The phrase “proper planning prevents poor performance” is highly applicable to businesses of all sizes. Whether you are an entrepreneur starting a new business from scratch or a blue chip multinational corporation, it’s critical that you have a well-documented plan in place that outlines the strategies, tactics and resulting actions that will enable you to hit a set of defined objectives.
A business plan should lay the foundations for success; it can be vital for securing funding and should be a living document that evolves with the business and the environmental factors that will impact operations and performance.
However, one of the most prevalent reasons for organisations not having a fully documented business plan is the time it takes to create and the sheer volume of information that is required. This is where the Business Model Canvas can benefit your organisation.
What is a Business Model Canvas?
Put simply, the Business Model Canvas is a one page business plan. Initially developed by Swiss business theorist, author and consultant Alexander Osterwalder, this strategic planning tool is used by many organisations across the globe.
Essentially, it uses a template that can help your business simplify its planning in a highly visual way. It can help you create a business plan that:
- Builds from your value proposition
- Outlines how your activities need to align to achieve your objectives
- Illustrates the potential trade offs that may be required to meet goals.
Benefits of the Business Model Canvas
There are many advantages to using the Business Model Canvas as a planning tool to supplement a full business plan. Its use isn’t restricted to creating the entire plan for a company either. A study by business strategy company Strategyzer found that 21% of the time, it is used to develop a new product or service.
Here are three benefits your business will get by using the Business Model Canvas for planning:
It’s obviously a lot faster to compile a plan on a single sheet than it is a lengthy 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 is really going to drive performance and not get too bogged down with non-essential activities. It also helps different teams and departments easily understand how your company operates and where their work fits in to the overall model and strategy.
Furthermore, it can also be adapted for organisations that don’t have revenue as the primary goal.
As you’ll soon discover, the key elements of a business that are included in the Business Model Canvas are either the responsibility of separate departments or require people from different departments to work together to be a success.
Therefore, a planning session that brings the various stakeholders together in a focused way can help ensure that everyone is aligned on achieving the overarching business objectives.
Creating a Business Model Canvas
As we’ve shown, using this simple business plan format can be a quick and collaborative process. Therefore, when creating one, it may be easier to get the relevant people in your organisation together for a planning session, which shouldn’t last as long as some planning meetings do!
Given the simple visual layout of the Business Model Canvas, a good way to run the session would be to either use a large printout of the template, draw it out on a whiteboard or project it on to a screen.
You can then use Post-it notes or something similar that allows you to quickly add, move, change or remove ideas and information for each section.
Our handy guide, which can be found below, provides more information about how you should go about filling the template in. However, in the session, you should have people who have the knowledge and can provide information on the following areas:
- Key partners
- Key activities
- Key resources
- Value proposition
- Customer relationships
- Customer segments
- Cost structure
- Revenue streams
Don’t forget that you should still have a full business plan in place, especially if you are looking to secure funding but the Business Model Canvas can supplement that to help your business be a success.