When to Use a Business Model Canvas

Showing a giraffe’s picture to a child while explaining how the animal looks is going to be much faster and more accurate than describing it in words. The core idea behind a typical business model canvas is quite similar, barring the differences in subject and audience of course! A business model canvas is a visual description that represents the concerned business model in seamless visual clarity.

A canvas model almost always accompanies the written business model nowadays because it makes presentations much more productive and less time-consuming. If you have not yet used a business model canvas, then you are probably unsure about when and how to use them. That’s precisely what will be discussed next.

When You Wish to Improve Your Chances of Succeeding at Investor Presentations

Investors and banks are not the only audience for whom a business plan is developed, but they are certainly the most important group if you are just starting out or planning an expansion. If you have a sound business plan, then you have already completed half the job.

However, the other half of the job involves conveying that sound business plan in a clear and convincing manner to the potential investors. This becomes a much easier and faster process if you customize a business model canvas template in preparation for that specific presentation. As to why a business model canvas provides entrepreneurs with an advantage during investor presentations, here’s a brief look at the key factors:

  • Investors are busy, and expertly done visual models save time
  • Visual data conveys ideas at not only higher speed, but also in greater detail
  • Your chances of a successful presentation increase when you don’t waste time and deliver your business pitch with visual clarity
  • Investors are far more likely to interact actively in the presence of a visual model than they would be otherwise

When You Wish to Convey Ideas Internally

As previously mentioned, investors are not the only audience here. For established businesses, it is common for executives to prepare canvas models for internal presentations while deciding a course of action for:

  • Solving existing problems or preparing for predicted issues in advance
  • Proceeding with a proposed expansion sustainably
  • Improving productivity, profits and fulfilling company goals

When You Have a Proper Understanding of How the Process Works

Understanding the concept and the benefits alone is not going to be sufficient for creating a professional business model canvas. You will either need to learn how to use it or hire professionals for the job. Although it will take much more than a few lines to adequately describe the process in its entirety, you will find the following introduction to be quite helpful to get started on your way.

9 Blocks of the Traditional Business Model Canvas

A traditional business model is separated into nine interlinked components, which are then represented visually on the business model canvas as nine blocks. These blocks or components include:

  1. Customer/Client Segments: Identification and definition of target customers/clients
  2. Value Proposition: Value that the business/product will deliver to the identified target audience
  3. Distribution Chains: Channels of marketing and delivering the value proposition
  4. Customer/Client Relations: Client acquisition, support, and retention plans
  5. Revenue Streams: All active sources of income
  6. Critical Resources: Financial, physical, human, intellectual, and other types of assets and resources critical to the business entity
  7. Critical Functions: Critical activities or functions which are vital to the business model (production, R & D, etc.)
  8. Crucial Partners: Most crucial partnerships for the company (suppliers, buyers, investing partners, etc.)
  9. Cost Structure: Most significant and inevitable expenses necessary for the business model to work

Do note that this is only an introduction to the basic business model canvas. There are several variants of the same model with additional components to better fit the present times. Even if you use the classic 9-component canvas for creating your visual business model, subcomponents will need to be added for accommodating the digital aspects which were not there at the time. In fact, the additional blocks or components are exactly why visual models are so important these days. Without visual representations, a modern business model would be so much more complicated to explain to even experienced business personalities.

In short, a business model canvas should be used at every given opportunity to simplify. Simplification saves time, and time is money in business. Only make sure that you have a proper understanding of how it works before creating a model canvas for the presentation.

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