The phrase “good planning prevents poor performance” applies perfectly to businesses of all sizes.
Whether you’re an entrepreneur starting a new business from scratch or a blue-chip multinational, it’s essential that you have a well-researched plan in place.
Your plan should outline the strategies, tactics, and resulting actions that will allow you to achieve a set of defined goals.
In this article, we talk about the importance of having a business plan and why a Business Model Canvas gives you an easy way to put your plans together.
Here’s what we cover:
Why a business plan is important
A business plan should lay the foundation for success.
It can be vital to securing funding and should be a living document that evolves with the business and environmental factors that will impact operations and performance.
However, one of the most common reasons why organizations do not have a fully documented business plan is the time it takes to create it and the sheer volume of information required.
This is where the Business Model Canvas can benefit your organization.
What is a Business Model Canvas?
Simply put, the Business Model Canvas is a one-page business plan.
Originally developed by Swiss business theorist, author and consultant Alexander Osterwalder, this strategic planning tool is used by many organizations around the world.
Essentially, it uses a template that can help your business simplify its planning in a very visual way.
It can help you create a business plan that:
Built from your value proposition
Describes how your activities should align to achieve your goals
Illustrates potential trade-offs that may be necessary to achieve goals.
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Benefits of the Business Model Canvas
There are many benefits to using the Business Model Canvas as a planning tool to complete a comprehensive business plan.
Its use is also not limited to the creation of the complete plan of a company.
A study by business strategy firm Strategyzer found that 21% of the time it is used to develop a new product or service.
Here are three benefits you will get from using the Business Model Canvas for planning:
It is obviously much faster to compile a plan on a single sheet than on a long written document.
Additionally, using the Business Model Canvas to plan potential strategies can also allow you to quickly test the viability of an approach.
The simplicity of the model allows you to focus on what will really drive performance and not get too bogged down in non-essential activities.
It also helps different teams and departments easily understand how your business works and where their work fits into the overall model and strategy.
Moreover, it can also be suitable for businesses that do not have revenue as their main objective.
As you will soon discover, the key elements of a business that are included in the Business Model Canvas are either the responsibility of separate teams or require people from different teams to work together to be successful.
Therefore, a planning session that brings different teams together in a purposeful way can help ensure everyone is aligned towards achieving overall business goals.
Creating a business model canvas
As we’ve shown, using this simple business plan format can be a quick and collaborative process.
Therefore, when setting up a meeting, it may be easier to bring relevant people from your business together for a planning session, which shouldn’t last as long as some planning meetings.
(Or if you run your business on your own, this is something you can do on your own.)
Given the simple visual layout of the Business Model Canvas, a good way to run the session would be to use a large printout of the model, draw it on a whiteboard, or project it onto a screen.
You can then use sticky notes or something similar that lets you quickly add, move, edit, or delete ideas and information for each section.
Our handy infographic guide, found below, provides more information on how you should complete the template.
However, during the session you should have people who have the knowledge and can provide information on the following areas:
- Key partners: They are the necessary partners for you to do business.
- Key activities: Here’s what your business does every day to succeed.
- Key resources: This covers the people, knowledge and money needed to successfully run your business.
- Value proposition: Showcase your products and services, and how they will benefit your customers.
- Customer relationship: Detail how you will nurture relationships with your customers.
- Channels: This part explains how people will hear about your business.
- Customer segments: Talk about your different customer groups here.
- The cost structure: Cover your key costs here; do this by looking at your resources and activities.
- Income stream: This explains how your business will make money and where it will come from.
Final Thoughts on the Business Model Canvas
The Business Model Canvas is a great way to put together a simple yet effective plan for your business.
And having a one-page plan means you can quickly see what your business needs to run.
However, remember that you should always have a comprehensive business plan in place, especially if you are looking to secure financing.
But the Business Model Canvas can complement that to help you and your business succeed.
Editor’s note: This article was first published in February 2018 and has been updated for relevance.