Use a one-page business model canvas template to check if a business idea would be successful before you write a business plan.
One common reason for business failure is that the business idea is not good enough.
The business model design process helps new business owners avoid wasting time or money on a business idea that has a poor chance of success. Many new business owners find the process of writing business plans daunting. The good news is the business model canvas template is a faster and simpler way to test new ideas.
A business model canvas template is essentially a one-page description of your business idea. It explains “what” and “why” your customer will buy from you along with several other key aspects of your business.
It is a powerful tool for examining business ideas, quickly and with minimal cost. You may have more than one idea, or variations of it, so having a quick way to compare them is valuable.
When you come up with a new business concept, it is often hard to clearly describe your ideas and how they might work in practice. The business model canvas template can make this much easier as all the key points are on a single page.
Check out other important things you need to get right with this link Before owning a business: Things you need to know (2021)
How does a business model canvas template differ from a business plan?
Business models are usually one page, concise overviews that follow a simple, consistent format.
Business plans are usually much longer, more detailed documents that describe how a business will perform both from an operations perspective, as well as financially.
In the past, prospective business owners were told to write detailed business plans in an attempt to work out if their business would be successful.
And while a business plan is essential for managing a business, it is not necessarily the best tool to describe and evaluate a new business idea.
Business plans are the best tool to forecast and manage a well defined business concept. But writing them can be very time-consuming, especially to compare several business ideas.
Why is business design thinking a winner?
Complicated things go through a design process so they work correctly. We would never dream of building a house without having a design to follow.
Businesses are complex, yet they are often not created by design and instead tend to evolve haphazardly.
Ignoring the business design stage is especially risky for people who have never owned a business before. This is because they often focus on the wrong things while missing more critical items.
You might also like our article 5 Reasons Why Great Ideas Fail.
Critical business functions must be performed in harmony if a business is to be successful. You can hear more about critical business functions here in Episode 11 of the The Should I Own A Business Podcast.
Other vital elements, for example, are to do with:
- how well a product or service fits the needs of customers
- the way suppliers and partners interact with the enterprise
- which critical business activities and resources are required
- the channels through which you reach and service customers
- how much money will be made, how it’s collected and your costs
Multiple business ideas can be easily compared because of the consistent one-page format and then business plan can be written for the chosen business idea.
In 2010, a book called Business Model Generation by Alexander Osterwalder and Yves Pigneur was released. It described a new approach where business ideas could be more effectively tested before committing time and money. Although the book was primarily speaking to a corporate audience, its’ lessons are just as relevant for small business.
Here are a couple of common terms you will hear and our definitions.
What does Value Proposition mean?
The simplest definition of your Value Proposition is the reason why your customers buy from you?
To put this a different way, what value does the customer get from you.
Your aim is to create a strong Value Proposition that will attract customers.
A clearly defined Value Proposition is at the centre of a business model design.
What is the difference between a Value Proposition and a Unique Selling Proposition?
Your USP may be an important part of your value Proposition.
A USP is a Unique Selling Proposition (or Unique Selling Point) that makes your product or service unique from your competitors.
A USP can make it harder for competitors to attract your customers away from you and, in turn, can increase your profitability.
How does a business model canvas template help?
Using business model design helps identify products or services that “fit” with what a customer segment wants. Here’s a YouTube video of how the business model canvas works.
There are some excellent business model design tools that help you study customer segments. Use them to work out how well your Value Proposition fits their needs. When you confirm a “fit,” you can then shape your business to deliver the Value Proposition efficiently and effectively.
There are also a couple of less obvious benefits from business design thinking.
- It allows you to clarify your marketing message as the process drills into the key benefits you offer to your customer segment.
- You may discover other new opportunities that you had not previously identified.
Does business model design work for any business?
Yes! This because businesses might outwardly appear different yet; internally, they all have to perform similar functions. The business model describes how these functions are executed around the “value proposition.”
Depending upon their respective business models, two competitors in the same industry can achieve radically different levels of success.
This design thinking approach works well for new businesses, franchises and as a tool for reviewing existing businesses that may need revitalizing.
Do I still need a business plan?
We recommend that you develop and work on a business plan. The business model design and canvas will help you identify the overview of your business concept. The business plan will help you implement it.
Listen to Podcast How To Evaluate Your Business Idea for our 3 Step Process