UNIT 2: Business Plan Using

Business Model Canvas.

Business Model: a plan for the successful operation of
a business, identifying sources of revenue, the target
customer base, products, and details of financing.
Business Model Canvas (BMC): this is a very
simplified tool that enables entrepreneurs to prepare
and portray their business plans on a single page.
There are nine areas that make up the BMC.
The left-hand section of the Business Model Canvas is
the infrastructure section and is made up of three
key areas - activities, resources and Partners.
The middle section of the canvas describes the
business offering and is the value proposition
delivered to different customer segments.
The right-hand side of the Business Model Canvas is all
about customers - description of the customers, the
channels through which products or services are
delivered and the relationships the business has with
customers.
The bottom section of the canvas describes the
finances.
Purpose of Business Model Canvas.
▪ It helps entrepreneurs address specific risks and
acquire more information about competitors, costs,
customer segments or a market niche.
▪ It sets an overarching framework for developing a
business strategy, a detailed business plan, and/or
a prioritized action plan.
▪ When planning your start-up, go through your own
Business Model Canvas exercise and integrate your
completed canvas into your business plan.
▪ It provides an opportunity to assess your business
plan using actual data and refine your strategy to
get closer to your goals.
▪ It helps visualize what is important and forces users
to address key areas.
 ▪ It can also be used by a team (employees and/or
advisors) to understand relationships and reach
agreements.
▪ It helps an entrepreneur to transform an idea into
an actionable business plan.
▪ It gives an entrepreneur a wide view of every step
of their business.

Sustainable Business Model Canvas is a tool that

you can use to visualize, assess, and adapt your
project’s blueprint (business model) in a clear and
structured way while considering the project’s social and
environmental impact.
It focuses mainly on two main directions.
The positioning section illustrates the position of
your project within your target market, the added value
it brings to the target groups, to society as a whole and
to the environment. The fields included in the
positioning section include Customer Segments,
Customers Relationships, Channels, Value Proposition,
Revenue Streams, and Social and Environmental
Benefits.
The operational section: illustrates the operational
plan of your project including all the involved
stakeholders and the financial aspects of your project.
The fields included in the operational section include
Key Activities, Key Resources, Key Partners, Cost
Structure, and Social and Environmental costs.
Components of the Business Model Canvas.
Value Proposition. Bundle of products and services
that create value for a specific Customer Segment.
a) What are your products and services?
b) What value do we deliver to the customer?
c) Which one of our customer’s problems are we
helping to solve?
d) Which job are we helping the customer get done?
e) Which customer needs are we satisfying?
Customer Segments Your target audience.
Who are the key customers or users of your business?
Who are you solving a problem for?
What do they do?
What draws them to you?
What are your top three segments?
Which segments produce the most business and
revenue?
Channels Structure. How your business
communicates with and reaches your Customer
Segments to deliver your Value Proposition.
✓ Through which Channels do our Customer
Segments want to be reached?
✓ How are we reaching them now?
✓ How are our Channels integrated? Which ones work
best?
 ✓ Which ones are most cost-efficient?
✓ How are we integrating them with customer
routines?
✓ Customer Relationship Types of relationships a
company establishes with specific Customer
Segments
Customer Relationships. Types of relationships a
company establishes with specific Customer Segments
✓ What are the key relationships and how do you
maintain them?
✓ Having attracted clients and customers, how do you
plan to retain them?
✓ How do you nurture your customer/client
relationships? Are you going the automated route
or something more personal?
Revenue Streams. The way a company makes
revenue from each customer segment through either
the sale of a product or through providing a service.
✓ For what value are our customers willing to pay?
✓ How would they prefer to pay?
✓ How much does each Revenue Stream contribute to
overall revenues?
Ways to generate Revenue Streams
Asset sale, Usage fee, Subscription fees,
Lending/Renting/Leasing, Licensing, Brokerage fees and
Advertising.
Key Resources. The most important assets required to
make your business model work.
What Key Resources do our Value Propositions require?
What key resources do our Distribution Channels
require?
What key resources do our Customer Relationships
require?
What key resources do our Revenue Streams require?
Types of Key Resources Physical, Intellectual Property,
Human, Financial
Key Partners. The network of suppliers and partners
that make the business model work.
▪ Who are our Key Partners?
▪ Who are our key suppliers?
▪ Which Key Resources are we acquiring from
partners?
▪ Which Key Activities do partners perform for us?
Motivations for creating partnerships Optimization
and economy of scale Reduction of risk and uncertainty
Acquisition of resources and activities.
Examples of partners include employees, vendors,
clients, government, customers, your suppliers, logistics
providers, bankers, IT vendors.
Key Activities. The most important things a company
must do to make its business model work.
▪ What Key activities do our Value Propositions
require?
▪ What key activities do our Distribution Channels
require?
 ▪ What key activities do our Customer Relationships
require?
▪ What key activities do our Revenue Streams
require?
Types of Key Activities
Production, Problem solving, Platform/network,
Marketing, Sales and Customer Service, Research and
Development.
Cost structure. How a business spends its resources to
create value. It details the expenses incurred by all
business model components.
▪ What are the fundamental costs derived from my
business model?
▪ Which Key Resources represent a significant
expense to the business?
▪ Which Key Activities represent a significant expense
to the business?
▪ How do your key activities drive costs?
▪ Are the above-mentioned activities matched to the
Value Propositions for your business?
▪ By exploring different permutations of your
business model, do the costs remain fixed or
become variable?
▪ Is your business more values driven, or cost driven?
Social and Environmental Costs. The social and
environmental costs are additional external costs that
result from the impact that your project activities could
have on the surrounding environment and communities.
Identifying and accounting for these costs is crucial
when designing and implementing your project to create
a balance between the financial aspirations, social and
environmental consequences. This way, you can achieve
comprehensive sustainability of your project.
Social and Environmental Benefits. Social and
environmental benefits are the external benefits that
your project produces for the communities and the
environment in which it operates. What social or
environmental benefits will result and who are the
beneficiaries?
✓ Position yourself as a project that has a positive
social and environmental impact.
✓ Enriches/strengthens the credibility of your project’s
value proposition to the target groups.
✓ Attracts financial support from governments, donors
or impact investors that may support you taking
your project to the next level.
Steps followed to make a Business Model Canvas.
Step 1: Customer Segments
Who are you creating value for? The first step is to find
out what type of customers your organization is
targeting.
✓ Mass Market. One large group of customers with
broadly similar needs and problems.
 ✓ Niche Market. One group of customers with
specific needs and problems.
✓ Multiple groups of customers with slightly
different needs and problems.
✓ Diversified. Multiple unrelated groups of customer
segments with very different needs and problems.
✓ Multi-Sided Platform. Multiple independent
groups of customer segments that may have
different needs and problems, but the business
model requires both.

