MIND THE GAP

Writing a traditional business plan can be a challenging and complex task. Moreover, it's no longer an effective method because it is time-consuming and requires a lot of research and writing. You don't have that kind of time when you're a start-up or a solopreneur, especially in today's fast-paced world.

Additionally, the traditional business plan is inflexible and lacks adaptability. Keeping it updated after weeks or even months of writing it becomes a chore.

Finally, it's challenging to communicate critical information quickly to investors or potential customers. Therefore, many businesses, including well-known companies, have opted to use the Business Model Canvas to streamline the process and enable robust strategic conversations that lead to action.

CLOSE THE GAP

I was introduced to this model in 2015 when I was on a team working with a non-profit to develop a center of neurosurgery excellence in Bolivia. I’ve used it ever since in my business and when advising others.

The Business Model Canvas (BMC) is a strategic management tool that provides a structured, visual framework for developing new or documenting existing business models. Developed by Alexander Osterwalder and Yves Pigneur, it has become a popular tool among entrepreneurs, executives, and business strategists for its simplicity and effectiveness in mapping out business strategies. It’s a great solution for planning your business while covering all relevant topics.

The Business Model Canvas is designed to be straightforward and accessible. Each component represents a fundamental aspect of a business, from its value to its customers to the infrastructure it requires and its financial viability. This canvas allows businesses to clarify their strategies, align their activities, and identify potential trade-offs in a single visual document.

This process can be really fun. The goal is to capture your business's key attributes at a high level in the nine components. After explaining each component, I’ll show you how to apply it, whether you provide products or services.

This is the cornerstone of the canvas, defining what makes a product or service attractive to customers. A strong value proposition solves a customer problem or satisfies a need. It differentiates from competitors and pinpoints the unique value the business creates.

This is a critical step in every business. If you don’t have this yet, refer to the three steps for creating a unique value proposition. You must have this completed for the BMC to work properly.

Who do you serve and why? The segment could be based on different groupings such as demographics, behaviors, needs, or the roles of customers (e.g., users, payers, buyers). Understanding the customer segments helps tailor the value propositions, channels, and customer relationships to each specific segment.

👀 More coming soon to the Gap Dēmĭstəfīed.

This block describes how a company communicates with and reaches customer segments to deliver its value proposition. Channels can be direct, such as in-house sales teams, or indirect, such as through distributors or retailers. The choice of channels impacts the customer experience and can be crucial for competitive advantage. Think also about the location of the business—brick-and-mortar, pop-up, online, etc.

You may be familiar with the following terms.

Multi-channel Marketing uses multiple communication channels or platforms to reach and engage customers or users. Think of this as all of the tools available to you to reach the customer.

Omni-channel Marketing refers to integrating multiple channels or platforms to provide a seamless and consistent customer experience. Think of this as all the tools available to your customers to reach you. This is a customer-centric approach.

Defined for each customer segment, it describes the relationship the company establishes with its customers. Relationships can range from personal to automated, from transactional to long-term. The nature of these relationships influences customer satisfaction and loyalty.

It’s important to remember that people buy or do business with people they trust.

Also, it can take 7-10 touches with you or your content before someone enters the marketing funnel to learn more about what you offer and express interest.

Revenue streams are how the company makes income from each customer segment. Strategies can include transaction revenues from one-time payments or recurring revenues from ongoing payments for continuous services.

Offerings such as courses can be a one-time payment with a large reach. You can also offer a subscription service with MRR (monthly recurring revenue) or provide tiered services.

If you offer professional services, maybe one revenue stream is working with you directly while another is an introductory course.

You will set your prices, special discounts, or bundles here.

These are the assets required to offer and deliver the previously described elements. Resources can be physical, financial, intellectual, or human. Key resources let companies create and offer a compelling value proposition, reach markets, maintain relationships with customer segments, and earn revenues.

You should also consider your tech stack. I feel like this is its own category. Things you want to think about are how you will manage projects, client/customer information, social media, knowledge management, and so on. Poor operational support or processes can break trust.

If you missed it, I shared some of my favorite tech stack platforms.

The most important activities necessary to execute a company's business model could include production, problem-solving, or platform/network maintenance. Key activities allow businesses to create and deliver value, reach markets, and maintain customer relationships.

I like to divide the list of activities into revenue-generating activities and business operations activities. Focusing on operational activities and believing you’re making progress can be seductive. Even huge corporations mistake operational activities for strategy.

Revenue-generating activities will eventually result in money coming into the business. As for the operational tasks, automate them as much as possible. For example, I use Honeybook to manage my business using templates and automated workflows connected to my Calendly account. When someone inquires about my services, it triggers a workflow. It also allows them to set up a time with me immediately. This removes friction in the customer experience, and everything I need is in one place.

Remember, some activities can be outsourced. The internet makes it easy to find affordable assistance through sites like Fiverr or Upwork or hire an hourly virtual assistant.

Key partnerships can help optimize business models, reduce risk, or acquire resources and activities that are too costly to maintain internally.

These partnerships can be things like referral groups or local organizations for which you can be listed as a resource. A rising resource is small communities organized on Slack or Discord around specific topics. For example, I belong to an online community for fractional professional services and another for K12 freelancers and consultants. This is a great way to source opportunities and build your brand.

This describes all costs incurred to operate a business model. Creating and delivering value, maintaining customer relationships, and generating revenue incur costs. Such costs can be calculated relatively easily after defining key resources, activities, and partnerships.

And if you’re a solopreneur, don’t forget to factor in paying yourself as a cost. I’m not referring to paying yourself a salary (that’s a specific business entity structure). Your cost structure should consider your personal finances - living expenses, long-term savings, retirement, etc.

The Business Model Canvas goes beyond creating a business plan; it's a strategic management tool allowing continuous adaptation and validation. It enables businesses to:

If unsure what constitutes a strategy, learn more about crafting a winning strategy here. It will also help you understand the difference between strategy and tactics.

Many leading companies, including startups and corporate giants across various industries, have successfully used the Business Model Canvas to launch new products or pivot their strategies effectively.

THE GAP DĒMĬSTəFĪED

If you do an internet search, you will find a lot of content describing the BMC. I encourage you to start with the concept's originators and then go from there. Everyone will have their take on how to use it.

By starting with the foundational concept, you will find that you can adapt it to best fit your needs.

The nine-box framework ultimately allows you to think strategically about your business while being agile and adaptable in its use.

Learn more at https://www.strategyzer.com/

Also, get the book. It’s a quick read!