A business model describes the rationale of how an organization creates, delivers, and captures value
The Business Model Canvas is a strategic management and lean startup tool initially proposed by Alexander Osterwalder, which allows us to develop and document new or existing business models. It is a visual template that consists of 9 building blocks that allow you to design every business model you can imagine:
1) Value Proposition: What value are you creating for each customer segment. Quoting Osterwalder (2004), a value proposition “is an overall view of .. products and services that together represent value for a specific customer segment. It describes the way a firm differentiates itself from its competitors and is the reason why customers buy from a certain firm and not from another.”
2) Customer Segment: Which Customers are you trying to serve
3) Channels: How do you deliver your solution to each of your customer segment. This includes the company’s marketing and distribution strategy.
4) Customer Relationship: The links you establish with your different customer segments to get, keep and grow your customer base. The process of managing customer relationships is referred to as customer relationship management.
5) Revenue Stream: How do you make money form each of your customer segments
6) Key Resources: What are the most important assets (Physical, financial, intellectual, or human resources ) required to create value for your customers
7) Key Activities: Key activities necessary to execute your business model
8) Key Partners: Who are the key partners and suppliers needed to complement other aspects of your business model
9) Costs: What are the costs to operate your business model
Here is a 2 minute overview of how the Business Model Canvas works: