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The Business Canvas

The most used Business canvas model material in colleges and Universities in the world today is The Business Model Canvas by Alexander Osterwalder

Before going into the business canvas it is a help to understnd What is a business model?

What Osterwalder has done is to take a helicopter and look down on a typical business, big or small. From this height he has been able to point out 9 building blocks that a business is built from. Instead of only describing the 9 buildings blocks in text he has taken a canvas and drawn all the building blocks.

The business canvas looks like this:

How to use The Business Canvas

As an entrepreneur or an entrepreneurship trainer you draw the business canvas on the wall, a black board or on a big sheet of paper.

You can now see with your own eyes se the building blocks of any company. From here you fill out the building blocks the business model for your new company.

Discuss and design the business canvas with friends, partners and fellow students how to make the best equation between “Value Proposition” and “Customers” and the connection between the two must be described in the “Channel” building block.

The business canvas is a good way of keeping track of the discussion.

Below is an example and description of each of the 9 building blocks.

Business canvas example

In this example a group of women pepper growers in Thailand have decided that they will try to sell their pepper seeds via a webshop. They have drawn the 9 building blocks a new business model is build around using the wall of their store room as a canvas.

When everyone involved in creating a new business model can look at the business canvas it becomes easier to talk about each building block.
The women start discussing how to manage the different building blocks and one of the women are putting up labels on the canvas with the findings.

1) Key Partner:

The women know they are professional in growing, collecting, drying and packaging the seeds. They have for years done this and sold the seeds to middlemen who come by their farms and buy for further sale. But selling online via a webshop they have no idea what to do. So, they need to partner up with someone who knows operating a webshop.

One of the women has a son who works in the nearby city actually managing a webshop for a textile factory. They decide to ask him for help.

When the seeds are sold through the webshop, the seeds must be posted to the buyer so they must be able to deliver the seeds to a post office every day. To a start when there are few buyers the seeds can be transported by bicycle to the post office 7 km away.

2) Key Activities:

The activities needed to be able to sell seeds online are:

•  Growing
•  Harvesting
•  Drying
•  Packaging in nice 25/50 g bags
•  Packaging for sending overseas
•  Transport to post office
•  Managing and marketing of the webshop

3) Key Resources:

The resources needed in order to grow and send pepper seeds:

•  Access to farmland with pepper trees
•  Knowledge to grow and process pepper seeds
•  Packaging facilities
•  Webshop

4) Value Proposition

The women have for some time been discussing how they can benefit more financially of their hard work. They have experienced by their own eyes that the price paid by the middlemen and the price in the supermarkets is 40 times higher.

They have also experienced that tourist passing by their small stand at the local market are excited to hear how they grow their pepper and the tourists are ready to pay a much higher price for their pepper.

This led to them to the idea that they might be able to sell directly to the overseas tourists in their homeland and to the middleclass in Asia by adding extra value to the pepper seeds, the value of being organic and grown by women in the rural areas.

5) Customer Relationships

When being online the women cannot talk directly to the customers so the have to find ways to connect to the online customer.

Pictures say more than many words so the webshop must be packed with authentic pictures and videos from the production process of the pepper. The webshop partner can use his smartphone to take authentic pictures of the women in the group.

6) Channels

The channel that connects the value proposition in this example is the webshop.

7) Customer Segments

The women pepper group will have different customer segments.

•  They will probably continue selling to the middleman as long the webshop sale is low
•  The consumers are reached through the stand at the market
•  Online customers overseas
•  Online customers, metropoles in Asia

8) Cost Structure

The main extra costs for setting up a webshop to sell the seeds and thereby creating a new business model are:

•  Design of webshop
•  Staff to manage and marketing of webshop
•  Purchase of packaging material

9) Revenue Streams:

The way the new business model generates income is:

•  Online sales of pepper products

The Business Canvas developed by the pepper growers will look like this:

After deciding a business model

With the help of the Business Canvas the pepper growers have found a business model for selling organic pepper seeds online to customers in Europe and USA. Next step is to start writing your own personal business plan.

Source:  Business Model Generation. 

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