage a culture of flexibility and continuous improvement.

Lack of alignment among team members

Problem: Without a shared understanding and consensus among team members regarding the BMC, there can be misalignment in execution, leading to inefficiencies and dilution of strategic efforts.

Solution: Regularly discuss and review the BMC with all team members and stakeholders. Ensure clear communication and alignment on the business model's key components and strategic direction.

Focusing only on the present

Problem: Focusing solely on current operations and ignoring future opportunities and threats can make your business vulnerable to disruption.

Solution: Use the BMC as a tool for both current state mapping and future scenario planning. Regularly brainstorm potential changes in customer needs, technological advancements, and market dynamics that could impact your business model.

Underestimating the importance of key partnerships

Problem: Neglecting to carefully consider and nurture key partnerships can lead to missed opportunities for leveraging external expertise, resources, and market access.

Solution: Identify and actively manage relationships with partners that can provide critical resources, channels, or customer access. View these partnerships as strategic assets.

Failing to prioritize and sequence activities

Problem: Attempting to tackle all components of the BMC simultaneously without clear priorities can lead to resource strain and loss of strategic focus.

Solution: Identify the most critical components of your BMC that will drive most of your value creation and revenue generation. Focus your efforts and resources on these areas before expanding to others.

Not leveraging technology and tools

Problem: Manually managing and updating your BMC without using digital tools can limit collaboration and reduce the efficiency of iterations.

Solution: Use platforms like Miro for collaborative BMC creation and iteration. These tools offer templates, easy updates, and the ability to share your canvas with stakeholders for feedback and collaboration.

By being mindful of these pitfalls and implementing the suggested solutions, you can ensure that your Business Model Canvas remains a dynamic, effective tool that drives your business strategy forward. Remember, the goal is to use the BMC not just as a planning tool but as a framework for ongoing innovation and strategic agility.

Building your BMC with confidence

Creating a Business Model Canvas is an ongoing journey, not a one-time task. Here are some final nuggets of wisdom:

Iterate Relentlessly: Your BMC should evolve as your business grows.

Seek Diverse Perspectives: Collaboration enriches your business model.

Use Visual Tools: Platforms like Miro offer an interactive way to build and share your BMC.

As we come to a close, it's important to emphasize that the Business Model Canvas is more than just a tool - it's a way of thinking that encourages creativity and innovation in your business strategy. Whether you're a product manager, business manager, or strategist, using the BMC framework can help you clearly articulate, develop, and pivot your business model with confidence. So embrace it, and discover how your business ideas can flourish in ways you never thought possible.

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Business Plan vs Business Model Canvas Explained

6 min. read

Updated July 29, 2024

It might be stating the obvious, but planning and preparation are keys to success in business.

After all, entrepreneurs put in hard work to develop their product, understand the market they plan to serve, assess their competitive landscape and funding needs, and much more.

Successful business owners also take time to document their strategies for guiding the growth of their companies. They use these strategies to take advantage of new opportunities and pivot away from threats.

Two common frameworks for documenting strategies – the business model canvas and the business plan – are also among the easiest to get confused.

Though they can complement each other, a business model canvas and a business plan are different in ways worth understanding for any entrepreneur who’s refining their business concept and strategy.

Let’s start by digging deeper into what a business model canvas is. 

• What is a business model canvas?

You may have heard the term “business model” before. Every company has one. 

Your business model is just a description of how your business will generate revenue. In other words, it’s a snapshot of the ways your business will be profitable.

Writing a business plan is one way of explaining a company’s business model. The business model canvas takes a different approach.

A business model canvas is a one-page template that explains your business model and provides an overview of your:

• Relationships with key partners
• Financial structure
• And more…

While the business model is a statement of fact, the business model canvas is a strategic process—a method for either documenting or determining your business model.

It’s meant to be quickly and easily updated as a business better understands what it needs to be successful over time. This makes it especially useful for startups and newer businesses that are still trying to determine their business model.

You can think of a business model canvas as a condensed, summarized, and simplified version of a business plan. It’s a great way to quickly document an idea and get started on the planning process.

The business plan is a way to expand on the ideas from the canvas and flesh out more details on strategy and implementation.

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Components of a Business Model Canvas

The simplest way to think about your business model canvas is to map it out visually. A business model canvas covers nine key areas:

• Value proposition : A company’s unique offering in the market and why it will be successful.
• Key activities: The actions that a company takes to achieve its value proposition.
• Customer segments : The types of people or businesses that are likely to want a company’s products or services.
• Channels : How a company reaches customers through marketing and distribution efforts.
• Customer relationships: How a company interacts with customers and maintains important relationships.
• Revenue streams: The ways in which a company makes money.
• Key resources: The assets such as property, equipment and staffing that a company needs to perform its key activities.
• Key partners: The relationships with suppliers, vendors, customers and other stakeholders a company must maintain in order to be successful.
• Cost structure: The major drivers of company expenses that will need to be tracked and managed.

[Want an even simpler alternative? Try downloading our free one-page plan template and start building your plan in less than 30 minutes.]

To get a better sense of how a business model canvas documents business strategy, consider a company like Netflix. The streaming company’s business model is based on generating subscription revenue through its content library and exclusive content.

If Netflix executives were to create a business model canvas, it would map out how the company leverages key resources, partnerships, and activities to achieve its value proposition and drive profitability. The business model is the destination.

The great thing about a business model canvas is that you can quickly document business ideas and see how a business might work at a high level. As you do more research, you’ll quickly refine your canvas until you have a business idea you think will work.

From there, you expand into a full business plan.

• What is a business plan?

If a business model canvas captures what a company looks like when it’s operating successfully, then a business plan is a more detailed version along with a company’s blueprint for getting there.

Think of your business plan as a process of laying out your goals and your strategies for achieving them.

The business plan is more detailed, and changes over time. It examines each aspect of your business, from operations to marketing and financials.

The plan often includes forward-looking forecasts of a company’s projected financial performance. These are always educated guesses. But these forecasts can also be used as a management tool for any growing business.

Comparing actual results to the forecast can be a valuable reality check, telling a business if they’re on track to meet their goals or if they need to adjust their plan.

Using an investor-approved business plan template is also a must for companies hoping to receive a bank loan , SBA loan , or other form of outside investment . Anyone putting up funds to help you grow will want to see you’ve done your homework.

So a business plan is how you not only prepare yourself, but also show your audience that you’re prepared.

Components of a business plan

While there are several different types of business plans meant for different uses, well-written plans will cover these common areas:

• Executive summary : A brief (1-2 pages) overview of your business.
• Products and services : Detailed descriptions of what you’re selling and how it fills a need in the market.
• Market analysis : Assessing the size of your market, and information about your customers such as demographics (age, income level) and psychographics (interests, values).
• Competitive analysis : Documenting existing businesses and solutions your target customers are finding in the market.
• Marketing and sales plan : Your strategies for positioning your product or service in the market, and developing a customer base.  
• Operations plan : Describing how you will run the business from day to day, including how you will manage inventory, equipment, and staff.
• Organization and management team: Detailing the legal structure of the business, as well as key members, their backgrounds and qualifications.
• Financial Plans : Business financials that measure a company’s performance and health, including profit & loss statements, cash flow statements and balance sheets. Effective financial plans also include forward-looking sales forecasts and expense budgets.

How a business plan and business model canvas inform business strategy

Avoid the trap of using the two terms interchangeably. As we’ve shown, the two have different focuses and purposes. 

The business model canvas (or our one-page plan template ) is a great starting point for mapping out your initial strategy. Both are easy to iterate on as you test ideas and determine what’s feasible.

Once you have a clearer sense of your idea, you can expand the canvas or one-page plan into a business plan that digs into details like your operations plan, marketing strategy, and financial forecast.

When you understand how – and when – to use each, you can speed up the entire planning process. That’s because the business model canvas lays out the foundation of your venture’s feasibility and potential, while the business plan provides a roadmap for getting there.

The work of business planning is about connecting the dots between the potential and the process.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• How both inform your strategy

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What is the Business Model Canvas?

Download the free business model canvas template, history of the business model canvas, structure of the business model canvas template, example of a business model canvas, additional resources, business model canvas template.

The executive summary of a business

The business model canvas is a strategic planning  tool used by managers to illustrate and develop their business model. The business model canvas template clearly identifies the key elements that make up a business. Additionally, it simplifies a business plan into a condensed form. In this way, the business model canvas template acts like an executive summary for the business plan.

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The business model canvas template was originally introduced by Alexander Osterwalder in his 2004 thesis, “The Business Model Ontology – A Proposition in a Design Science Approach”. Since then, the business model canvas template has been taught at business schools and iterated upon to fit more niche businesses.

There are nine main building blocks in the business model canvas template:

• Key Partners
• Key Activities
• Key Resources
• Value Propositions
• Customer Relationships
• Customer Segments
• Cost Structure
• Revenue Streams

The following is a breakdown of each of these nine elements. These elements all link and work with each other to ensure the success of the business.

#1. Key Partners

Key partners are the companies or people your business works with to create a strategic relationship. A few examples of key partners are suppliers or distribution partners in the supply chain .

Here are a few things to consider about key partners:

• What key resources does your company receive from these partners?
• What key activities are performed by these partners?
• What is your company’s motivation for working with these key partners? Is there something specific that only they can provide? Do they help lower costs?

#2. Key Activities

Key activities are specific activities or tasks that are fundamental to the operation of your business. An example of a key activity would be the procurement of fresh produce in bulk for a restaurant.

Here are a few things to consider about key activities:

• What key activities are necessary to deliver your value proposition ?
• What activities set your company apart from others?
• How do your revenue streams , distribution channels , and customer relationships differ from competitors? How do your key activities affect these?
• Do you need to procure specific niche resources?
• Do you need to streamline to keep costs and prices low?

#3. Key Resources

Key resources are the assets necessary to operate and deliver your value proposition. For example, a diamond mining company cannot operate without mining equipment . Alternatively, an automotive company cannot operate without the human capital and expertise that goes into designing cars.

Here are a few things to consider about key resources:

• What specific assets are necessary to operate your business and deliver your value proposition ?
• What resources do your distribution channels and revenue streams need to function?
• What resources are needed to maintain customer relationships and customer satisfaction ?
• Does your company require significant capital or human resources?

#4. Value Propositions

Value propositions are arguably the most important element of the business model canvas template. The value proposition determines the fundamental offering the company is trying to give its customers. It is the primary driver of business operations. For example, Spotify’s value proposition,  “Music for everyone.” , eloquently states its mission and offering. Spotify wants to be a music streaming platform that has music selections for everyone.

Here are a few things to consider about value propositions:

• What exactly is your company trying to give to customers?
• What problem is your company trying to solve and what needs are your company satisfying?
• How do you offer something different that satisfies the demands of your  customer segments (e.g. price, quality, design, status, etc.)?

#5. Customer Relationships

Customer relationships are the different types of interactions a company has with its customers. For example, a designer suit company will provide significant help for the customer, tailoring to their needs and working directly with them to create the suit they want. Conversely, telecommunications companies often have poor reputations and customer relationships as many practice aggressive and predatory sales practices through their call centers. Compared to telecommunications companies, the designer suit company has significantly richer and more fulfilling customer relationships.

Here are a few things to consider about customer relationships:

• What type of relationship does your company have with its customers? For example, do you provide dedicated assistance or are they expected to self-serve their needs through provided support channels?
• How does the business interact with customers and how does this differ between customer segments ?
• Does your company frequently communicate with customers?
• How much support is provided by your company?

#6. Channels

Channels are the different structures and methods that are used to deliver your company’s product and value proposition to its customers. Channels encompass all of a company’s supply, distribution, and marketing channels. It is important to consider all channels of a company and make sure they are functioning cohesively. For example, a company like Amazon needs to consider how its fulfillment centers and shipping services are integrated to send out timely shipments.

Here are a few things to consider about channels:

• How do you deliver your  value proposition ?
• How do you reach your  customer segments ? What channels are used?
• Are your supply, distribution, marketing, and communication channels well-integrated and cost-efficient? Are they being utilized effectively?

#7. Customer Segments

Customer Segments are the different types of customers that a company manages. A company that produces different products will need to interact with different types of customers.

An example of this would be airline companies. Airlines offer tickets for economy, business, and first-class customers. First-class passengers have access to exclusive benefits and luxury travel arrangements. Conversely, economy passengers are provided much less support, thus costing less, but also coming in significantly larger amounts.

Here are a few things to consider about customer segments:

• Who is the main focus of your value proposition? Who are you creating value for?
• Who are your most important customers? What are they like? What do they need? What do they enjoy?
• What are your different types of customers ?
• What is the customer market like? Is your company targeting a small niche community or a mass market?

#8. Cost Structure

The cost structure refers to how a company spends money on operations. It consists of the company’s key costs and the company’s level of focus on costs. If a company is cost-driven, it focuses on minimizing costs and, thus, prices for customers. Alternatively, if a company is value-driven, it focuses on creating value for its customers, with less focus on cost.

An example of this would be a comparison between fashion retailers, Forever 21 and Gucci. Forever 21 is a fast-fashion company focused on delivering the newest styles at low costs – a cost-driven company. Alternatively, Gucci is a luxury brand focused on delivering high-quality clothes and accessories designed with the latest trends in the fashion industry – a value-driven company.

Here are a few things to consider about cost structure:

• What are the key costs in your company’s business model
• What are the major drivers of cost ?
• How do your  key activities and  key resources  contribute to the cost structure?
• How do your costs relate to your  revenue streams?
• Is your company properly utilizing economies of scale ?
• What proportion of costs are fixed and variable ?
• Is your company focused on cost-optimization or value?

Check out CFI’s course on Budgeting and Forecasting to learn more about estimating future cash flows, revenues, and expenses!

#9. Revenue Streams

Revenue streams are a company’s source of cash flows . They are the final element of the business model canvas template. Revenue streams are the different ways your company’s value proposition generates money. A company might have multiple revenue streams. For example, Apple has multiple revenue streams between its variety of products and its services, such as Apple Music.

Here are a few things to consider about revenue streams:

• Does your company have multiple methods of generating revenue ?
• What is the pricing strategy for the products offered by your company?
• Through what  channels do your customers pay?
• Does your company offer multiple forms of payment (up-front, payment plans, financing, etc.)?

Here is a simple example built for an automotive company using our business model canvas template!

Proper financial management is the backbone of any business. Corporate Finance Institute has resources that will help you expand your knowledge, advance your career, and manage the financials of your company! Check out the helpful CFI resources below:

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A Better Way to Think About Your Business Model

• Alexander Osterwalder

How Nespresso used a simple business model canvas to change face of the coffee industry.

The business model canvas — as opposed to the traditional, intricate business plan — helps organizations conduct structured, tangible, and strategic conversations around new businesses or existing ones. Leading global companies like GE, P&G, and Nestlé use the canvas to manage strategy or create new growth engines, while start-ups use it in their search for the right business model. The canvas’s main objective is to help companies move beyond product-centric thinking and towards business model thinking.

• Alexander Osterwalder is cofounder of Strategyzer.com , a company that builds practical tools for business strategy and innovation. Together with Yves Pigneur, he invented the Business Model Canvas and co-authored the international bestsellers  Business Model Generation  and  Value Proposition Design .

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How to Create an Expert Business Model: A Detailed Guide + Templates

Written by: Chloe West

If you’re looking to create your own business, there are two things you need: a business plan and a business model. Your business plan helps you explore your overall business idea; your business model determines how your business will make money.

Creating a business model from scratch can be overwhelming—this is why working with a business model template or canvas is such a great idea.

Throughout this article, we’re going to cover what a business model is, introduce you to different types of business models, show you how to create a business model and share a number of templates you can use to get started with your own business model.

Table of Contents

What is a business model, nine key elements of a business model template, what are the different types of business models.

• Business Models FAQs

A business model provides the overall structure for your new business idea. A business model canvas (BMC) is often used as a starting point for this structure, including nine key elements (that we’ll address shortly) that help you flesh out your business model.

The typical structure for your business model should look something like this:

Image Source

Why Use a Business Model?

Using a business model makes sure you’re ready to launch a successful business. Especially if you’re hoping to pitch investors , you need to have a solid business model and plan to showcase why they should invest and how your business will generate revenue.

A few other benefits of a business model—especially if you use a business model template—include:

• You have a starting structure for your business model so you can simply plug in the key information
• Using a business model template helps you fill in any gaps you may otherwise have missed
• A business model helps you focus exclusively on your value proposition and why your business matters
• Working with a business model template helps you flesh out your business model quickly and efficiently
• Having a business model provides you with a tangible document you can include within your business plan , investor pitch and other important external documents

Essentially, you shouldn’t consider starting a business until you’ve created a business model. However, with a business model template, the process is relatively straightforward. We’ll walk you through each of the elements your business model needs and provide you with a number of templates to help you get started.

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As we’ve mentioned, there are nine key elements that you need to include in your business model. A good business model canvas template will have space for you to input information about each of these sections.

Let’s walk through each one so you can start thinking about how they’ll pertain to your business.

Key Partners

Who are the key partners in your business? This will be the people or companies that your business will rely on for supplies, processes, etc., to succeed.

Some questions to ask yourself here are:

• Who are your key partners and suppliers?
• What are the key resources you receive from these partners?
• What are the key activities (more on this in the next section) your partners will be doing?

Key Activities

Key activities refer to the essential processes your business needs to perform in order to offer its products and/or services to customers. This is what allows you to deliver on your company’s value proposition.

Key Resources

Your key resources are the supplies, equipment and other assets that your business needs in order to operate. For example, a brewery needs brewing equipment and a photographer needs a camera and editing software.

Value Propositions

What sets your business apart from the competition? What is your company offering and what is the value for your customers? Share pain points that your company is solving for its customers along with the specific products and services you’re planning to sell.

Customer Relationships

What kind of relationship will you have with your customers? How will you help them? Will your relationship be fully online? Will you have an in-person location? How will you be accessible to your customers?

Describe the channels you will use to reach your customers—website, social media, retail store, front desk, etc. Also include information on the specific channels you’ll be using to provide your business’s products and services.

Customer Segments

Who are your ideal customers? Build out a user persona for each customer segment you plan to service. For example, you might offer a direct-to-consumer model where you’d list out the specific types of customers who might buy your product directly, while also offering a wholesale model where you’d include customer segments about decision makers in retail stores.

Cost Structure

List out the costs that your business will have based on your key resources and activities. What do you have to pay in order to operate your business?

Revenue Streams

How will your business make money? What are the available areas that your business can use to bring in revenue and stay afloat? For example, an information business might offer paid coaching calls, paid online courses, as well as a few different types of services to generate revenue.

There are many different types of business models, or rather, different ways that businesses can structure themselves to generate revenue.

We’ll walk you through the top 10 types of business models and share a pre-made template for each so you can easily get started fleshing out your own business model.

1. Subscription Business Model Template

Subscription business models are based around regular payments, typically monthly. However, they can also be quarterly or annually, where subscribers input their payment information and automatically have the subscription fee pulled out of their account on the same day each month.

This model has long been popular for service-based businesses, but many product-based businesses selling monthly subscription boxes are getting into this business model as well.

Some examples of businesses using this model include BarkBox, Netflix, Massage Envy, Stitch Fix, QuickBooks, Spotify and Dollar Shave Club.

Subscription-based models are popular because they provide a guaranteed revenue stream from month to month. While yes, a certain percentage of subscribers will likely cancel every month, there isn’t quite as much stress on generating new customers because you know you’ll have $X amount of revenue from month to month.

Use the template above to flesh out your own subscription business. Make it interactive by adding clickable elements to your business plan, financial statements or other documentation.

2. Bundling Business Model Template

A bundling business model offers standalone products while also offering “bundles” or “kits” of multiple products in one for a much more appealing price point. While we all know the most common users of the bundling business model—cable companies—there are actually a lot of ways to make this model work.

Yes, companies like AT&T and Xfinity offer things like internet and cable in a bundled package with a discount. Insurance companies like Geico and Progressive also offer discounts when customers bundle things like home and auto insurance into one.

However, this can also be used for product-based businesses. Men’s grooming brand Harry’s offers standalone products while also offering a bundled starter kit. Some companies might offer some sort of BOGO (buy one, get one) sale that offers 50% off a second item if multiple are purchased.

The bundling business model can be a great idea if offering multiple products or services for a lower price point will still be profitable for your business. Here's a template you can use to explain this model to stakeholders.

3. Freemium Business Model Template

The freemium business model is typically used by online service providers and software companies. For example, Visme utilizes the freemium business model. We offer our software completely free of charge for life, but it comes with limited access. To get access to more premium features, users will need to sign up for a paid plan.

This is a great way to build trust with your customers. By offering part of your product or service for free, users can try it out to see how they like it. If they find that they’re using it often, it only makes sense to sign up for the full version of the product for a one-time or monthly fee.

Other examples of businesses using the freemium model include Grammarly, Notion, Calendly, LinkedIn, Zoom, and even online games that are free to play but offer in-game purchases, like Fortnite or Roblox.

When you create your business model template, you may end up sharing it with potential investors, other co-founders and more. You can also present it in a PowerPoint format using the template below.

With Visme, you can generate a shareable link that also gives you access to analytics , so you’re able to see how many people have viewed your business model and for how long.

4. Product-as-a-Service Business Model Template

The product-as-a-service business model essentially rents out products again and again to customers. This can be a great business model as you only have to purchase a set of products once—then you get paid each time customers want to use them.

City bike or scooter rentals are examples of this. Another is Rent the Runway, a high-scale clothing company that rents out dresses and other formal wear for people needing a one-time outfit for a fancy event. Completing the Puzzle is another example of this (also mixed with a subscription model) that sends out one puzzle at a time to its customers, who do the puzzle and then send it back.

While this business model can have a lot of upfront costs, getting investor funding or early signups can help to alleviate some of that.

With Visme, you can easily collaborate with co-founders and other team members on your business model to ensure you include all pertinent information. Simply invite them as editors to your project and you can work together in real-time .

5. Crowdsourcing Business Model Template

Crowdsourcing has become a popular business model due to the inception of sites like Kickstarter that host business ideas and allow the general public to fund them. As the name suggests, this business model is funded by a crowd of people.

