Understanding your business model is the first step if you want to grow your business. When we start, we’ll write a business plan but often we never revisit it. Like most things in life, our businesses evolve over time and that often means your model will need revisiting and updating to reflect the new direction and goals of your business. I’m going to share a simple technique that will help you to map out your business model.
The Business Model Canvas was developed by Strategyzer.com and since attending one of their two-day workshops 10 year ago I have used the model in my own business and have also adapted it for my clients to use.
The model follows nine main principles. Breaking down your model into these categories will give you a clear focus and a thorough picture of what actions you need to take going forward.
- Customer segments – Who are your customers
- Value proposition – Why do your customers use/buy your product?
- Channels – How do you reach your customers?
- Relationships – How do you interact?
- Revenue – What are the main income streams for your business?
- Key activities – What must you do to meet your customer needs?
- Key resources – What assets must your business use/have to compete?
- Key Partnerships – What can you outsource?
- Costs – What are the biggest costs in your business?
I have simplified the approach to asking Why, Who, Where, What and How:
How do I use this information going forward?
Once you have completed the model, there are several ways you can use the information you’ve gathered.
Target Business Models
Use the model to explore various future states. How do these differ to your current business model? Once you have agreed your target business model, this becomes the blue-print on which your planning and actions must align behind.
Now is a good time to research your competitors in your market. What do their business models look like? This is a useful exercise to help you highlight your strengths and weaknesses and identify your place within your market.
While it might feel a little uncomfortable, now is the time to put yourself in the shoes of a disruptor. Pick apart your model from top to bottom and start again from the beginning. If you were targeted for acquisition, what parts of your current business model would be stripped out? Where are the inefficiencies? Would you target different customers? Is there an untapped market/need?
This may be challenging but think about what the total opposite of your business model would look like. Thinking about this will push the boundaries and you might find you come up with some ways to improve your model. Get the creative juices flowing by turning your business model on its head.