How to Simplify Your Strategic Planning With the Business Model Canvas

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The Business Model Canvas is an accessible tool that puts the key elements of your business in one place, helps you to demonstrate or develop your business model, and allows you to evaluate the factors that impact the direction of your business. The Business Model Canvas is a simple approach to strategic planning; it takes the complexities of a business and presents a high-level overview of the critical components affecting your longevity and profitability. This framework is especially helpful for revealing insights that may otherwise get lost in the details, for communicating ideas and business opportunities with clarity, for engaging various departments or key players in your organization, and for creating a solid foundation from which a strategic plan or thorough business plan can be built.

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Business Model Canvas Template

The Business Model Canvas is made up of nine primary components, which include both the internal and external building blocks of a business:

1. Key partners
2. Key activities
3. Key resources
4. Value propositions
5. Customer relationships
6. Channels
7. Customer segments
8. Cost structure
9. Revenue streams

The nine components of the Business Model Canvas can be illustrated in a simple table; this allows the components to be easily reviewed and compared.

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How to Conduct a Business Model Canvas

Collect data. The Business Model Canvas is used by business managers, leaders, and owners to demonstrate or develop a business plan, so you need to collect relevant data about your business if it is not immediately on hand.

Consider these questions: What data do we need to collect? Who will provide this data? How will this data be collected?

Use the collected data, along with the following template and probing questions, to complete your Business Model Canvas.

Key Partners

List the key partners and consider these questions:

• Who are our critical suppliers, partners, or collaborators?
• What resources and services do they offer?
• Why did we choose these key partners?

Key Activities

List the key activities and consider these questions:

• What key activities does our business use to satisfy our values proposition?
• How do our key activities differentiate us from competitors? Consider price, value, and complexity of the product or service.

Key Resources

List the key resources and consider these questions:

• What do we need to run our business and meet our values proposition? Consider personnel, resources, property, skill sets, and budget.
• What key resources allow us to sustain customer relationships?

Value Propositions

List the value propositions and consider these questions:

• What exactly does our business provide or do for our customers?
• What value does our business bring or what problems do we solve?
• Why does a customer choose to work with us over a competitor?

Customer Relationships

List the customer relationships and consider these questions:

• Who are our key customer relationships?
• How do we obtain and retain our customers?
• How much customer service do we offer?
• What differentiates our customer relationships from our competitors?

Channels

List the business channels and consider these questions:

• How do our customers find us?
• How do we engage or share our value proposition with our customers?
• How effective are the channels currently being used?

Customer Segments

List the customer segments and consider these questions:

• Who are our target customers or users?
• Who is our customer? Consider their values, interests, and defining characteristics.
• What attracts our target customers to our company?

Cost Structure

List the cost structure and consider these questions:

• What is the cost of operating our business? Consider all costs like manufacturing, sales, R&D, HR, marketing, etc.
• Which costs are fixed? And which costs are variable?
• What emphasis do we put on price compared to the value offered?

Revenue Streams

List the revenue streams and consider these questions:

• What are our revenue sources?
• How did we determine the price for our products or services?
• How does our customer pay us? And are there different pricing options or methods for them to choose between?

Use the Business Model Canvas as a strategic planning tool. One of the benefits of this framework is simplicity; with the essential company information all in one place, you can communicate new ideas, conduct a high-level overview of your business model, and use these insights to develop or shift your business model.