No matter the size, age, or purpose of a commercial entity – it needs a business model canvas. Even if you started your business years ago with the intention of just running it out of your garage, you still need a plan.
What is a Business Plan?
When most people think of writing a business plan, they envision a long, extensively detailed document with masses of data and financial forecasts. While that may be the requirement for people seeking outside funding, a business plan doesn’t have to be complicated to be effective.
A business plan provides the blueprint for how you intend to build your business, so the plan only has to be as long as you need, depending on the size of your business. Use your own business plan to map out your goals, action plans, and financials while significantly increasing your chances for success.
In other words, your business plan is vital to establish the structure of your business. The goals, objectives, strategies, and services to be offered are components used to plan and manage your business, apply for funding, or show to potential investors.
Some advantages of having a business plan
Objectivity – while preparing the plan, it forces the person preparing it to look at the business in an objective and critical manner.
The big picture – It helps the entrepreneur starting the business to consider all options.
Strategic focus – It helps to focus ideas and serves as a feasibility study of the business’s chances for success and growth.
Feasibility – It may show the business is not viable and help realize the idea is flawed.
Strategic planning tool – it can be shared with potential investors, partners, and business development professionals.
It is a strong communication tool for your business defining your purpose, your competition, your management, and personnel.
The process of creating a business plan can be cumbersome and a serious reality check for anyone attempting to set up a B2B firm.
On the other hand, using a Business Model Canvas could prove to be a valuable tool in helping you to develop your business’ model and achieve success, regardless of what type of business it is.
What is A Business Model Canvas?
The Business Model Canvas is a tool that is used to visualize all the building blocks required for beginning a business, including customers, market route, value proposition, and finance.
It enables you to visualize and map your model onto one page and allows you to quickly make changes as and when required. Put simply it’s a short and precise version of a
This canvas (made up of 9 building blocks) provides you with a clearer understanding of the relationship between, services, channels of distribution and costs, etc.
These blocks consist of:
- Key Partners – For example, partners, suppliers
- Key Activities – For example, distribution channels, customer relationships, revenue streams
- Key Resources – What unique strategic assets must the business have to compete? For example, human, financial
- Value Propositions – What’s compelling about the proposition? For example, brand, price, design
- Customer Relationships – How do you interact with your clients? For example, personal assistance, self-service
- Client Segments – Who are the customers? e.g. mass market, niche market
- Channels – How will your services be promoted, sold, and delivered?
- Cost Structure – What are the business’ major cost drivers? For example, fixed costs, variable costs
- Revenue Streams – How does the business earn revenue from the value propositions? For example, commodity sale, a subscription fee
Although the canvas is pre-structured, each component will be unique to your model. Visualizing the relationship between components allows both the business owner and stakeholders, to experiment with various strategic possibilities, thereby maximizing the potential for growth, profitability, and success.
Advantages of Using a Business Model Canvas
The business model canvas is not static. Instead, it regularly evolves, allowing you to make quick changes to your business model and help secure your competitive strategy.
It’s perfect for startups or small professional service firms with limited capital.
There are plenty of templates out there. You might begin with a predefined template and see where it takes you. For more advanced planning, seek the help of expert consultants who will offer a variety of tools and resources to ensure the plan will be successful in achieving its goal.
So, which is better? A business plan, or a business model canvas?
A business plan works for every type of business but is not as flexible as a business model canvas. Business model canvas allows small, medium, and large professional service firms to quickly make changes to their strategies or any other mechanism in their plan that doesn’t seem to work.
It’s a good alternative that best suits small and medium-sized professional service or B2B firms.
For more information about this topic, contact us for a free consultation. Don’t forget to sign up for our newsletter for more interesting insights on other B2B planning topics.