The entrepreneurial process is difficult to navigate for anyone, but especially for someone just starting out. Let’s discuss the Business Model Canvas (BMC), a visual illustration where entrepreneurs can develop ideas and prepare to launch their new business.
Creating multiple BMCs is one of the most influential practices in your entrepreneurial process. The BMC is a strategic management and lean startup template for developing new, or documenting existing business models. It is a visual chart with elements describing a company or product value proposition, infrastructure, customers and finances. It assists entrepreneurs in aligning their activities by illustrating potential trade-offs. The BMC was created in 2008 by Alexander Osterwalder, a Swiss business theorist.
The business model canvas is a great tool to help you understand a business model in a straightforward, structured way. Using this canvas will lead to insights about the customers you serve, what value propositions are offered through what channels, and how your company makes money. You can also use the BMC to understand your own business model or that of a competitor. It covers key partners, activities, resources, propositions, customer relationships, channels, customer segments, cost structure and revenue streams.
The benefit of using the BMC is to provide structure to your idea, a focus on value and why your business should exist and gives you a sharable concrete document of your thus far intangible idea. The cons of the business model canvas are essentially the risks of using it in the wrong context. It is a very beneficial tool, if you know how to apply it, but it can be dangerous if you don’t. It can potentially act as an incorrect blueprint for the business. The canvas will not substitute your whole business model planning. It is a rough holistic sketch of a business model that is intended to help you draft multiple options quickly. If you’re just creating one canvas, you’re missing the mark on how to use this tool to your advantage.
Download and start using a BMC diagram today!
Connor Kenyon, Baylor University student