Business planning for startups often happens well after startup. Despite how important planning is to the success of a growing business, entrepreneurs often put off the task because they believe it will take a long time to complete the plan. There is a good reason for this, of course—a fully-fleshed business plan is comprehensive and often requires some research and relatively detailed planning.
Fortunately, there are shortcuts you can take to create a functioning business plan that does not take a long time to complete. One way to do this is by using the Business Model Canvas (BMC), an amazing tool for anyone from a solo entrepreneur working on a small home-based business to a large company grappling with complex problems. It is well-named, as it is both a creative template (canvas) that can be adapted and changed over time, as well as a simple yet effective business model that can be captured on one page. It can be a relief to get your ideas out of your head and onto a simple, flexible structure.
“The Business Model Canvas helped me to make a connection between who my customers are and what it will take to service them. Laying out the different aspects of needs and fulfillment necessities helped me to put a focus plan in process.”
—Heather Dalton from Stroll Runner
What is the Business Model Canvas?
The concept of the BMC was created by Alexander Osterwalder of Strategyzer. The canvas is made up of the following nine blocks:
- Key partners
- Key activities
- Key resources
- Value proposition
- Customer relationships
- Customer segments
- Cost structure
- Revenue steams
The magic of this tool is that it helps you to lay out the details of your business and provides insight into your market, competitors, start-up costs, sales, expenses, financing needs, and more. Your honest answers help identify areas of opportunity, challenge, and concern. For those considering a new business idea, it can also help determine if you are ready to take the next step or if you need to reevaluate your business idea.
According to Vermont Small Business Development Center (VtSBDC) client Sammy Hedlund, owner of Takeout Shorts, “Filling [the BMC] out helped me mentally organize my business. Separating each operational aspect helped me frame my strengths and weaknesses.”
But I thought I needed a written business plan!
Another great feature of the BMC is that it maps well to a full-length written business plan. You can think of it as a really thorough outline! Sometimes you do need a full business plan, such as when you are seeking financing and your investors need more details. In that case, the BMC gets you most of the way there, enabling you to look at all angles of your business. The more formal plan is just adding detail to the outline. Think of it as taking your art from sketch to a fully realized painting!
Why use the Business Model Canvas?
There are many reasons to use the BMC. Here are just a few:
- It tells the whole business story on one page—utilizing nine basic building blocks.
- It is clear and concise.
- It addresses all components of running a business.
- It puts the needs of the customer first.
Planning is a verb not a noun! You can use the BMC for focused strategy sessions, too—not just for reviewing the whole business. For example, you could choose to identify how your revenue streams are affected by your key partners (versus looking at the link between customers and revenue). And finally, this tool is perfect for non-profit or any type of organization seeking to understand where they are now, and how to find a road map to future goals.
From Alexander Osterwalder’s Twitter feed, August 8, 2019
“’Innovation’ is just an activity and not an end in itself. The goal of innovation is to create value for customers and value for the company. The most impressive innovators even align that with creating value for society!”
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