Primer: What is a Business Model Canvas (BMC) and its Purpose
Questions Addressed by this Primer:
- What is the purpose of a business model canvas?
- What is the purpose of completing a business model canvas?
- What is the purpose of constructing a business model canvas?
- What does business model canvas do?
- What does Business model canvas mean?
- What is Business model canvas definition?
What is a Business Model Canvas (BMC)?
Business Model Canvass (aka BMC), is a framework that can help entrepreneurs define and communicate their business model. BMC's purpose is to help entrepreneurs articulate their value proposition, customer segments, channels, revenue streams, and costs, in a very succinct fashion. Furthermore, BMC can also be used to assess the viability of a business model and to identify potential improvements.
The business model canvass is composed of nine building blocks:
- Value propositions: What needs does the startup aim to address for its customers?
- Customer segments: Who are the startup's potential customers?
- Channels: How will the startup reach its potential customers?
- Customer relationships: What kind of relationship does the startup want to establish with its customers?
- Revenue streams: How will the startup generate revenue?
- Key resources: What resources does the startup need to deliver its value proposition?
- Key activities: What activities does the startup need to undertake to deliver its value proposition?
- Key partners: What partnerships does the startup need to establish to deliver its value proposition?
- Cost structure: What are the startup's key costs?
What is the purpose of the business model canvas?
There are many purposes for completing a business model canvas, but the three most important ones are:
- Help entrepreneurs validate their business idea,
- To help them think through all the important aspects of their business
- Help them communicate their business idea to others.
The BMC is used to validate the business idea and forces entrepreneurs to think through all the aspects of their business, from their value proposition all the way revenue and cost model. By completing the BMC, entrepreneurs can get a better sense of whether or not their business hypothesis is viable.
Additionally, BMC can also help entrepreneurs communicate their business ideas in a very cohesive manner. When you have a clear and concise business model, it is much easier to explain your idea to others and get them on board with your vision, which in turn can attract investors and partners.
3 Examples of Startups, who have used BMC successfully:
1. Airbnb: Airbnb is a online platform that allows people to list, find, and book accommodations around the world.
2. Uber: Uber is a transportation network company that allows people to request and pay for rides through its smartphone app.
3. Pinterest: Pinterest is a social network that allows users to share and organize images and other content.
Summary:
BMC is a valuable tool for entrepreneurs. It can help them validate their business idea, think through all the important aspects of their business, and communicate their business idea to others. It can also help entrepreneurs articulate their value proposition, customer segments, channels, revenue streams, and costs, on a single page.
About Us:
MD-Konsult.com, is a Startup and Small Business Focused Consulting Firm. We have a Business Model Canvas template, that we use with our clients to ensure our clients tee off on the right footing towards success.
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