Business Model Canvas template: what it is and how to create one

Sometimes the best way to plan something is to visualize it. When we can see what we’re trying to create, we can bring it into being because we have a good idea of how it should look. Coming up with ideas is a visual process, meaning entrepreneurship benefits heavily from visualizing your ideas and finding ways to picture what you want.

In this blog post, we’re going to go over one such visualization technique that is useful for entrepreneurs: the business model canvas. We’ll discuss what they are, who can benefit from them, before breaking down the elements of one so you can create your own business model canvas template.

A business model canvas (BMC) is a management tool which you can use to clarify a business idea or concept you have, or are trying to understand.

Your BMC will usually be a one-page document broken up into 9 boxes, each denoting the fundamental elements of a business or product, structured for maximum coherency. The right side of the document is customer-focused (external), while the left side focuses on your business (internal). In the center of the document is ‘value proposition’, which assesses the exchange of value between your business and your clients.

Anyone starting their own business or working in a self-employed capacity will likely benefit from a business model canvas. Let’s go over a few different scenarios in which the business model canvas is most useful.

BMCs can be hugely helpful in your regular strategic planning and development cycles. This is because they can provide a kind of blueprint for your strategies, offering clear direction for you and your team.

You can also refer back to business model canvases to look at what you’ve done on past projects, and how they might inform future ones. As blueprints, BMCs provide a picture of the intention with the project, and you can use this as a comparison to the final result of past projects.

Creating BMCs of competitors can be a useful way of better understanding the competition in your field. By looking into their approaches, strengths, limits, etc., you have a much better idea of what you’re up against. From there, you can develop strategies that succeed where others might have failed.

One interesting way to use the BMC is to better understand your customers. This works best for B2B customers who work with other businesses, such as business banking fintech platforms. Mapping out your business customers’ business models will give you a much better idea of how to appeal to them and how to pre-empt what they want to complete their own projects.

BMCs add planning and structure to the ideas you generate for your business. When you come up with a new project, the first thing you need to do is work out the different ways you can guarantee the project’s success, which BMCs can be ideal for.

Because BMCs include an analysis of costs and revenue streams, you can better understand your cash flows and where you can allocate income for investing opportunities. Past business models will give you an idea of how much money goes into and comes out of your past projects, and creating entirely new BMCs can then be done with your investment costs in mind.

As we discussed above, your business model canvas template is made up of nine separate blocks, with a left side, right side, and a center. To help you implement the BMC into your own business practices, we’re going to discuss in detail what each block means and how it fits into the wider structure.

Your customer segments are the different segments you wish to reach with the project or company your BMC is mapping out. These segments can include customers who won’t generate revenue, but are important for the project nonetheless.

• Mass market: if you’re focusing on mass markets, you won’t distinguish between customer segments. Other segments of your business model canvas templatelike the value propositions, distribution channels, and customer relationships will all focus on one large group of customers with similar needs.
• Niche market: targeting niche models means aiming for customers with specific, narrow needs.
• Segmented: in the case of segmented customer markets, you’re addressing customer bases whose needs differ slightly from each other. These can be due to the customer’s needs for products, or the amounts they are willing to spend.
• Diversified: diversified markets are when the needs of the customers differ heavily, and you are looking to expand your business to attract very different business from other customer segments.
• Multi-sided: these are the markets that are interdependent upon each other. In the way that media readerships attract advertisers, going for this kind of market means establishing the connections between segmented markets.

Your value proposition should ask the question ‘what problem am I trying to solve?’ To answer this question, let’s use a rather simplistic example that clarifies things. When you enter a hardware store or any other oversized establishment, your first problem, as a customer, is this:

How do I find the thing I came here to purchase, quickly and painlessly?

It is then the establishment’s duty to acknowledge that all customers share this or a similar problem, and provide solutions for it:

• Numbered aisles indicating what customers find in those aisles
• Numerous employees willing to show customers where to find what they need
• Interactive electronic maps with item search functions
• Clearly labeled, spaced-out items on shelves for easy browsing

And so on. These and more solutions can be used to solve the problem of finding items among a large catalog. The stores that solve this problem best will be remembered by shoppers and used again for their convenience.

Within the business model canvas, the value proposition sits in the center of the structure, spreading over the customer side and business side of the structure. This is because your value proposition considers both the existing problem for the customer and how you as a business are going to provide the solution.

Channels sit on the right side of the business model canvas template, and are how you interact with your customers for their needs. They are the methods you use to reach your customers. You should consider the following when dealing with channels:

• What are the channels I can use to best reach my customer segments?
• How are our current channels performing?
• Which channels are the best/most cost effective/etc.

Types of channels can be divided into two categories:

Owned direct

These are channels you own entirely, like your website or physical retail store. These are the channels that generate high profit margins, but are also difficult and costly to set up and maintain.

Partner indirect

These include partner-owned websites, as well as wholesale distribution or other retail stores. Channels like these have lower profit margins, but they expand your company’s reach for customers in different regions and areas.

What kind of relationships do you want to have with your business’s customers? It’s unfortunately not enough to say ‘good ones’ because you have to think about the ways you wish to interact with your customers.

This is why there is a customer relationships section in your BMC. To determine this, you need to figure out what kind of interactions your customers expect from your business.

Let’s discuss some of the types of customer relationships you might provide:

• Dedicated personal assistance: direct assistance over a long period of time, e.g. personal shoppers or home carers
• Personal assistance: direct assistance on a time-limited basis, e.g. car dealership salespeople
• Self-service: the customer needs no external assistance, e.g. petrol stations, vending machines
• Automated service: the assistance is automated, e.g. car washes, self-service c

checkouts

• Communities: Customers receive assistance from other customers, e.g. online discussion communities
• Co-creation: customers create value in the business, e.g. content via product reviews

Revenue streams are how your business will stand to make money. You need to consider how much your customers are willing to pay, and for what they are paying. Revenue streams usually take the form of being single payments or subscription-based regular payments.

Within those two overall types are several other revenue streams, so let’s break them down for you to create your business model canvas template:

• Asset sale: selling ownership rights to a physical product, the most common type of revenue stream
• Usage fee: selling usage rights of a particular service, e.g. package delivery fees, hotel bookings
• Subscription fees: selling access rights to a service, e.g. streaming video memberships, gym memberships
• Lending/leasing/renting: selling temporary rights to use a service or product, e.g. apartment rentals, car rentals
• Licensing: selling permission to use protected intellectual property, e.g. copyright ownership
• Brokerage fees: selling usage of a product or service by taking percentage fees, e.g. credit card companies, crowdfunding platforms
• Advertising: selling space for advertisers to use to reach their own customers, e.g. banner ads, podcast ads

Your key resources will be the necessary assets you need for your business model to be successful. Whether it is a project or a plan for a new company, what you put here will be integral to making it work.

Examples of key resources include website hosting software for an e-commerce website, cement for a construction company, a crew for a film production, etc. Without these things, these businesses or their projects could not exist.

For B2B companies who work with other businesses, key resources are more likely to refer to things like expert consultants or necessary software.

Here are the main types of key resources:

• Physical resources: infrastructure, equipment, office rental, vehicles, physical inventory
• Intellectual property: patents, copyrights, legal protections on products and processes
• Human resources: in-house experts, contractors, yourself as a solo entrepreneur
• Financial resources: investments, grants, lines of credit, cash on hand
• Digital resources: digital real estate, URLs, backlinks, search rankings

Next to the key resources section of your BMC is the key activities. Like the key resources, these are the things you need to do, actions you need to implement, in order to run your business.

Your key activities will differ depending on the kind of business model you are proposing. For example, a fintech company may want to offer a new accounting software—both a partnership and key resource—for their customers. This would mean customers needing to learn how to use the software and what they can do with it. Key activities to implement this adoption would be creating content to announce the launch, training staff to assist the customers with questions they have, creating content to instruct users, etc.

There are three categories of key activities which help to define the kind of tasks you will need to perform for your business:

Production in which product development, manufacturing, and delivery are covered. This category usually refers to significant qualities of a single product.

Problem solving in which organizations seek solutions to specific problems. Consultancies and service providers fit into this category, demonstrating a lot of knowledge management and requiring heavy training of staff.

Platform/network in which software and brands function as platforms, developing and working continuously to keep them running through management and promotion.

Key partnerships in your BMC are where you outline the relationships you have with other businesses which are necessary to run your business and complete certain projects. These relationships may be with your suppliers, manufacturers, advertisers, etc. Through combining forces you are able to succeed in areas you wouldn’t be able to alone.

There are four types of key partnerships to consider for your business, per the BMC Introduction wordpress:

• Strategic alliances: partnering with a company with whom you have no direct industry competition, in ways which are doubly beneficial for both of you.
• Co-optition: strategic partnership between competitors, designed to spread awareness of the industry together.
• Joint ventures: joining your company with another to create a separate entity, ideally profitable for you both.
• Buyer-supplier: building strong, ideal relationships with your suppliers and buyers, to foster trust and future benefits for the both of you.

The cost structure block in your business model canvas template represents how you will structure the costs incurred by the other blocks in your business model.

The type of cost structure you use will be the one that fits the size, shape, and type of business you are running or project you are implementing with your BMC. These fit under two categories:

Cost-driven

A cost-driven business model is all about minimizing costs wherever possible. It is a lean structure, with low cost value propositions, maximum automation possible, and frequent outsourcing of labor. The Singaporean budget airline Scoot embraces this model, offering cheap flights but customers must purchase their own in-flight meals and provide their own entertainment.

Value-driven

This type of cost structure is less concerned with costs and more on creating value. Luxury hotels follow this model, using expensive amenities, entertainment systems, and extravagant comfort for their guests during their stays.

Now that you have the information you need to create your own, Qonto has a business model canvas template you can download and fill in yourself. Find our business model canvas download here.

• A business model canvas or BMC is a visual tool entrepreneurs can use to map out projects or companies.
• BMCs are useful for strategizing new projects, analyzing the competition in your industry, and analyzing customers. They also work to generate new ideas and make better investments.
• BMCs have nine blocks: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure.
• Each block is dependent on and affects another block, making the structure interconnected.