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A Business Secret Which No Entrepreneur Would Like To Miss
Starting a business is indeed a giant game in itself. 73% of the entrepreneurs find it immensely difficult to maintain healthy and long-term relations with customers and vendors, deciding the cost structures, or even identifying their customer segment.
Likewise, entrepreneur needs to take care of hundreds of things together. Be it registering of business legally, making a website, creating a marketing strategy, making relations with vendors, establish a team of committed employees, product testing, maintenance of accounting, etc.
So, what about those 73% entrepreneurs? Do they lack clarity? Are they afraid in executing their ideas? Don’t they have proper guidance? Why they lack to make one big picture before execution.
If you are an entrepreneur and want to get rid of such time-taking unproductive moments, then you must make a Business Plan. It will guide you at every step and create a strong structure on which you can convert your ideas into reality by penning them down. All it takes is some devoted time in making of a business plan. However, is there any tool, which entrepreneur can take help from? The answer is YES.
Only after dealing with hundreds of business owners and entrepreneurs, what I have observed is that 8 out of 10 organizations have multiplied their growth by implementing this one simple tool. This one-pager has helped thousands and lakhs of entrepreneurs globally to gain clarity and also start their venture. Business Model Canvas also helps while pitching in front of investors as it earns confidence of the vision entrepreneur is portraying. Hence, I strongly believe, Business Model Canvas is necessary and also vital for all entrepreneurs.
But how to make Business Model Canvas and what all it includes?
Read below and you will find the answer to create your own Business Model Canvas.
Business Model Canvas consists of 9 blocks, namely:
1) Customer Segment
2) Value Proposition
3) Channels
4) Customer Relationships
5) Revenue Stream
6) Key Activities
7) Key Partnerships
8) Cost Structure
9) Key Resources
Business Model Canvas has a management template which describes, design, and analyse the ideas running in mind for the business. It brings clarity for execution. Each segment is explained below with example of Netflix, the most viewed OTT platform in the world.
1) Customer Segment:
Customer Segment means to determine the target audience to consume your product or get benefit out of your service. Know whether you are dealing in B2B or B2C model.
Example: Anyone who is interested in watching movies and web series is the audience for Netflix. Customer segmenting of Netflix can be done in three ways:
(i) Micro Customer Segmentation: It includes 2000 taste clusters which uses data from viewer’s history.
(ii) Usage-Based Segmentation: This is affected on the basis of browsing behaviour of viewers.
(iii) Geographical Segmentation: Netflix will do region-based customer targeting. Read Next Blog
2) Value Proposition:
It’s about solving a problem and giving a long-term solution. That will fill the gap and create a need for you product and service.
What experience you are giving to your customers?
What image they will carry is all because of the value you have created for your product or service?
What core values do you deliver to customers?
Example: Netflix provides the ultimate flexibility for their viewers and that is why their customer base is not only maintained but increasing day by day. They provide customers value in the form of following manner: 24x7 streaming, No. of ads between shows, 4k video quality, Original tv shows, Netflix originals (produced by Netflix), 30 days trial, Subscription can be cancelled anytime, AI based Algorithm (according to interest viewers will get preferences) Read Next Blog
3) Channels:
A method through which you will make your product or service reach to maximum audience. Different ways of reaching customers are: website, blog, Facebook, Instagram, Pinterest, WhatsApp Business, OTT platforms, YouTube, etc.
Example: Netflix markets themselves via various social media platforms like Instagram, YouTube, Giving paid advertisements, because they get maximum youth on these platforms. As a result, they ask those consumers to come on their own OTT platform and consume the content. Read Next Blog
4) Customer Relationships:
Decide your customers by doing Market Segmentation, Targeting, Positioning and by deciding the channel is one thing. After deciding the target audience, building a life-long relation based on trust and value comes under Customer Relationship.
Example: More methods through which customers can be kept engaged are: Online chat with customer when faced by problem, Gift cards (discounted rates), Social media interaction, Self-service (viewer can decide what to see and when) Read Next Blog
5) Revenue Streams:
Consistent income flow of money will make sure the operations run smoothly on daily basis. Different business will have different revenue streams depending on it’s requirement. For example; direct sales mode, freemium model, subscription model, licensing model, Advertising, Commission, etc.
Example: Netflix have three paths through which they will earn: Online subscription, CD and DVDs(even now in some parts of the world, Netflix sends DVDs via courier), Product Placement. Read Next Blog
6) Key Activities:
The type of business will determine your key activities which you will be doing in order to make your business model work. Various areas need to be checked like: Marketing, business operations, product package, continuous innovation(R&D), Logistics, etc.
Example: Maintain and expand Website Infrastructure, Production costs, Licensing work, Retain customer for re-marketing Read Next Blog
7) Key Partnerships:
Some things in your business won’t be done alone. Clarity must be made in advance about the roles and expectations from your Key Stakeholders and Competitors to avoid clash future. Know the different types of partners before you make anyone an important part of your business.
Example: Netflix has made all the possible players as their partners; Smart tv companies, Gaming console companies, Google and amazon partnership, TV network companies Read Next Blog
8) Cost Structures:
What are the expenses made on daily basis and also you must make plans for your long term Expenses. Expenses like office rent, salary, electricity, website, etc are obvious costs. Apart from that you need to figure out what can be the other expenses.
Example: There are many types of expenses like:
Licensing cost (to buy old movies), Production cost, R&D (AI Cost), Website maintenance cost (infrastructure), DVD and mail shipping cost. Read Next Blog
9) Key Resources:
Things which are used in the business and makes your regular working easy are said as your assets.
What needs to be checked is do you have cash in-hand?
Do you need a support of credit?
Physical resources include Infrastructure like store, manufacturing plant, delivery trucks, desktop computers, etc are types of Key Resources.
Example: Software Developers working for Netflix are a big asset for the company. Also, to maintain AI Algorithm, huge costing is involved.
About Me
ConfabPro is Business Coaching and Consulting company helps businesses to create the scalable businesses and to create the most balanced work forces.
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Business Model Canvas originally founded in the book Business Model Generations penned by Alex Osterwalder and Co-authored by Yves Pigneur was made with an objective to make the path of anyone who is interested in starting their business gain clarity and make the path easy with all the details mentioned in it in a single view.
My own experience in guiding budding entrepreneurs and business owners says that majority of them were unaware of such tool, but once they implemented, the results were satisfactory. I am confident that after putting your plans on Canvas you will gain deeper clarity for your business. Hope it will be of your help. But, remember Business Model Canvas is a tool to be executed. Take action and you will see the magic. Feel free to contact me on ‘milin.desai@confabpro.com’ or +91-9638-9233-16.