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Thursday, February 25, 2021

Business Model Canvas: Practically explained

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If only business plan documents could be summarized in a single page for non readers like me, that was my thought when i initially wanted to start a business . Luckily I was able to stumble upon the Business Model Canvas. Thanks to google for it. Now, I don’t have to read or write 20 plus pages of business plan documents to understand or create a new business. 

Business Model Canvas is a management and startup template for lean development.It was developed by Alexander Osterwalder. It is a visual chart with the blocks for value proposition, infrastructure, customers , and finances of products, services and the business. Each block of this template forms an essential element of the business which in essential creates the strategy for the operation of the business. 

Elements of Business Model Canvas:

Customer Segments : For whom are we creating value ? Who are our most important customers ? Is our customer base a Mass Market, Niche Market, Segmented


Value Propositions : What value do you deliver to the customer ? Which one of our customer’s problems are we helping to solve? Why should customers buy or use your products or services?

Channels : How are we reaching the customer segments ? How you get value propositions across the customers. 

Customer Relationships :  How to communicate with Customers ? 

Revenue Streams : For what revenues are our customers really willing to pay? How much does each revenue contribute to overall revenues?


Key Activities : What things will you do to deliver those value propositions ?
Key Resources : What are the assets needed ?

Key Partnerships : Who are our key partners ? Which key activities do partners perform?


Cost Structure : What are important costs inherent in our business model ? Which key activities are most expensive ? 

Let’s say you were to start a refreshing Lemonade business at the park, then we can apply the Business Model Canvas as shown in the image:




For our Lemonade booth, our value proposition will be freshly brewed Lemonade on the go. At the park , our customers are those exercising at the park, but we can also include park visitors as our customers. In this scenario, we handle the customer relations via talking to customers and we do that via Lemonade Stand. Key activities of our business include preparing the Lemonade drink, Marketing it and finally selling the drink. For that to happen, we need key resources like Ingredients for making the drink, Sales people to manage the sales and equipment like cups, water jar, and booth for it. Since we are selling Lemonade at the public park, we need to partner with the local park authority or municipality. As far as the cost goes, we have to pay for ingredients, salaries for sales personnel, pamphlets and flyers to advertise our booth within the park and the equipment cost. We generate revenue by the drink sales and the generous tips by the Lemonade drinker.

As you can see, Business Model Canvas is an excellent tool to get started with your Business Idea l. It is a good way to put your business ideas to the stakeholders. Since it is a living document, you might want to revise and  revisit often.

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