If you’re looking to create a winning business plan, the Strategyzer Business Model Canvas is the tool for you. This simple yet powerful tool can help you map out your business in a way that is easy to visualize and test step-by-step. In this article, we will discuss how to use the Business Model Canvas to create a well-rounded business plan that will help you achieve success.

A filled in business model canvas

What is the business model canvas?

The business model canvas is a tool developed by Strategyzer that helps you map out your business in a simple and visual way. The canvas is made up of nine building blocks.

  • Value proposition
  • Customer segments
  • Channels
  • Customer relationships
  • Revenue streams
  • Key resources
  • Key activities
  • Key partners
  • Cost structure

Empty business model canvas Empty business model canvas

Each of these building blocks represents a different aspect of your business, and they all work together to create a holistic picture of your business model. You can use the business model canvas to test out different business models and see which one is the best fit for your company. It’s also a great tool for refining your existing business model.

How to fill out the business model canvas

Now that we’ve covered what the business model canvas is and why you should use it, let’s dive into how to fill it out. You can pick any building block in the canvas to start from and different choices will lead to different business models. For instance, starting with a channel you have access to could dictate the kinds customers you can reach. Starting with high-touch customer relationships could impact your cost structure, revenue streams value proposition etc.

One path: starting with the customer segment

Many entrepreneurs start with the customer segment. Why? Because if you don’t know who your customer is, it’s very hard to build a business that serves them well. If you have a strong passion or deep knowledge about a particular customer segment this can be a good approach, however your skills and resources and personal preferences are also important. Don’t pick customer segments you have no interest in or segments you have no way of reaching. Who is your customer? Take your best guess and write it down.

Some people experience analysis paralysis during this process. The canvas is a tool for exploring ideas and your initial guesses will be imprecise. If you are unsure of the customer segment for example write down several – you can always remove segments later as you do research.

You’ll need to reach these customers. That’s where the channels building block comes in. There are many ways to reach customers (e.g. paid ads, search engine optimization, through a sales team, through a partner) and each come with their own set of pros and cons. Consider each channel and how well it would work for your business. Take your best guess and write it down.

Picture of a canvas partially filled out Picture of a canvas partially filled out

We started with designers so channels like Dribbble (which I mis-spelled) may be good for reaching them. Now it’s time to start thinking about what you’re going to sell them. This is where the value proposition comes in. A value proposition is a statement that explains what your product or service does, how it solves a problem, and why it’s better than the alternatives. It’s important to have a strong value proposition because it will be the foundation of your sales and marketing efforts. Strong value propositions come from identifying important jobs customers are trying to accomplish (jobs to be done), pains customers experience (pains) and gains customers hope receive. What value are you delivering to your customers? Write it down.

What will you have to do to deliver this value? That’s where key activities comes in. Key activities are the actions your business needs to take to deliver your value proposition. For instance, if you’re selling software, developing and shipping that software is a key activity. If you’re selling consulting services, business analysis might be a key activity. Will you be doing these activities yourself? Will you need to hire people to perform them? Will you be happy running a business where these activities make up the day to day work? How will these activities impact your cost structure? Write your ideas down down and move on to…

Key resources. Key resources are the things your business needs to deliver its value proposition. They can be physical (e.g. factories, machines, land), human (e.g. employees with specific skillsets), financial (e.g. cash to keep the business running), or intellectual (e.g. patents, copyrights, brand). Do you have these resources or will you have to acquire them? Can you acquire them and how much will they cost? These are all things you’ll need to figure out to get your business up and running. Write your ideas in the key resources section.

What kinds of relationships will you have to maintain with your customers? These are customer relationships and they can be of several types: personal assistance, dedicated account management, self-service, or automated services. Each type of customer relationship requires a different level of engagement from your company and has different costs associated with it. Decide what kind of customer relationships you want to have and write them down.

Picture of canvas with relationships filled in Picture of canvas with relationships filled in

The value proposition is a guess but I know I want to do a software tool since I have engineering resources. A business rarely delivers value on its own. Most businesses rely on partners. That’s where key partnerships come in. Key partnerships are businesses you team up with to help you deliver your value proposition. For example, if you’re selling software, you might partner with a business that provides installation and training services. If you’re selling physical goods, you might partner with a business that provides shipping and fulfillment services. Figure out who your key partners will be and write them down.

All these activities, resources partnerships and relationships will cost money. That’s where your business’ cost structure comes in. The cost structure is a summary of the costs associated with running your business. It includes both one-time costs (e.g. purchasing equipment) and recurring costs (e.g. salaries, rent, utilities). What will it cost to get your business up and running? What are the ongoing costs? Write them down in the cost structure section. If you have a lot of costs you may need to offer premium services to customers who pay for value. If you have lower costs than your competition you may be able to offer a more generic product at a discount. Write your thoughts about your costs in the cost structure section.

Finally we come to revenue streams. Revenue streams are the ways your business makes money. If you’re selling products, you have product sales. If you’re selling services, you have service fees. If you’re selling advertising, you have advertising revenues. There are many other types of revenue streams as well – subscriptions, licensing fees, membership dues etc. Will your revenues cover your costs? Are there creative ways to earn additional revenue streams?

Completed business model canvas Completed business model canvas.

The completed canvas. I like to highlight cards I am certain of in green. Red cards indicate problems and blue next steps. As I research I try to add more and more certainty to my project idea through keyword research, conversations, and experiments.

Explore different ideas with multiple Business Model Canvas(s)

I hope you’re seeing that each building block in the canvas impacts the others. Changing a block can lead to new very different kinds of businesses. Try filling out the canvas in a different order. See what kinds of new novel business models you can discover.

A picture of several business canvases A picture of several business canvases

Remember, the business model canvas is a tool to help you build a business, not a foolproof business plan. You’ve filled out the canvas but your canvas is full of uncertainty. You will need to get out of the building, talk to customers and turn your guesses into facts. Your canvas is your experiment guide. Take each guess (channel, customer segment, etc.) and test it in isolation. As you confirm or invalidate your guesses your canvas will change. Eventually you will end up with a plan for a business you can actually build.