How to use a Business Model Canvas

Traditionally business plans are long, comprehensive documents that can be time-consuming to create and difficult to understand. But what if you could capture the key elements of your business into a single page? That’s where the Business Model Canvas comes in.

What is a Business Model Canvas?

A Business Model Canvas is a strategic management tool that helps you to visualize, design, and iterate your business model on one page. It was originaly developed by Alexander Osterwalder and Yves Pigneur. Since then a few variations have been developed. Our preference is on the Lean Business Model Canvas by Ash Maurya, but the core idea remains the same for all of them: to provide a simple way to understand your business model.

Why we like to use a Business Model Canvas

Business plans have their place, but they can be overwhelming. Especially when working on a new idea, you want to spend your time as effectively as possible to validate your assumptions. Unless you are working on a deep technical product that requires incredible high investments, a 50-page document is in most cases not the right way to start.

However, you and your team need to be on the same page. You need to understand the key elements of your business model and how they interact. The Business Model Canvas is a great tool to facilitate this discussion. It helps you to focus on the key elements of your business model and how they interact.

How to create a (Lean) Business Model Canvas

A business model canvas consists of nine building blocks. Here is a brief overview of each of them. While not required, it is recommended to fill out the canvas in the following order.

1. Customer Segments: Who are the customers you are creating value for? What are their characteristics? What are their needs? Who are you going to call when you have an initial version of your product?
2. Problem: What are the problems you are solving for your customers? How do they solve the problem today?
3. Unique Value Proposition: What makes your product unique? What is the value you are providing to your customers? How would you describe your product in one sentence?
4. Solution: What is your solution to the problem? How does it solve the problem for your customers?
5. Channels: How are you going to reach your customers?
6. Revenue Streams: How are you going to make money? What are the different ways you can monetize your product?
7. Cost Structure: What are the costs associated with your business model? What are the key resources you need to make your business model work?
8. Key Metrics: What are the key metrics you are going to track? What are the key assumptions you are making?
9. Unfair Advantage: What are the things that make it hard for others to copy your business model? What are the things that make you unique?

This is not meant to be a static document. Instead it should grow and get adjusted while you work on your product. Initialy it shouldn't take you longer than an hour to fill this out.

We recommend to use a (digital) whiteboard or a large piece of paper to fill out the canvas. This way you can easily adjust and discuss the different elements with your team.