A business model canvas is a tool entrepreneurs use to identify the key ingredients that make up their business and often form a business plan’s foundation. A lot more detail is included with a business plan, but the canvas does a great job of getting things started.
What your co-op will do, why it needs to do this, and how it will function as a business should become clear by completing a business canvas. But, before starting this exercise, try answering the following questions:
If you could 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.
These nine segments can be grouped into four categories:
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 people in Winnipeg and the surrounding area.
Your business may serve a niche market with a particular 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 sold through grocery stores. Like Moss Digital Co-op, many tech companies have multiple revenue streams — they might collect fees for completing specific projects and 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 pay consistently, 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 upfront? Do some research to 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 your business’s specific details. Here’s what you’ll need:
Start by downloading the business model canvas from here. Then fill in each box. Start with the value proposition and work through each segment. This process will help get everyone to get on the same page about how the business will work, and it’ll lay a great foundation for a business plan.
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 real companies’ business models and breaks these down into easy-to-understand concepts. This video also gives a great overview of business models for start-ups.Was this useful?
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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.