BMC Explained
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FREE Tool

The Business Model Canvas (BMC) is a cool strategic management tool that gives a visual representation of a company’s business model. It helps organizations map out their existing or new business models, focusing on nine building blocks:

• • Customer Segments,
  • Value Propositions,
  • Channels,
  • Customer Relationships,
  • Revenue Streams,
  • Key Resources,
  • Key Activities,
  • Key Partnerships,
  • Cost Structure.

The BMC shows how these parts connect, giving a clear snapshot of an organization’s business strategy. By using the BMC, businesses can easily see where value is created, how it’s delivered, and how revenue is generated. 

It’s an awesome tool for strategic planning, management, and innovation!

The Business Model Canvas (BMC) has revolutionized strategic planning since its inception. It was first introduced in 2008 by Alexander Osterwalder and Yves Pigneur in their groundbreaking book “Business Model Generation”. They developed the BMC as a response to the need for a more flexible and easy-to-understand tool for business model innovation.

The BMC has been widely adopted by companies of every size and industry around the world. It has been praised for its simplicity, its ability to foster understanding, discussion, creativity, and analysis, and most importantly, for turning abstract concepts into practical business applications.

The Business Model Canvas consists of nine building blocks, each represented by a rectangle.

1. Key partners: A business’s key partnerships include stakeholders, joint ventures, and strategic alliances that will help the business carry out its objectives. This is also the place to consider suppliers.
2. Key activities: The key activities of a business are all of the tasks and responsibilities that need to be done in order to make the business model work, including its revenue streams. This might include production tasks, marketing or networking activities, and problem-solving.
3. Key resources: Your key resources are the primary assets you will need to complete your key activities. This could include employees, finances, equipment, or intellectual property.
4. Value proposition: The value proposition of a business is the unique offering or solution that a business offers its customers. A value proposition might be a new product or service customers can’t get anywhere else, or an improved version of an existing product or service.
5. Customer relationships: This building block involves defining the customer’s relationship to the business and examining the customer experience. Some businesses require personal assistance, while others are self-service.
6. Customer segments: This involves defining the customer base, or the types of people (or businesses) the company will serve through its products or services. This could include particular demographics, industries, or even specific named customers.
7. Channels: This section outlines how the business delivers its value proposition to its customer segments – this could be through a physical store, an online platform or direct sales, amongst others.
8. Cost Structure: This outlines all the expenses your business incurs while operating. It includes everything from overhead costs, such as rent and utilities, to variable costs like production materials. Understanding your cost structure is crucial for pricing strategies and profitability analysis.
9. Revenue streams: Lastly, this block describes all the ways the business makes money from each customer segment. This could be through direct sales, subscription fees, licensing fees, or even advertising revenues.

Creating a Business Model Canvas (BMC) is quite straightforward and can be achieved in the following steps:

1. Start with a Blank Canvas: You can find a blank BMC template easily online. Print it out or use it digitally.
2. Customer Segments: Identify the different groups of people or businesses your organization aims to reach and serve.
3. Value Propositions: Define the unique value you offer to each customer segment. It’s what sets you apart from the competition.
4. Channels: List all the ways you reach your customer segments. This includes your websites, physical stores, social media, etc.
5. Customer Relationships: Determine the type of relationships you want to establish or maintain with each customer segment.
6. Revenue Streams: Identify how much each customer segment is willing to pay and how you will collect those payments.
7. Key Resources: Identify the resources needed to create value, reach markets, maintain customer relationships, and earn revenue.
8. Key Activities: Enumerate the activities necessary to execute your business model.
9. Key Partnerships: List your suppliers and partners, and what you get from them.
10. Cost Structure: Finally, note down all the costs incurred in operating your business model.

As you fill each block, remember to keep the content simple and concise. The BMC is meant to provide an at-a-glance view of your business model. When completed, you should be able to easily understand and explain your business model to others.

To gain more in-depth knowledge about the Business Model Canvas, these resources are highly recommended:

1. “Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers” by Alexander Osterwalder and Yves Pigneur – (https://www.businessmodelgeneration.com/):

This book is the cornerstone of BMC. It’s a must-read for those who are intrigued by business modelling and strategy.

2. The Official Business Model Canvas Site – (https://strategyzer.com/canvas/business-model-canvas):

This website is filled with useful material, including meticulous guides, instructional videos, and case studies. It was crafted by the creators of the BMC, making it a reliable and authoritative source.

3. The Business Model Canvas Guide on Cleverism – (https://www.cleverism.com/business-model-canvas-complete-guide/):

This comprehensive guide offers valuable insights into the Business Model Canvas, covering everything from the basics to advanced strategies. It includes practical examples that help bring the concepts to life.

These resources each provide a unique outlook on the Business Model Canvas and will equip you with the tools needed to effectively apply it to your business.

Enjoy your journey of exploration!