Step 2: Value Propositions

What value do we deliver to the customer? Once you
know who you are providing to, then you can appeal to
them with a value proposition. State your
product/service, and why your product/ service is
valuable.
✓ Newness. Fulfils an entirely new set of needs that
customers previously didn’t perceive because there
was no similar value proposition.
✓ Performance. Improves product or service
performance.
✓ Customization. Tailored to the specific needs of
individual customers.
 ✓ Getting the job done. Helps customers get a
certain job done.
✓ Design. Stands out because of superior design.
✓ Brand/Status. Stands out because of the
popularity or respect of a brand/ status.
✓ Price. Offers a similar value but at a lower price.
✓ Cost Reduction. Helps customers reduce their
own personal costs they would take on without the
product/service.
✓ Risk Reduction. Offer customers a chance to
reduce their own risks.
✓ Accessibility. Provides to customers that
previously lacked access to product/service.
✓ Convenience/Usability. Provides customers an
easier way to use a vital product/service.
Step 3: Channels
How do your Customer Segments want to be reached?
These channels include communication, distribution, and
sales.
✓ Sales Force. In-person sales.
✓ Web Sales. Online sales.
✓ Own Stores. In-store sales.
✓ Partner Stores. In-partner-store sales.
✓ Wholesaler. Distributed sales.
Step 4: Customer Relationships
What type of relationship does each of our Customer
Segments expect us to establish and maintain with
them?
✓ Personal Assistance. Customers can talk with
human assistance.
✓ Dedicated Personal Assistance. Customer
representatives are directly and solely connected to
an individual customer.
✓ Self-Service. Customers are given resources to
help themselves.
✓ Automated Services. Customers are given
customized help usually through software and
automation.
✓ Communities. Customers can connect with other
customers for help.
✓ Co-Creation. Customers can create value for the
company. (Ex. YouTube video uploads.)
Step 5: Revenue Streams
How do your Customer Segments purchase your Value
Proposition?
✓ Asset Sale. One-time sale of ownership rights of a
physical product.
 ✓ Usage Fee. On-going costs to continue use of
product/service. (Ex. Pay Per-View)
✓ Subscription Fees. Cost allowing customers to
use product/service for a specific period.
✓ Lending/Renting/Leasing. Temporarily granting
someone the exclusive right to use a
product/service for a specific time.
✓ Licensing. Granting customers permission to use
protected intellectual property.
✓ Advertising. Income through fees for advertising a
particular product/ service/brand.
Step 6: Key Resources
What Key Resources does our business require?
Describe the most important assets required to make a
business model work.
✓ Physical resources. Facilities, buildings, vehicles,
machines, distribution networks,
✓ Intellectual resources. Brands, proprietary
knowledge, patents, copyrights, partnerships,
customer databases.
✓ Human resources. Key people involved in
business activities.
✓ Financial resources. Capital, financial guarantees,
lines of credit.\
Step 7: Key Activities
What does your business do with your resources?
Discover the most important actions a company must
take to operate successfully:
✓ Production. Relate to designing, making, and
delivering a product.
✓ Problem Solving. Relate to creating solutions to
on-going customer problems.
✓ Platform/Network. Relate to continually
maintaining Key Resources.

Step 8: Key Partnerships

Who are your suppliers and service providers? Discover
what partnerships your business has forged.
✓ Strategic Alliances. Partnership between non-
competitors.
✓ Competition. Partnership between competitors.
✓ Joint Ventures. Partnership between ventures to
develop new a business.
✓ Buyer-Supplier. Partnership between buyers and
suppliers to assure reliable supplies.
Step 9: Cost Structure
What are your most important costs? Develop how your
company views costs and what costs it requires to
operate.
a) Value-Driven. Focus on improving high value
propositions.
b) Cost-Driven. Focus on reducing costs whenever
possible.
✓ Fixed Costs. Costs that remain the same no
matter the volume of goods or services produced.
✓ Variable Costs. Costs that change proportionally
to the volume of goods and services produced.
✓ Economies of Scale. Costs are reduced with the
increase of the volume of goods and services
produced.
✓ Economies of Scope. Costs are reduced with the
increase of business operations.