When wrote my first business plan for a startup business idea in the late 80’s, I encountered this weird phenomenon where the more I wrote in the plan, the less useful the plan became.
Everything I wrote were simply my ideas I was making up about how the business might work and I simply didn’t know all the answers. Writing 15 pages or more of fiction didn’t seem very helpful, either to me, or to the people I was trying to communicate with. The big ideas just seemed to get lost in the detail.
Many years later, when listening to entrepreneurs describe their businesses, I found that they too were struggling to succinctly communicate how their business actually worked.
Then a few years ago I came across the business model canvas, created by Alexander Osterwalder, and I have become a huge fan.
The concept is that any business can be described using 9 boxes on a single A4 piece of paper; the “canvas”. The boxes are in a logical sequence from Supply side on the left, through production and value generation in the middle, through to customers on the right hand side.
Because the canvas is so simple, it helps communicate the key concepts clearly in a structured fashion and this simplicity helps highlights gaps or weaknesses in the model.
The 9 questions you have to answer are:
Which partners and suppliers do we work with, and what do they do?
What do we actually do or make in our business?
What resources do we need, including people and skills, to complete the activities?
What problems are we solving for our customers?
How do we interact and maintain relationships with our customers?
How do we actually get our products and services into the hands of our customers?
Who are our customers?
What are the most important costs in running our business?
How do we make money?
This is all a massive oversimplification of what is a rich and elegant model, so if you want to know more, Osterwalder provides a lot more detail his website.
A hi-res PDF version of the canvas is available for download here: