The business model canvas provides a tool with specific elements of a business model for entrepreneurs and strategic managers that need to be included to ensure corporate success. The start-ups by utilizing this visual tool can define and develop more efficiently their corporate structure and plan.

Identifying key elements in a business, the business model canvas guides corporations and start-ups into narrowing their focus and helps them to identify the most important features of their business. By streamlining the business plan model, companies are able to move quickly into the realm of customer feedback and can make necessary adjustments and changes to their start-up plan.

Developed by Alexander Osterwalder, the business model canvas has evolved into a workable template that companies can use during startup or expansion.

The business model canvas targets four specific areas of a business:

  • Infrastructure: Identifies the key activities of the business, as well as the key resources and partners.
  • Offering: The value proposition of the company – what the business offers to meet the needs of its customers.
  • Customers: Identifies the demographics of the intended customer base, the customer relationship and how the company will manage reaching the potential customers.
  • Finances: Concrete information regarding the finances of the company. This includes fixed costs such as rent and utilities, as well as hardware and network components. It also includes variable costs and revenue streams.

Used effectively, the business model canvas is a workable document that can change and grow with the company – providing guidance and encouragement as the company moves towards its goals. Business model canvas may vary depending on the business model, development stage, or its purpose. For the last, two groups can be differenciated:

  • Internal purpose: Successful completion of the business model canvas will give the company hands on tool that can be used to start analysis of the company, begin creative thinking about ways to improve the company and give various elements within the company a new appreciation for the total picture.
  • External purpose: As a company seeking investors, the business model canvas helps to narrow the focus of the company, and helps to identify areas where investors are needed and where weaknesses may exist in the plan. It can be used to help a newly formed merger identify a new course of action, or give direction for a company that is floundering.

Learn more in the post: From idea to scaling your business