99% of startups fail in the first 5 years, and because of less planning and research because entrepreneurs are in a hurry to succeed and get the best results but they miss understanding concepts and research.
What is the business model? what is the aim of writing it? How can it help entrepreneurs building their startups?
Business Model Canvas is the guideline for any startup’s success it is the path for understanding your business, market, customers, revenues, costs, resources.
In any business model there are 9 questions to be asked to yourself and to your partner, please check the below picture to understand what I mean before we take the questions one by one.
In front of you there are 9 blocks, each block is describing part of your business, let us start by the Customer Segment, whom are the people you will be addressing in the business, and try to be specific and this will never come without market research and understanding the market quite good. The second block is the Value Proposition, here you are addressing your customer segment with a value they will be benefiting from your product or service, and be aware that studying your competitors is a good step to understand the real benefit and value. The third block is The Channels, how will your value proposition be delivered to your customers, as for example: website, social media, videos, offline marketing,..etc. The fourth block is the Customer Relationship, which is what is the type of relation between you and the customer is it face to face, online, repeated transactions, what is going to be the relation between both of you. The fifth block is the Revenue Stream, how will you generate money from the customer and don’t try to be vague in answering this question, try to be very specific in what are the revenue streams and each point should be tested well as not to be deceiving yourself. Next Block is the Key Resources, what are the needed resources for you to start your business and grow, it might be developer, marketing team, sales team, factory, funds,..etc. The seventh block is the Key Activities, what are the activities you and your team will be doing each day to succeed, as sales, marketing, development, public relations, events, analytics,..etc. The eighth block is the Key Partners, whom are the people you want to deal with to help you start or grow, might be photographers, agencies, investors,..etc. The last block is the Cost Structure, and this is the hard block because it is the one that defines if your business is profitable or not because if the cost is higher than the revenue stream, the business is not successful, so being specific, actual and realistic is important in understanding the reality about your business.
Now, I want to share an example of one of the most successful startups, AIRBNB business model, please check the below picture.
This is one of the most detailed business model canvas, as you can see everything is structured, studied, and related to each other.
To Conclude, there are 9 blocks for you to answer them to know the business model and how are you gonna generate revenues; customer segment, value proposition, channels, customer relationships, revenue stream, key resources, key activities, key partners, cost structure.
Finally, try to be honest with yourself and not in hurry to start your business, study well your business, market, people, deals, context, everything that can help you build this business model to be realistic and actual.
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