Understanding and leveraging the business model canvas
The business model canvas is fast becoming the standard way for new and aspiring entrepreneurs to conceptualize their enterprises.
Reflecting the shift in recent years towards lean startups, and catering to the more visual communication style of millennials, this concise and highly visual approach offers a more clear and integrated look at a business’s objectives and operations than the text-heavy, linear-style traditional business plan.
“The business canvas model is a fabulous tool for a startup organization, even for organizations that are older. The reason is that it allows you to look at everything pictorially. It’s all broken down and it’s easy to fill out. It really encourages conversation,” says Mark Simpson, business professor and program coordinator at George Brown College.
Introduced in 2010, this simplified, scaled-back document (like the startGBC sample template) features various sections mapped out on a single page for describing the different elements of your company, including its core activities, cost structure, revenue streams, target customers and delivery channels. The limited space means it’s necessary to be succinct, which helps entrepreneurs better crystallize their business concept.
Another key feature is its Pinterest-style layout, which allows you to see all the moving parts of your company at once, and to better understand how they work together. This holistic format, combined with its handy one-page length, makes the content easier to digest by potential investors, employees, advisors and other stakeholders, which allows for more meaningful discussions about the startup’s direction, strategy and viability.
“To be able to see it laid out on one page is fabulous…It makes it really easy to understand and to get the conversation going,” Simpson says.
Entrepreneurs wanting to make the most of this tool need to remember some key tips, Simpson says. First, they should examine how well the canvas model fits their particular type of business — he says it tends to better serve goods- versus service-based companies. Companies in the pre- or early-launch phase can use the lean canvas approach: create a template with only the sections currently pertaining to your enterprise, and revise and update it as your business develops.
When working on the document, use language that quickly gets to the point, he says, so that ideas can be easily understood. He recommends researching YouTube for videos on best practices in creating a business model canvas (his favourites are Business Model Canvas Explained and Getting From Business Idea to Business Model).
As well, he says, business owners should share the document with any other employees in their startup to gather feedback and ensure everyone is on the same page. As your business progresses, treat the document as a living plan that you regularly review and refine to help you stay on track.
Finally, if you are seeking any funding for your business, make sure you supplement the business model canvas with additional information that fully explains your expected revenues and expenses.
“They will have to be really clear and in-depth on their financials,” Simpson says, “because that’s what investors will want to know about.”