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Business Model Canvas

Business Model Canvas

Business Model Canvas (BMC) is a powerful tool initiated by Alexander Osterwalder in 2005 and is based on the concept of business ontology. BMC enables entrepreneurs to visualize their ideas in nine boxes starting with the definition and identification of the value proposition of their offerings.

How BMC works

The canvas synthesizes the actions required for an entrepreneur to put an idea into practice in nine building blocks. The block identified as value proposition that often appears in the centre of the canvas is perhaps, the most important box of the canvas, as it defines who you are as an entrepreneur and identifies the unique selling point of your products or services. The rest of the blocks are structured as follows: customer segments; channels; customer relationships; revenue streams; key resources; key activities; key partnerships and cost structure. Then, you can start building the canvas as follows.

As each box represents a specific action, and the entrepreneurial activity is a coordinated sequence of actions you should start working on the canvas in the following order: first you need to identify the customer segments; then you should define the value proposition for each segment and proceed with the channels; the customer relationships; the revenue streams; the infrastructure; the key activities and partners and last the cost structure of the business model you built.

For each building block, the canvas presents a short description guiding you on what data you need to collect and what information you should include so you can accurately describe the business model of your product or service you plan to launch.

The BMC is an open-source tool, which you can easily print on a large surface and start building it with your team. Apart from the BMC, there are also other available tools such as the lean start-up methodology.

The BMC cannot replace the business plan because it is static and it does not reflect any strategic development of the business model to be launched. However, it can be considered as a necessary activity for entrepreneurs to visualize their ideas, mainly, in the pre-startup phase, communicate the business model with the audience, as well a very good tool that guides them to pitch their ideas.