Business Model Canvas Examples; 9 Steps to Create Your Business Model
Business Model Definition
A business model is defined as a plan for a business’s successful operation identifying sources of revenue, the target customer base, products, and details of any financing. Essentially, it tells us how the key drivers of a business fit together.
It can also be defined as a plan for a business’s successful operation, identifying sources of revenue, the intended customer base, products, and details of financing.
When you think about writing all this down in a document such as a word document, it’s obviously going to require multiple pages to capture all of that information and be a complicated and confusing task.
And it’s really easy to see why people get overwhelmed when thinking about business models, but that’s where the business model canvas comes in.
Why a Business Model Canvas?
- It gives you a way to create a pretty clear business model using just a single sheet of paper. It can be used to describe any company from the largest company in the world to a startup with just a single employee.
- It removes all the fluff that might have been present in a traditional business model. It’s all killer, no filler.
- It’s flexible because it’s quick and easy to make changes to your model and sketch out new ideas.
- It’s customer-focused, and that’s because it forces you to think about the value you’re providing to your customers, and only then what it takes to deliver that value.
- It shows connections, so the single page and graphical nature of the canvas show how the different parts of the model relate to each other. That’s really hard to understand from a traditional business plan.
- Finally, it’s easy to communicate, and again that’s because the canvas is so easy to understand. You’ll be able to share and explain it easily with your team, making it easier for them to get on board with your vision.
A business model canvas Template (Business Model Components)
Canvas on that canvas is made up of nine building blocks, s
- Customer segments and that answers Who are your customers, then?
- Value proposition, and that answers. Why do customers buy from you? What is the game that you provide or the need that you satisfy?
- Channels. How your products and server services are delivered to the market.
- Customer relationships. How do you get to keep and grow your customers?
- Revenue streams. How does your business earn money?
- Key resources and that answers the question. What unique strategic resources does your business have, or does it need?
- Key activities. What unique strategic activities does your business perform to deliver your value proposition?
- Key partnerships. What non-key activities can you outsource to enable you to focus more on your key activities?
- Cost structures. What are the major costs incurred by your business?
The element on the left-hand side of the business model canvas represent costs to the business.
And similarly, elements on the right-hand side of the can represent revenue for the business, or they generate revenue for the business.
Business Model Canvas Explained
Business Model Canvas Customer Segments
The first building block is customer segments, and in this building block, you enter the different customer segments you will serve.
One really important point to get across here is that customers don’t exist for you, but rather you exist to serve your customers.
And many businesses will serve just one customer segment, but not all. So, for example, Google serves customer segments; it serves people who perform searches, but it also serves advertisers.
Business Model Canvas Value Proposition
The next building block is the value proposition that describes the value you deliver to each customer segment.
What problems do you solve for each segment? What needs do you satisfy on the value proposition answers the question?
Why will customers buy from us now?
Some of the most common value propositions are like it’s the highest performing product, the product’s design is fantastic, or the brand is really strong, or it’s really competitive around price.
Business Model Canvas Channels
The third building block channels and refer to how your products or services are sold to customers. Ask yourself how customers want to be reached or how are you reaching them right now?
You can either have your own channels or partner with someone else who has a channel.
Your own channel or your own channels might include any combination of things like stores you own, a sales force you employ, or your website.
Partner channels could include a multitude of options. So, for example, using a wholesaler or maybe working with affiliates or even using Google AdWords to advertise on Google.
Business Model Canvas Customer Relationships
This answers the question. How do you get, keep, and grow customers?
When we say get, we mean, how do customers find out about you and make their initial purchase decision?
For example, as we just said, you could advertise through Google keep how do you keep customers once you’ve got them? Excellent customer service might help you to keep your existing customers grow.
When we say, grow, we mean, how do we get your customers to spend more?
So, for example, you could send out a monthly newsletter to keep them informed about your latest products or your latest services.
The easiest way to define all this is to walk through the entire customer journey in detail on that is to define;
how do customers find out about you?
How do they decide whether to investigate your product?
How do they buy your product?
Then how are they managed after they’ve made the purchase?
Business Model Canvas Revenue Streams.
Where does the money come from? And this might sound really super simple, but it isn’t so.
What you’re trying to figure out is what strategy you will use to capture your customers’ most value.
And in a practical sense, there’s a bunch of ways you could do this so well. Customers pay a one-time fee. Will you have a monthly subscription fee?
Perhaps you give away your product for free as Skype does to hope that some portion of your customers upgrades to your premium product.
Let’s take a step back for a moment.
If you look at what we’ve done so far, we filled in our value proposition, although building blocks to its right.
In a nutshell.
We’ve developed our understanding of everything that relates to our customers. Now, we need to fill out the left side of the business model canvas value.
We need to build our infrastructure, so they were able to provide the value proposition to customers.
Business Model Canvas Key Resources.
This building block describes your most important strategic assets that are required to make your business model work.
Now, resources can fall into one of four categories you have physical resources such as buildings, vehicles, machines, intellectual resources, brands, any specialist knowledge you have or patents, and copyrights human resources.
Sometimes your people will be your most key resource, particularly true in the creative industries.
You could have financial resources such as lines of credit or cash balances.
Business Model Canvas Key Activities
The seventh building block is key activities, and these are the most important strategic things you must do to make your business model work.
Key activities should be directly relatable to your value proposition on If they’re not, then something is wrong because the activities that you view as being most important in your business aren’t actually delivering any value to your customers.
Business Model Canvas Key Partners
The eighth building block is key partners. In this block, you list the tasks and activities that are important but which you’re not going to do yourself. Instead, you’ll use suppliers and partners to make your business model work.
For example, think about Spotify Spotify XKE activity is probably updating their platform; however, as it doesn’t produce its own music.
One of Spotify’s key partnerships will be the deals that it strikes with record labels and publishing houses.
You know, without those deals, they’re literally wouldn’t be any music in Spotify.
Business Model Canvas Cost Structure
This is where we map key activities to costs. We want to ensure that costs are aligned with our value proposition.
Now it should be straightforward to determine your most important costs on your most expensive costs after you’ve defined your key resources, your key activities, and your key partnership.
So that’s the theory of the business model.
Google Business Model
The first thing you should know about Google’s business model is that it’s multi-sided. That means that it brings together two distinct but related customers
In Google’s case, it’s people who use the service for free. People who perform searches on people who pay to use Google searches people who want to advertise.
From the diagram, we can see that Google makes money from the advertiser customer segment, whose ads appear either in search results or on Web pages.
We can see that the money subsidizes a free offering to the other two customer segments, those of search users and content owners.
Google’s key resource is obviously its search platform, and that includes google.com. It includes AdSense for content owners and AdWords for advertisers.
The key strategic activities that Google must perform are obviously managing its existing platform, including a really large infrastructure, which is needed to support that platform.
Its key partners are content owners from which a large part of its revenue is generated. That’s indirect.
Obviously, advertisers generate the revenue, but they wouldn’t make that revenue without the content owners
Other partners are companies that produce mobile handsets to whom Google provides its Android operating system free of charge.
Now, in return, when users of these handsets search the Internet, they used the Google search engine by default, thus bringing more users into the ecosystem and generating even more revenue.
Skype Business Model
From the business model canvas, you can see that Skype has two key value propositions.
The first is the ability to make calls over the Internet, including video calls for free. And the second is the ability to make calls to phones cheaply.
Skype operates what’s known as a freemium business model. That just means that most Skype users use the service for free to make calls over the Internet, with only about 10% of users signing up for the premium prepaid service.
We can see from the customer relationship building block that customers typically have a help themselves relationship with Skype, and typically, this means they’re using their support website.
The channels Skype uses to reach its customers are its website Skype.com, on partnerships with headset brands.
When we look at key partnerships, key activities, and key resources together, the main thing to notice collectively about these things is that Skype can support its business model of offering cheap and free calls because it doesn’t have to maintain its own telecommunications network like a traditional telecoms’ provider would have to.
Skype doesn’t need that much infrastructure at all. Just back end software on the servers hosting user accounts, and that’s how come, it’s able to offer this unique value proposition to the customer segments that it serves.
Gillette’s Business Model
Gillette’s business model is based on the bait and hooks business pattern or business model pattern. That pattern is characterized by an attractive, inexpensive, or even free initial offer that encourages ongoing future purchases of related products or services.
Within this business model, the base is often provided at a loss subsidized eventually by the hook. In Gillette’s case, they offer in any expensive razor handle, and that’s the bait on, then continued purchases of the blades represent the hook.
This business model is also very popular in SAS businesses, a software as a service business where typically a free initial month leads to a monthly subscription.
In the diagram here, you can see that we’ve used the arrows’ thickness to indicate where the revenue is coming from.
Just a single customer segment customer generates all revenues, but within that, the vast majority of revenues come from frequent blade replacements, with just minor revenues coming from the purchase of handles.
Gillette’s business model canvas’s left-hand side shows how all major costs are aligned with delivering the value proposition.
For example, marketing costs helped to build Gillette’s strong brand on R& D costs helped to ensure that the blade and handle technology is unique on the proprietary.