If you are an entrepreneur or thinking of becoming one, you must have a solid plan to establish your business. A good business model canvas sample will yield the type of information you need to put down on paper and make your goals a reality.
What is a Business Model Canvas?
The Business Model Canvas is a simple visual representation of the key business model elements, which are often described in text form. It does not replace the text but complements it by showing all the elements of a business model in one place.
The canvas consists of nine blocks (or sections) that describe an organization’s value proposition (what it does), its customers and users, resources and capabilities, partners and channels, sales and marketing activities, finances (revenues), costs & expenses, and key metrics.
The first version of the model was created by Alexander Osterwalder and his team at Strategyzer in 2010 as part of their consulting work with leading corporations such as Google, P&G, HP, and GE. Since then, it has been used by thousands of companies across all industries and has been translated into over 30 languages worldwide.
How does a business model work?
Business models are ways that a business makes money. There are many different kinds of business models, from retail stores to online services.
A business model works by creating a value proposition for customers, which is what the business does for them and then charging them for it. For example, Amazon sells books online and charges its customers for shipping and handling. In another example, Netflix rents movies online and charges its customers monthly subscription fees.
Business models can be complex because they include many interrelated elements that work together to create value for customers. For example, Amazon’s business model includes not only selling books but also renting servers to run websites, delivering packages through the mail, and running its own logistics network to get things where they need to go as quickly as possible — all at low cost so it can sell books at lower prices than its competitors.
Business models are the way that companies make money or at least earn enough to stay in business. Business models can be simple or complex, but they all share these four characteristics:
Every business model has a customer or set of customers at its center. If you’re selling widgets to other businesses, for example, your customers are the people who buy your widgets. If you’re selling ads on your website, your customers are the advertisers whose products you advertise.
The product or service being sold
This is what makes money for the business and gives it value to its customers — if there were no product or service involved, there would be no reason for anyone to do business with that company.
The value proposition
This makes people want to buy the product or service offered by the company in question — if there were nothing attractive about it, no one would buy it, and the company would go out of business.
The revenue stream
How much money does this company make? This ties directly into how much value its customers place on its products or services; if its value proposition is weak, then so will be the revenue stream generated by those products or services.
Types of business models
The type of business model you choose will depend on your goals and resources and the market in which you operate.
The most common types of business models are:
Advertising is a business model where you create content focused on your target audience and then sell advertising space on that content. This way, you make money off other people’s products and services. You may have heard of websites like Buzzfeed or Upworthy, which produce viral content and sell ad spots on their site to companies that want to reach their audience.
Affiliate marketing is another popular strategy used by many online retailers. In this type of business model, you earn commissions by promoting someone else’s products or services and getting people to buy them through links on your website or blog. The retailer pays you a commission when someone uses your link and makes a purchase with them.
You can use this template if you are a broker or an agent and want to do an analysis of your business model. You will have to fill in the sections like customer segments, offerings and value propositions, key resources and capabilities, channels, partners, costs, and revenue models. This is a very useful tool for businesses that want to increase their profitability by increasing their customer base.
Concierge or customization
This type of template allows you to understand how much profit you generate per customer when providing customized service. It also helps you understand how many customers you need to achieve your desired amount of profit. This template can be used for any business. Still, it is especially useful for B2B companies that want to improve their sales performance by offering personalized solutions to clients.
This type of BMC includes questions about how crowdsourcing can be used as an effective way to generate ideas or suggestions from customers or employees.
This type of business model aims to remove the middleman between the buyer and seller. This can be done by creating a platform where buyers and sellers can interact directly with each other. One example is Uber, which connects passengers with car owners who want to make some extra money driving them around town.
This type of business model allows customers to buy only part of a product or service instead of having to buy the whole thing. For example, if you wanted to rent an apartment but couldn’t afford the price tag for a full year, fractionalization might allow you to rent just one room instead of an entire apartment at once.
Franchises are proven business models, meaning they have already proven their success in other markets and don’t need further validation. The franchisor will provide all the required training and support to help you grow your own franchise and protect your brand image.
Freemium is a popular business model that offers a free version of your product or service but charges for additional features or access (premium). This might seem counterintuitive at first because how can anyone pay for something that comes for free? But many companies have successfully used this model because it works great when done right!
Leasing is a very well-known business model. It’s popular because it allows companies to get their hands on expensive equipment or real estate without paying for it outright. Instead, they pay for it over time as part of their rental payments.
Some businesses rely on customers coming to them rather than vice versa. These businesses have low customer touchpoints, meaning they only have a few opportunities for interaction with their customers each month or year. An example could be an airline ticketing service like Kayak or Orbitz that doesn’t allow direct communication with its customers and instead relies on third-party marketing efforts to sell tickets online.
The company operates as an intermediary between buyers and sellers in a marketplace business model. This model is common in e-commerce, where companies like eBay or Etsy use it. It’s also used by Uber, which connects riders with drivers who provide transportation services for money.
A razor blade business model refers to a product or service that requires customers to buy additional products or services to use the original product or service. For example, if you own a car wash chain, you could sell customers replacement parts like oil filters and windshield wipers on top of wash services — making them “razor blades.”
Reverse Razor Blade
The reverse razor blade model is one of the most popular models that companies can use to provide their users with free services while making money with paid subscriptions and other premium features. The idea behind this model is that users get access to free products or services, and once they start using them, they become addicted to them and want more. This way, the company makes money from its customers after they have become loyal to the brand.
A reverse auction is an auction type where buyers compete against each other for the best price for a product or service instead of sellers competing against each other. In this type of auction, prices decrease over time until someone buys the item at a certain price point before others can do so too!
The subscription model is the most common business model today. It allows you to make money from your customers while they are using your product or service. This way, you know that they are interested in it, and they might even buy into more products or services later on!
Subscription-based businesses include Netflix, HBO Now, and Spotify. These companies charge their customers a monthly fee for unlimited access to their content library. The customers don’t own the content. However, they only have access when paying their monthly fees. So if they stop paying the fees, they no longer have access to the content anymore either!