Business Model Canvas: The Definitive Guide and Examples

Before 2004, entrepreneurs often faced the challenge of developing lengthy and complex business plans that could be time-consuming and overwhelming. Alexander Osterwalder introduced the Business Model Canvas (BMC) to simplify the process, revolutionizing how businesses can structure and communicate their plans. Unlike traditional methods, the BMC is a concise, visual template that helps companies outline vital elements of their business model on a single page, allowing for easier understanding and adjustments.

The Business Model Canvas comprises nine building blocks, each representing a vital part of business strategy and operations. These blocks cover essential areas like customer segments, value propositions, revenue streams, and key partnerships, making it easier to see how different components interconnect. In the sections below, we’ll explore each element in detail, illustrating how the BMC can offer businesses clarity, flexibility, and insight.

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What to Begin With?

Once you decide to use the Business Model Canvas approach, you need to prepare the essentials:

Decide on the team members involved;
Allocate time;
Prepare the tools.

The necessary tools depend on how you decide to brainstorm:

Offline: Download a PDF Business Model Canvas template, and take several colored markers, sticky notes, and anything else you need. For example, a board is essential for enhanced convenience if you are brainstorming in a big team;
Online: Choose the platform where you will work with a template. It can be Google Docs, Omnigraffle, or the Stratygizer web app.

Why Choose Business Model Canvas?

What makes the Business Model Canvas (BMC) stand out among other business planning methods? Its concise, one-page layout brings a host of advantages:

Focus: By consolidating all essential items on a single page, business owners can concentrate on defining clear objectives and aligning their strategies without being bogged down by excessive detail. This streamlined approach helps prioritize key components and exclude any unnecessary ones, keeping the focus on impactful decision-making and strong customer personas;

Density: Reading through one dense, well-organized sheet is far more effective than navigating a lengthy report. The BMC format presents each item in an easy-to-read, visually organized way, facilitating quick planning, interaction, and step-by-step evaluation;

Flexibility: The canvas is highly adaptable, allowing users to fill out multiple versions, compare them side by side, and choose the approach that best connects with their goals. This flexibility fosters exploration, enabling teams to test various strategies and quickly iterate based on what resonates most with their business model.

The Business Model Canvas enables a cohesive overview that streamlines both individual and collaborative planning. It helps teams interact with their ideas and connect each element of the business in a meaningful way.

About the Nine Business Model Canvas Elements

Let’s elaborate on what is behind the nine Business Model Canvas blocks:

1. Customer Segment

Daily operations highly depend on customers and their behavioral patterns. That’s why customer segmentation is a must when creating a business model.

In this block, you need to describe the buyer persona. The description includes the following:

Demographics (age, gender, etc.);
Professional status;
Motivation and goals;
Shopping preferences.

This is an essential list of points. You can add specific parameters. For example, software developers may identify the preferred device type. Already-established brands can also introduce visitors’ tiers that differentiate people according to their level of connection with a brand.

Read an in-depth article about customer segments here.

2. Value Proposition

A value proposition is a brief description of your product and its ultimate value for a client. In other words, write down in a Business Model Canvas why consumers should buy your goods or services. Ideally, it solves a problem or drives additional value for an end client.

Keep in mind that the wording should be precise and short. Don’t describe your value proposition in several sentences. Limit it to a single but eloquent phrase. Here is an excellent example from Maps.me: “Fast, detailed, and entirely offline maps with turn-by-turn navigation — trusted by over 140 million travelers worldwide.”

Read an in-depth article about value proposition here.

3. Distribution Channels

Osterwalder, together with Pigneur, described five phases of channel development.

Awareness includes channels that establish the initial contact with the target audience and develop the connection. It usually involves marketing channels;
Evaluation implies allowing potential buyers to try your goods and see the value. Popular channels are free samples, reviews, and case studies;
Purchase is about when and by what means customers can buy your product. The channels vary significantly depending on the prevalence of online or offline communication;
Delivery describes how an end consumer receives a product;
After-sales is usually limited to customer support that provides after-sales service and resolves problems.

Read an in-depth article about distribution channels here.

