Invented and developed by Alex Osterwalder and Yves Pigneur in 2004, the Business Model Canvas is a model that is widely applied to display the essential components/building blocks of developing a project or starting a business.
The Business Model Canvas is a graphic display of the nine building blocks in one overview/canvas:
The Business Model Canvas is a strategic tool that helps you to visualise and assess your project idea. The canvas fits on one page and in this way gives you an overview of the different elements of a project or business. The right side of the canvas focuses on the audience or customer, while the left side of the canvas focuses on the project or business. In the centre you see the value propositions that represent the exchange of value between your project and your audience or customers. The BMC allows you to make connections between your idea or concept, and work out how to make it into a business.
The building blocks explained
Customer segments
Who are your clients? Describe them. What are their needs and interests? What is the segmentation of your market? What are your target groups?
For example: if your potential clients are lovers of jazz music. What kind of jazz? What segment of the jazz scene? Bebop or free jazz? What is their age? Are you targeting the segment aged 20-30 or 80-90? Where do they live? In what part of town, in what part of The Netherlands? How much money can they spend? What (social) media do they use? What is their favourite day/time in the week to go to a jazz concert?
What is special about you or your product? How is it different from what competitors have to offer? How can you specify your offer? What values does your product create?
For example: we are the only Early Music ensemble with a portable pipe organ of eight registers including meantone temperament that offers endless new possibilities to give colour to instrumental combinations (artistic value). Because we have this organ, we can put together programmes that no other ensemble can do. Thus, we can sell more concerts (economic value). Because our organ is portable, we can give concerts at remote locations that don’t see a lot of cultural activity. By organising an event (concert) in these places we bring communities together (social value).
Customer relationship
Is your relationship with a customer a one-time transaction or a recurring transaction? Does your customer buy only a part of what you are offering or the whole package? Are you the only provider or could your customer also get your product elsewhere? What does that mean for your relationship with the customer?
For example: our string quartet is offering a series of three concerts per season. In this way we build up a relationship with the audience of a specific venue in three concerts. If people buy tickets for all three concerts at once, they get a discount. If they subscribe to our newsletter, they can receive a discount for purchasing our new album and we can keep them informed about our activities and concerts.
Via what channels are you promoting and selling your product to your customers? And via what channels do you stay in touch with your customers and informed about their needs and satisfaction with your product?
For example: my product is a series of online tutorials available on my website. I am present on the main social media platforms (YouTube, Instagram, TikTok) to build an audience. I take great care in keeping my online presence up to date and strategically choose what content to publish on what platform. I ask my customers to post reactions on YouTube and Instagram to inform me about their needs and satisfaction. Specific target groups I find through targeted advertising and pushing my website in search engines.
Revenue streams
What kind of benefits or profit do you create? Immediate income or long-term benefits? Only financial benefits or other? Do you also create pleasure, feel-good moments, satisfaction for your customers and a good image for yourself?
For example: I offer cello lessons online. Some clients buy a package of 30 lessons for a whole year, others buy a package of 5 lessons to be planned within 3 months. For each of these packages, the moment of collecting the money is different. Different packages generate different streams of income. For a feel-good moment for the student and to promote my teaching practice, every fifth lesson will end with a small recording of a duet I play with the student that they can share with their friends and family.
Key resources
What are the key resources of your product or project? What can you use to create your value proposition? To what resources do you have access? A workshop or a factory? Expertise? Highly skilled staff? State of the art technical equipment? A patent?
For example: key resources of my Early Music ensemble are:
- Our ensemble consists of the best players of our generation
- All members of the ensemble play on superb copies of period instruments.
- We have done extensive research on how to perform music from the Mannheim School era
Key activities
What are the key activities needed to create your value proposition?
For example: Our value proposition is introducing jazz music to children. Our key activity is offering jazz concerts in schools.
Partners
Define partners for your product or project. Who are your own key suppliers? With what partners can you collaborate? What can they do for you, what can you do for them? Together you can be stronger on the market.
For example: We are a guitar duo, and offer duo concerts. In addition, we collaborate with a singer. If the venue’s budget allows it, we can expand our programme to include songs. The singer has her own network that brings us other opportunities to play concerts. We regularly play concerts at a church in our hometown. More and more of the regular church attendees come to these concerts. When a wedding is planned at this church, the church recommends us to the couple to provide music for the ceremony.
Cost structure
Define the nature of the different costs. What are your fixed costs? What costs are investments (that will pay off in the long run)? What are flexible costs that you will only incur in the production phase of your project?
For example: Our piano trio rents a rehearsal studio, and the string players need a new set of strings every 3 months: both are fixed costs. We are investing in a video camera and a set of good microphones so we can make good quality recordings that we can use to build a portfolio and for promotion. Our flexible costs are the time we spend to rehearse and prepare for concerts.
Value proposition stands at the core of the Business Model Canvas. It is defined by what you have to offer, what is unique and specific about your project. It reflects the essence of your project.