As a business owner, a founder, a salesman or a marketer, you regularly need to :
Persuade and convince an investor or banker to finance or sponsor your business
Persuade and convince a customer to buy your product or service
Persuade and convince a talent to join your team
etc.
In order to succeed in these tasks, you should first understand and master every component of your business. One of the best and proven ways to accomplish this is to prepare what we call a business modal canvas (BMC).
The BMC is a ONE-PAGE Framework that defines the key components of a business.
The BMC consists of nine key building blocks or components.
Here is an example of the business model canvas for ChatGPT :
Business Model Canvas for ChatGPT
1- Customer Segments
Customer segments, refer to different groups of people.
A customer segment is a group of consumers who share similar characteristics. These variables can be demographic (age, gender, income), geographic (location, climate), psychographic (interests, values), behavioral (purchase frequency, loyalty), or any other factors that are relevant to your business.
Identifying our customer segments helps us to answer these key questions :
Who are our most important customers?
What are their needs and characteristics?
Which customer segments should we prioritize?
2- Value proposition
The value proposition is the promise delivered to the customer. It should highlight these three elements :
What problem do we solve for our customers?
What needs do we fulfill?
What makes us different from our competitors?
3- Channels
They are the ways your business connects with customers in order to:
Tell customers about what makes your business valuable.
Provide and deliver that value to customers.
It helps answer questions such as:
How do we deliver our value proposition to customers?
Which channels do our customers prefer?
How can we optimize our distribution and communication channels?
4- Customer Relationships
A company needs to define the kind of connection it aims to have with each customer segment. These relationships can vary from personal interactions to automated processes.
To define your customer relationships, answer these questions :
What type of relationship do we want to have with each customer segment?
How do we acquire new customers?
How do we retain and grow our existing customers?
5- Revenue Streams
They are the ways in which a business generates revenue.
It helps answer questions such as:
How do we make money?
What are our primary revenue streams?
Are there any additional revenue opportunities we can explore?
We will take a look at some of the common revenue streams :
Flat Rate and Subscription: The "Flat Rate" and "Subscription" revenue streams provide consistent revenue. Flat rate charges a fixed amount, while subscription charges recurring fees. Both offer predictable income for the business and a stable payment method for customers.
Pay Per Use and Performance-Based Contracting: The "Pay Per Use" and "Performance-Based Contracting" revenue streams are based on usage. Pay per use charges based on usage frequency, while performance-based contracting charges based on results. These align business and customer interests, ensuring fair payment for usage and value provided.
Licensing and Franchising: "Licensing" and "Franchising" revenue streams involve granting usage rights for a fee. Licensing allows intellectual property use, while franchising allows business operation under a brand. Both expand reach and generate revenue from others using products or services.
6- Key Resources
They are the essential assets a business needs to operate, such as physical resources (facilities, equipment), intellectual property, human resources, financial capital, strategic partnerships, information/data, brand/reputation, and networks/relationships. These resources support the delivery of the value proposition and the overall business strategy.
7- Key Activities
The Key Activities component identifies the crucial actions and processes that drive our business's success. It addresses important questions like:
What are the core activities necessary for our business to operate?
What tasks are essential for delivering the value proposition?
Are there any activities that can be outsourced or automated?
8- Key Partnerships
Strategic alliances and partnerships play a crucial role in a business's growth and success. They enable the business to enhance capabilities, access resources, and expand into new markets. These collaborative efforts help the business achieve its objectives and create mutually beneficial relationships.
Here are the most important questions to ask when considering partnerships and collaborations:
What strategic alliances or partnerships can we form to enhance our capabilities and resources?
How can we leverage partnerships to access new markets or customer segments?
What are the criteria for identifying potential partners that align with our business goals?
What resources or expertise can our potential partners bring to the table?
How will these partnerships contribute to our overall business strategy and growth?
What measures will we put in place to evaluate the effectiveness and success of our partnerships?
9- Cost Structure
It encompasses the various costs incurred in operating the business and delivering the value proposition to customers.
Here are the important and concise questions to ask when considering the cost structure in the Business Model Canvas:
What are the main cost components of our business operations?
How do our costs impact our pricing strategy and competitiveness?
Are there opportunities to optimize or reduce costs without compromising value?
What cost drivers have the most significant impact on our expenses?
How do our cost structures compare to competitors?