4. Customer Relationship

A customer relationship strategy determines how your target audience interacts with your brand. You can choose from five types of customer relationships in terms of the Business Model Canvas:

Personal assistance is a traditional approach where a customer interacts with a personal assistant when contacting your brand. It implies a high level of personal care and deep, meaningful relationships;
Self-service is the opposite of personal assistance: a brand doesn’t directly communicate with a consumer — instead, the consumer can understand the product via guides and FAQs;
Automated service involves AI-based suggestions and bots that can provide essential assistance. This type is more engaging than self-service;
Communities are spaces developed by a brand to help the audience understand the product better. Oracle is an excellent example of a company that practices this approach;
Co-creation implies educating the customers via user-generated content.

Read an in-depth article about customer relationships here.

5. Revenue Streams

The next block of the Business Model Canvas is about determining your revenue source. Here, you should consider the buyer’s persona to identify what the target audience is ready to pay for.

There can be several methods of monetization:

Direct sales: Involves selling your service or product for a fee. They’re common in most industries;
Advertising: It’s relevant for niches like blogging or IT platforms. Revenue comes from advertisers who want to reach your audience;
Freemium: This applies to services only. Some features are free, while premium ones are paid for;
Subscription: This is similar to fee-based monetization. The only difference is that a consumer pays for access to the service for a limited time, not forever.

Read an in-depth article about revenue streams here.

6. Key Resources

In the Business Model Canvas, key resources are divided into four categories. Here are they explained:

Tangible: Any physical resources, from real estate to equipment. The stocks also fall in the category;
Intangible: Intellectual property like patents, copyrights, licenses, and customer knowledge;
Human: Your employees that make the business run;
Financial: All the finance, regardless of whether it’s an obligation. It includes cash, bank loans, grants or donations, and other finances.

Read an in-depth article about key resources here.

7. Key Activities

Key activities included in a canvas are the business activities vital for work. They vary from industry to industry. Some design this block by uniting the activities into one out of three categories:

Production
Problem-solving
Platform

For example, software developers fall in the first category as they design new products, while an IT company with its taxi service is attributed to the third category.

Read an in-depth article about key activities here.

8. Key Partners

Key partners are parties like suppliers who are vital to flawless business operations. In other words, a company can’t survive without them. There are four categories to include in the Business Model Canvas:

Supplier: A partner who supplies you with raw materials or finished goods;
Non-competitors: Companies you team up with to leverage their resources: for example, you can source goods from several suppliers;
Joint Ventures: Partners who help you fill the gap: enter a new market or reach a new niche. The result of a joint venture is enhanced mutual profitability;
Coopetition: A partnership between two competitors may occur as a merger to market a new product.

Read an in-depth article about key partners here.

9. Cost Structure

All the above blocks of the Business Model Canvas aren’t implemented for free. Startups and enterprises spend money on production and accompanying services. A company needs to estimate the costs first to set realistic revenue goals.

The costs vary depending on the industry. For example, some businesses have to cover R&D expenditures, as well as production and post-service. Others, however, exclude this debit from the template.

Read an in-depth article about cost structure here.

Applications and Analysis

Once the Business Model Canvas is ready, you need to analyze it. For this, you should assess the canvas in terms of three points:

Is it logical and coherent? Are there misaligned blocks? If yes, address the issue;
What can be improved? If you find any mediocre blocks, devote more time to improving them;
Are there any other ideas to consider? Maybe you can add something to the existing template or design a new one?
Does my team agree with the canvas? If not, reconsider the arguable moments. Rely on data and facts to prove your point of view;
Have I considered a long-term competitive advantage? If not, address the point. When building a business plan, you need to consider the market and competitors.

What to Do After?

After you have examined the canvas, you can integrate it into your daily routine. Here is how it can be utilized:

Track the changes. Any company evolves with time. A plan helps ensure that changes don’t contravene core principles;
Onboard top-management. The model communicates who you are and how you live. Instead of describing everything independently, you can let new hires read everything;
Guide the brainstorming. Every time you have a meeting where a team is generating ideas, place the canvas in front of it. It will help you reject unfit ideas.

You can also use the same technique in other areas. For example, if you have several customers, you can describe an approach to them using the BMS.

Some Tips for Beginners

If you have never created the Business Model Canvas, comprehending all the above data may be challenging. Here are five tips that will help you navigate across the template more easily:

Prefer teamwork: It’s better to brainstorm with reliable and competent team members than alone. You reduce the risk of designing the canvas from one perspective;
Work on a whiteboard: The more space you have, the better. This allows the whole team to examine the template thoroughly and facilitates the process;
Stock up on stationery: Colored markers and stickers will help you group the ideas when brainstorming. Otherwise, you risk ending up with an incoherent Business Model Canvas;
Devote enough time: Don’t allocate half an hour or schedule an important meeting right after the brainstorming. You will need a minimum of one hour for a draft;
Determine the sequence of blocks to fill in: It’s advisable to start with customer segmentation or value proposition. After that, you can determine the sequence as it’s convenient.

