A business model canvas is a tool entrepreneurs use to identify the key ingredients that make up their business and often forms the foundation of a business plan. With a business plan, a lot more detail is included but the canvas does a great job of getting things started.
By completing a business model canvas, what your co-op will do, why it needs to do this, and how it will function as a business should become clear. Before starting this exercise, try answering the following questions:
If you were able to provide a basic answer to these questions, go forth and conquer the canvas. But if more work is required, try some other resources first:
Business Model Canvas
A business model canvas has nine segments that make up all aspects of your business (see the image below). These nine segments can be grouped into four categories:
|7. Key Partners||8. Key Activities||1. Value Propositions||4. Customer Relationships||2. Customer Segments|
|9. Cost Structure||5. Revenue Streams|
Let’s take a closer look at each of these segments, and what you should consider when mapping out your business model.
A value proposition shouldn’t get too specific. Focus on the higher level purpose of your business. For example, Modo Car Share Co-operative in BC gives people an affordable alternative to owning a vehicle. Shift Delivery Co-op in Vancouver provides environmentally-friendly local delivery services.
Your business may appeal to a wide range of customers. For example, Red River Co-op in Winnipeg sells fuel, food, hardware, farm inputs, and liquor – their customer base includes a broad cross section of groups in Winnipeg and the surrounding area.
Your business may serve a niche market with a very specific group of customers. For example the Fogo Island Co-op Society exports harvested seafood to a small handful of processors in southeast Asia.
Most businesses, especially ones people can visit, sell goods or services directly to customers, like the International Women’s Catering Co-op. Some businesses get others to distribute their goods — like La Siembra Co-op, which makes chocolates that are sold through grocery stores. Many tech companies, like Moss Digital Co-op, have multiple revenue streams — they might collect fees for completing specific projects, and also provide ongoing services that require customers to pay a subscription. Sometimes, revenue will only come from select customer segments — Hullabaloo Publishing Co-op sells advertising space to companies and gives its publications away for free.
You’ll need a clear strategy on where your revenue will come from, and be aware of the logic behind how you’ll determine your prices to make sure you’re covering your costs.
It’s important to understand your key resources so you can figure out your start-up costs. This will change over time as you expand your business.
Key activities for La Siembra Worker Co-op, for example, include producing chocolate, sourcing cocoa and other organic ingredients from fair trade suppliers, and distributing their products to local retailers. Think through the processes of obtaining inputs, producing products, and getting your goods to market: what steps are involved in this process?
Your list of key partners will be specific to your industry. You’ll need to identify important suppliers, competitors, and buyers. As you grow, the relationships you need will likely change. It’s a good idea to be aware of relevant key partners, including any newcomers that impact your business.
From here, identify your fixed costs (the costs that you’ll have to consistently pay, like rent) and variable costs (costs that will fluctuate with your business, like packaging). Outline your costs and consider ways of managing them. Can you do things more efficiently? What costs will you have to pay up front? Do some research so you can assign some actual numbers to these costs; this will help you complete a complete financial plan later.
Business Canvas Exercise
As you work on business planning, creating a business model canvas can help you get folks on the same page and begin working through some of the specific details of your business. Here’s what you’ll need:
Re-create the business model canvas below (or you can also download one here) and begin filling in each box. Start with the value proposition and work through each segment. This will help get everyone on the same page about how the business will work and it’ll lay a great foundation for a business plan.
|7. Key Partners||8. Key
|1. Value Propositions||4. Customer Relationships||2. Customer Segments|
|9. Cost Structure||5. Revenue Streams|
There’s a lot of information available on building a business canvas. We highly recommend the book Business Model Generation; it gives a thorough overview of different business models used by real companies and breaks these down into easy-to-understand concepts. This video also gives a great overview of business models for start-ups.
Need a business plan? Start here. The Biz Plan Creator is an easy-to-use and helpful tool. Designed to guide you through the process, the Biz Plan Creator offers a user-friendly platform and clear advice at every stage. Plus, it includes a secure account and customized branding of your plan. So, you can leave and come back to your plan as needed. And when you’re done, a branded PDF business plan ready for investors and financiers is your reward.