Some very successful businesses and products have started this way, like card games Cards Against Humanity and Exploding Kittens, the now-defunct but once successful Pebble smartwatch, EcoFlow, the Wyrmwood Gaming modular table and video gaming console OUYA.

When editing this detailed business model template , make sure to take advantage of cool icons. Visme’s icon library boasts tens of thousands of different icon designs in several different styles. A business model canvas often uses icons to differentiate the sections anyways, so this is the perfect opportunity to get creative.

6. Franchise Business Model Template

The franchise business model is one of the oldest in the book. Nearly every popular fast-food restaurant chain has dipped its toes into franchising.

A franchise model is when a company allows private individuals to purchase the licensing of their name to create their own branch of a big-name corporation. For example, McDonald’s is one of the most well-known franchises.

Other businesses using the franchise business model include The UPS Store, Dunkin’, Great Clips, Ace Hardware, Planet Fitness, and 7-Eleven.

7. Manufacturer Business Model Template

The manufacturer business model starts with raw materials, like metal and plastic, and uses them to create a new product to sell to the end user. Popular examples of this would be car manufacturers like Ford, Toyota, and Chevrolet.

These businesses may then sell directly to the consumer or ship to a warehouse and sell through a retailer. Examples of manufacturers include Airstream, L.L. Bean, Burt’s Bees, Vitamix and Zippo.

8. Retailer Business Model Template

Speaking of retailers, this is another popular, tried-and-true business model. In fact, one of the most successful businesses of all time, Walmart, uses the retailer business model.

With this model, the company doesn’t actually make any of its own products. Instead, it compiles products from various suppliers and manufacturers to sell in its own storefront. This is one of the most popular business models, and as the last step of the supply chain, it’s one that consumers are most used to.

Examples of the retailer business model include Walmart, Target, Amazon, Barnes & Noble, Kroger, Costco, The Home Depot, Best Buy, PetSmart and GameStop.

If you’ve already created your new business’s brand guide, make sure to utilize those brand fonts and colors within your business model template. It’s never too early to work on brand strength , and incorporating your branding into documentation that gets in front of the eyes of investors is a great idea.

9. Distribution Business Model Template

The distribution business model falls right in between the manufacturer and retailer. This type of business often purchases the products in bulk from the manufacturer to then sell to the retailer for a profit.

Because these guys are the middleman, consumers likely aren’t well-versed with distribution businesses. Instead, they stay focused on the business side of things, building up solid relationships with manufacturers to ensure they get a good deal on bulk products. They then oversee the entire distribution process from the manufacturer until the products are on the shelves.

Use this stunning template to present your business model to partners, investor, suppliers and other key stakeholders.

10. Ecommerce Business Model Template

The last business model example that we’re going to cover is ecommerce. This type of business creates and sells its products exclusively online. It’s an easy type of business to create, especially with platforms like Shopify making creating an ecommerce website easy.

Some examples of ecommerce businesses include Warby Parker, Edloe Finch, Rothys, Day Designer, The Sill, and Beekman 1802.

If you have a product you want to create and sell, an ecommerce business model can be a quick way to get your new business started. Creating a website and shipping your products can have a relatively low overhead, so the only costs you need to worry about are the raw materials for creating your product.

Here's a customizable template you can use to present your e-commerce business model.

Business Model FAQs

Do you have pressing questions about business models? These FAQs are here to help.

What is the most common business model? 

The most common business model is retail, the sale of products or services to an end consumer. A brick-and-mortar store uses the traditional retail model while an e-commerce site uses the online version.

What are the 4 types of business models? 

The four core business models are:

• Suppliers: Focuses on providing products or services to other businesses or consumers.
• Modular Products: Centered around creating customizable or interchangeable components or services.
• Multichannel Businesses: Utilizes multiple distribution channels, such as online, brick-and-mortar and direct sales.
• Ecosystem Drivers: Creates and sustains a network of interconnected products, services or participants.

What is the difference between a business model and a business plan?

A business plan explains your overall business idea including your goals and the strategies you have set in place to achieve them. A business model determines what you’ll do to make your business profitable.

Get Started With a Business Model Template Today

Set your new business up for success by getting started with a business model template from Visme. Take advantage of our professional document creator to create a business model, as well as all your other business needs, like a business plan, sales collateral, pitch decks and more.

Easily visualize your business model with Visme

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About the Author

Chloe West is the content marketing manager at Visme. Her experience in digital marketing includes everything from social media, blogging, email marketing to graphic design, strategy creation and implementation, and more. During her spare time, she enjoys exploring her home city of Charleston with her son.

Business model canvas template

Summarize a new business model in its early stages.

Use this template to outline all the advantages, targets, challenges, risks, costs, and opportunities of your business. After completing each step, you'll have an exportable canvas representing all the key details.

A business model canvas (BMC) is a one-page model that provides a clear and concise overview of a company's value proposition, target customer segments, revenue streams, cost structure, key activities, resources, partnerships, and channels.

By filling out each section of the canvas, business owners and entrepreneurs can gain a deeper understanding of different business models, identify areas for improvement, and develop strategies to achieve their goals.

The business model canvas template helps with:

• Gathering observations across an organization and build a strategy
• Aligning teams around a common vision
• Identifying areas for improvement
• Making it easier to communicate your ideas to others

How to use the Business model canvas template

Use the following building blocks to build a cohesive business strategy:

1. Identify your customer segments

Who are the people or organizations that will be using your product or service? Try to be as specific as possible — build a customer persona to consider factors such as demographics, psychographics, and behaviors.

For an added level of detail, map out the customer journey to identify key touchpoints.

2. Define your value proposition

What is the unique value that your product or service offers to your customers? This should be a clear and concise statement that summarizes the benefits of your product or service, and how they address customer needs.

3. Identify your channels

Which methods of communication do you plan to use to spread the word about your business to your customers and your key partners? Will you be using online marketing, social media, direct mail, or some other method? List all the channels you plan to use.

4. Describe your customer relationships

How will you interact with your customer base? Will you be providing customer support, offering loyalty programs, or engaging in other ways? Be specific about the types of relationships you will be building with your customers.

5. Define your revenue streams

How will you generate revenue from your product or service? Will you be charging for subscriptions, selling products, or using advertising? List all the revenue streams and pricing models you plan to use.

6. Identify your key resources

What are the resources you need to deliver your value proposition? This could include things like technology, equipment, human resources, intellectual property, or physical assets.

7. Describe your key activities

What are the core activities required to operate your business? This could include things like product development, manufacturing, distribution channels, marketing, sales, or customer service.

8. Identify your partnerships

What external parties will you need to collaborate with to achieve your goals? This could include suppliers, distributors, or other businesses that complement your product or service. Understanding key partnerships can help give you a leg-up against potential competitors.

9. Define your cost structure

What are the costs associated with operating your business? This could include things like salaries, rent, utilities, marketing expenses, or product development costs.

10. Review the canvas

Once you have filled out all the sections, review your canvas and make any necessary adjustments. You may want to consider whether there are any areas that need further refinement, or if there are any inconsistencies that need to be resolved.

11. Next steps

Use the canvas to guide your decision-making and strategy development. You may want to share it with your team, investors, or other stakeholders to get their feedback and input. Update it regularly as your business evolves and grows to inform your roadmap.

Tips for creating a business model canvas

Invite more collaborators.

Invite more team members into the workflow to help with building out each section of the canvas. Team members can provide valuable feedback and unique insights that will strengthen the quality of your business model canvas

Try use cases other than business plans

A business model canvas can be used for more than new business models or an existing business strategy. For example, try gathering insights across an organization to build a more inclusive environment.

Keep it simple

The canvas is meant to provide a high-level overview of your idea on a single page. Avoid getting bogged down in details and keep your descriptions concise and to the point.

How to create a Business model canvas template

Better brainstorming, collaboration, and planning with mural.

Sticky notes & text

Add ideas, action items, and more as a sticky note or text box — then change the colors and cluster to identify patterns and new solutions.

Asynchronous collaboration

Innovate and collaborate effectively together without booking time on calendars.

Add comments and tag collaborators for smooth asynchronous communication.

Easy sharing

There are no barriers to collaboration with the ability to safely and securely share murals with others.

Presentation mode

Build presentations collaboratively, then deliver engaging sessions that go beyond one-way talk tracks.

Export as a download or embed the mural as an iframe into documentation and more.

Business model canvas template frequently asked questions

When do you need a business model canvas, how do you use a business model canvas, what are some common mistakes with using a business model canvas.

Template by Strategyzer

Strategyzer aims to put practical tools into the hands of every business strategy practitioner. They’ve assembled an amazing team of creative, technical, and business professionals from around the world to build products and create experiences that benefit individuals, organizations, and society.

Mural is the only platform that offers both a shared workspace and training on the LUMA System™, a practical way to collaborate that anyone can learn and apply.

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Business Model Canvas Template

Create and download your canvas online

Consider the business or project you want to build. Learn about Business Model Canvas to sketch your ideas.

Fill the boxes below by answering questions about your business. See the full picture.

Enter your email and receive your canvas. Print or share it with your team.

What is Business Model Canvas?

The Business Model Canvas is a strategic management and planning tool that provides a visual framework for describing, analyzing, and designing a business’s key building blocks and how they interact to create value.

What is the purpose of Business Model Canvas?

The purpose of a Business Model Canvas is to describe, analyze, and design a business model and outline high-level strategic decisions needed to get a business or product onto the market. Designed by the economic theorist Alexander Osterwalder and the computer scientist Yves Pigneur in 2005, the template comes in the form of an intuitive one-page business plan summary consisting of the nine key building blocks, from customer segments to cost structure.

When to use Business Model Canvas?

The Business Model Canvas is an adaptable tool with many applications. It’s commonly employed in the following scenarios:

• Initiating a business: The Business Model Canvas helps flesh out your business concept and assess whether you should proceed with it or consider modifying your approach.
• Enhancing an established business: If you’re dissatisfied with your business’s performance, the Business Model Canvas can assist in pinpointing areas that require improvement.
• Introducing a new product or service: The Business Model Canvas provides insights into how your new product or service aligns with your existing business and the necessary adjustments to ensure its success within the organization.

How can Business Model Canvas benefit established businesses?

• Structural Guidance: It provides a visual framework for structuring your business model, ensuring that the canvas evolves in line with your strategy.
• Value Proposition Focus: The Canvas emphasizes the core value proposition, keeping your business aligned with its fundamental purpose and acting as a guiding principle.
• Efficient Planning: Whether you have a defined model or are exploring alternatives, the BMC template enables rapid and efficient completion, promoting swift ideation and iterative development.
• Holistic Understanding: It offers a comprehensive view of the interconnected elements within your business, enhancing your perception of it as a cohesive system.
• Effective Communication: BMC can be easily shared with teams, stakeholders, advisors, and partners, facilitating clear feedback and understanding.

What should be included in Business Model Canvas (BMC)?

The Business Model Canvas should include 9 sections, each outlining the most strategically important elements of a business. The sections are as follows:

Customer Segments: What customer groups will be interested in your product or service?

Key Partnerships: Who are your partners and suppliers that make your business model work?

Key Activities: What activities do you require to make the business model successful?

Revenue Streams: How are you going to drive revenue?

Value Propositions: Why will customers buy and use your product?

Channels: How are you planning to deliver, promote, and sell your product or service?

Key Resources: What resources do you need to deliver on the value propositions ?

Customer Relationships: What customer communication channels are you planning to have?

Cost Structure: What will drive business’ expenses? How are they related to revenue?

How to create Business Model Canvas online?

For your convenience, you can quickly map out your business plan by filling in all 9 boxes of the BMC template online. There are no strict rules on which component of the BMC to spell out first. You may start by describing key partners, activities, resources, and value propositions and then move on to identifying your customer base and communication channels. The expenses and revenue boxes can be filled at the final stage.

Tips for Creating Effective Business Model Canvas

Here are four key tips to help you make the most of the Business Model Canvas:

Keep it simple. Your canvas should be clear, concise, and easy to understand. Avoid overwhelming it with unnecessary details. Focus on the core components that define your business, such as customer segments, value propositions, channels, and revenue streams. By keeping it simple, you’ll be better equipped to communicate your strategy to others and maintain a clear vision for your business.

Continuously update your canvas. Make it a habit to revisit and update your canvas regularly. Market conditions change, customer needs evolve, and competitors adapt. By regularly updating your canvas, you can ensure that your business remains aligned with current realities and emerging opportunities.

Collaborate with your team. Creating a Business Model Canvas is not a solo endeavor. Collaboration with your team is crucial. Gather input from various departments and individuals, as their perspectives can provide valuable insights. By involving your team, you can tap into their expertise and ensure everyone is on the same page regarding the company’s strategy and goals.

Test and validate your model. A business model is only as good as its real-world performance. It’s essential to test and validate hypotheses it contains. Experiment with different strategies, measure their outcomes and adjust your canvas accordingly. This iterative process of testing and refining will help you discover what works and what doesn’t, allowing your business to adapt and thrive.

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Rachel Reeves Plans ‘Canada-Style’ Pension Funds, Times Reports

Rachel Reeves

The UK government is considering the consolidation of multiple local government pension plans to pool their £360 billion ($458 billion) of assets and create a ‘Canada-style’ model, according to the Times newspaper.

Chancellor Rachel Reeves , who is meeting with the head of Canada’s largest pension funds in Toronto on Wednesday, believes a single fund will drive investment into infrastructure projects and generate higher returns. The consolidation is also designed to cut costs and fees, the paper reported.