Software for Business Model Canvas

If you prefer digital solutions to traditional paper and markers, you can opt for software to create the Business Model Canvas. There are many valuable tools on the web. These three, however, are the best:

Canvanizer: This free, simple, and shareable tool allows collaborative brainstorming in Google Docs. Later, the canvas can be exported to an image or other format;
Strategyzer: The free software is more advanced, with deep analytics and enhanced user experience. For example, the tool can assess the financial viability of a business idea. It also offers additional modes, such as a dashboard for Lean Startup development;
CNVS: The software’s simple interface makes it easy to understand. It allows building the BMC and a Lean and Feature Canvas.

What Are the Benefits of the BMC?

Businesses of all scopes choose the Business Model Canvas approach because of four core benefits:

Enhanced Visibility: Since the canvas involves visual presentation, it facilitates data comprehension. The team has all the information in front of their eyes; therefore, the analysis and decision-making are much more accessible;
Customization: If some blocks of the canvas don’t match with others, you can change them quickly. For example, it won’t take several hours to retype and reprint a 40-page report;
Focus on Value: The product’s value is typically at the core. It means that all the other blocks are designed with the end benefit in mind;
A Single Message: The business model canvas communicates the operation to the team, eliminating risks of failure due to misunderstandings.

What Does the Business Model Canvas Lack?

Although the Business Model Canvas is a popular and recognizable approach, many critics revolve around it. In particular, some executives criticize the model because of the lack of:

Competitors
Market analysis
Brand mission
Key priorities

While it may bother some people, there is nothing wrong with it. The nature of the BMC doesn’t imply focusing on these aspects. Its ultimate objective is to facilitate the process of crafting business models. The template includes the core blocks only. After all, the market and competitors’ external outcomes don’t shape the company’s inner structure.

Why Should Already-Established Companies Implement the Business Model Canvas?

Traditionally, the canvas approach is the prerogative of startups. But it can also be helpful for already-established enterprises. The BMC covers the following tasks: It helps to identify gaps in the model and discover new opportunities.

Allows comparing your model to competitors to identify competitive advantages;
Enhances the presentation of a company to potential investors;
Allows examining and testing new business models;
It helps to unite the model and eliminate misunderstandings in a team;
Allows recreating the company from scratch.

As can be seen, the Business Model Canvas effectively analyzes the whole company or particular project, maps out possible changes or gaps, and addresses them.

Actual Examples of the Business Model Canvas

Examples help executives to grasp the basics of the BMC better. Here are two examples of canvases from different industries:

Airbnb

Airbnb is a provider of affordable accommodation around the globe. Its canvas may look like this:

Customer Segments: Budget tourists, unconventional travelers, and locals seeking extra income;
Value Proposition: Easy and fast booking, colossal offer, competitive prices, and local lifestyle;
Distribution Channels: Social media, travel bloggers, and word-of-mouth;
Customer Relationships: Self-service with customer support;
Revenue Streams: A fee system and affiliate marketing;
Key Resources: A community of both landlords and guests, platform, and IT specialists;
Key Activities: User research, customer support, and maintenance;
Key Partners: Tourists and travelers, hosts, investors, payments providers, and insurance companies;
Cost Structure: Marketing and platform maintenance.

LinkedIn is a professional social network.

Customer Segments: HR, professionals seeking employment, and marketing specialists;
Value Proposition: Building a professional network of contacts, sourcing potential employees, and blogging;
Distribution Channels: App stores and website;
Customer Relationships: Self-service and customer support;
Revenue Streams: Freemium, marketing, and hiring solutions;
Key Resources: Platform, IT specialists, and user-generated content;
Key Activities: Platform maintenance;
Key Partners: Users and Slideshare;
Cost Structure: Marketing and maintenance.

Conclusion

The Business Model Canvas is one of numerous approaches to business modeling. It has proven its worth in the corporate community for more than fifteen years. Despite some criticism, the method is effective and illustrates the business plan precisely. Moreover, its visual features make it easy to comprehend and assess.

Business Model Canvas: The Definitive Guide and Examples

Download Business Model Canvas Templates

What to Begin With?

Why Choose Business Model Canvas?