How To Use A Business Model Canvas Template

Every company has a business model—a way of providing value to its customers—but not every business has a clear way of defining and sharing its model. If your business has a lot of moving parts, it can help to get them all down on paper and figure out what’s working and what isn’t. That’s where a business model canvas template comes in.

What is a business model canvas?

A business model canvas is a visual representation of the core elements of a business. It consists of nine sections, each representing a different part of a business model, with the boxes arranged to show the relationship between each element.

The left side of the business model canvas (key partners, key activities, key resources, and cost structure) efficiency highlights. The right side (customer segments, customer relationships, channels, and revenue streams) highlights value. This breakdown is inspired by the logical left brain and creative right brain. Your business’s value proposition goes in the middle.

Alex Osterwalder and Yves Pigneur developed the original business model canvas in their 2009 book, Business Model Generation. According to Alex and Yves, the business model canvas shows “the logic of how a company intends to make money.”

Benefits of a business model canvas

Business models can be complex, which is why it’s useful to have a standardized, one-page template like the business model canvas. Here are a few ways you can use it:

Visualization

You can write an extensive document detailing every facet of your business model, but will stakeholders actually read (and understand) it? A visual asset like the business model canvas makes it easier to present your ideas to others by breaking them down into digestible chunks.

Comparison

One of the main advantages of using a business model canvas is that its standardized format makes it very easy to compare different business models. Maybe you want to compare cost structures; you’ll find that information in the exact same place on each business model canvas. This can be particularly useful when starting a business or looking to expand.

Development

The business model canvas provides a framework for business model generation. Instead of starting from scratch, you can tweak any of the nine building blocks of an existing business model canvas to come up with new models.

9 elements of a business model canvas

1. Customer segments
2. Value proposition
3. Channels
4. Customer relationships
5. Revenue streams
6. Key resources
7. Key activities
8. Key partners
9. Cost structure

A business model canvas consists of nine key elements:

1. Customer segments

Customer segmentation involves grouping customers based on their behaviors and attributes. For the purposes of a business model canvas, you’ll segment customers to reflect how they impact the overall business model. It’s OK if you have just one segment.

For example, Toronto’s Propeller Coffee serves three main customer segments:

• Café customers who purchase coffee drinks to enjoy on-site

• Restaurants, which buy wholesale coffee beans to serve in their own establishments

Each segment has different needs and requires different resources.

2. Value proposition

This section of your business model canvas should explain how your product or service provides value to your customer. You might have different value propositions for each customer segment.

For example, Propeller Coffee helps its customers wholesale with every aspect of starting a coffee program, from equipment selection to barista training. Customers who buy Propeller coffee online or at one of its three retail locations enjoy value in the quality of the coffee and in supporting a local business.

3. Channels

Channels are how you interact with and deliver value to your customer. These include:

• Sales channels, or where your customer can buy your product, such as your ecommerce store or an online marketplace

Different customer segments may require different channels. For example, individuals can buy Propeller’s beans from its DTC ecommerce store or in its cafés. Wholesale clients have access to a separate, password-protected website.

4. Customer relationships

Different customer segments require different types of customer relationships. For example, someone purchasing coffee from Propeller’s ecommerce store might not require any personal service, instead receiving automated order confirmation and shipping emails. A wholesale customer may require highly personalized service, including a site visit and staff training.

🌟Resource: 5 Ways To Build Better Customer Relationships

5. Revenue streams

Your revenue streams are your business’s sources of income. In this section, you may want to include the percentage of total revenue each revenue stream comprises and describe your pricing strategies.

For example, prior to March 2020, 80% to 85% of Propeller Coffee’s revenue came from wholesale partners, mainly restaurants. But after restaurants closed due to the COVID-19 pandemic, Propeller Coffee experienced a huge shift in its revenue streams as it pivoted toward DTC ecommerce.

These different revenue streams come with unique revenue models. Propeller’s DTC customers can make one-time purchases or sign up for a coffee subscription, while pricing for wholesale customers depends on their particular needs.

6. Key resources

These are the assets you require to perform key activities and provide value to your customer.

Resources can be:

• Physical: buildings, equipment, inventory, or raw materials
• Human: staff
• Intellectual: patents or proprietary knowledge
• Financial: capital

Propeller Coffee’s key resources include the green coffee beans it purchases from farmers, the equipment it uses to roast the beans, its physical locations, and its staff.

7. Key activities

Your key activities describe how you provide value to customers. The inventors of the business model canvas break key activities into three categories: production, problem-solving, and platform/network.

Propeller Coffee’s business model primarily involves production: roasting, packaging, and delivering coffee beans. Its wholesale division also requires some problem-solving activities, like consulting clients on which equipment to purchase and train baristas.

Platform/network activities are common to software-as-a-service (SaaS) businesses. Their business models depend on maintaining a digital platform or network. Shopify, which Propeller Coffee uses to run its ecommerce store, is a good example of a business model that relies on platform activities. It provides value to customers like Propeller Coffee by keeping its platform running smoothly and adding new features.

8. Key partners

Key partners are the people and businesses you rely on to perform your key activities. These can be suppliers, like the farms that provide Propeller Coffee with green coffee beans, or strategic partnerships, like Canadian book retailer Indigo, which hosts Propeller cafés within multiple premises.

9. Cost structure

Your cost structure details how much your business spends on key activities and other business functions. Propeller Coffee, for example, might break its costs down into production costs (buying, roasting, and packaging coffee beans), ecommerce store operation costs, and retail store operation costs.

Cost structure is especially important for cost-driven business models with affordability as part of their value proposition.