On this occasion I would like to share about how to leverage Business Model Canvas to plan business for beginner businessman (StartUp). Before we get into a discussion about the Business Model Canvas itself, I would like to first discuss why Business Model Canvas can be an effective tool for making business planning.
Oh yes, maybe you'll find that this article is one of the longest article I ever write. It is true, because this article was deliberately created in a comprehensive manner how to use Business Model Canvas to plan your business.
Getting The Length Of A Business Plan, The Greater The Risk Of Failure
Well, is that true? So, the long and detailed business plan that we run, it increases the chance of failing? How can? Isn't that quite the contrary to the advice of experts in management and business mentors who encourage budding entrepreneurs to create a clear business plan and detailed?
As it turns out, there is precisely the location of the problem. I just realized that the increasingly lengthy business plan thus increases the chance failed when foster some budding entrepreneurs in program business incubator and Innovation Directorate of the University of Indonesia. In addition, I also saw the same pattern when foster budding entrepreneurs in portalstudentpreneur.com. Most of those who have a detailed business plan, complete with a description of the results of market research, financial projection and so on, thus failing.
Why is it happen? After your search, the more lengthy business plan, will have the following drawbacks:
- Flexibility – Most budding entrepreneurs who have business plan details make themselves the inflexible towards changes – changes in assumptions. So when there is a rapid change in the real world, the budding entrepreneurs ' persistent ' fight for their business plan that it was not relevant
- The validity of the idea – the complete Business plan will look at the feasibility of a business from various angles. Because of the many aspects that are seen (analysis of the market, product, marketing, finance, human resources, etc.), cause the budding entrepreneurs escape from an important question: is the idea that they are proposing in business it is true practice and needed by consumers? Because of the large number that must be met in a business plan, many budding entrepreneurs who ' forgot ' to test whether their business idea that's correct – incorrect valid (required customer) or not.
Michael Schrage MIT has said, a testable idea is better than a good idea. A business idea that tested better than that terllihat good. Steve Blank, one of the officials in the startUp world says, no business plan survives first contact with the customer. There is no business plan that can survive when first contact with customers (because surely there would be a difference between the initial assumptions with reality in the field).
So, if so what should I do?
Business building Plot differences between then and now
About 7-8 years ago, when I first learned my business many are learning that to build a business then it will pass through the following schemes:
Unfortunately, as it's been presented just now, many budding entrepreneurs who still follow the way. They initiated their business from an idea, created its business plan, then pitching. Wrong? It is not. The risk of failing? Ya.
Why risk this time? This is due to advances in technology, increasingly demanding customer of sorts – a range of competitors, innovation very quickly, making the market is very dynamic and rapid change – change. This year could be a business we are the market leader. However, 3 – 5 years later it could be our business will actually be the true missing without a trace – replaced by players – a new player.
Therefore, to reduce the risk of failure, needed a new way of looking for budding entrepreneurs in building their business. The most basic difference lies in the validation phase of the idea. Regarding the current extremely easy to create innovations to make things better (better), cheaper (cheaper), and faster (faster), the challenge then is it true that the idea – required by the current market? Whether the demand for market over those ideas valid?
Then, Groove to create new businesses in this era of change. Before the business idea made into a businss plan, need to be made in advance ' test ' if the idea is valid or not. Groove done is described as follows...
So after the creative and innovative ideas discovered, things you need to do then is make a businss model from those ideas, then validated if the business model could produce a profit. If the business model is valid, then proceed with making a business plan, such as formulating marketing strategy, financial projections, analysis of Human Reources, and so on.
What is a Business Model Canvas?
Okay, I've got an idea, then I must also formulate a business model I for validated. But, what the hell exactly is a business model? Business model, business model or simply can be defined as the process of how the company creates value and benefit from the sustainable creation of value.
Most easily imagine, suppose that you have to play the game Clash Royale or Clash of Clans on Android? We can download it for free, isn't it? Then where did the creators of this game is to get the money? Namely by selling items such as Gems or Gold in the game to be paid with real cash. Business models such as CR or CoC is also called with the "freemium" business model. A business model where they can deliver value with free (free) in full, but those who want to value more must pay with money (premium).
Know what is a Business Model Canvas
Finally we came on discussion what is a Business Model Canvas (BMC). BMC is a tools developed by Alexander Osterwalder, popularized through his book Business Model Generation. BMC was developed to help business organization and budding entrepreneurs to map and analyze against their business model.
What exactly is the Business Model Canvas?
In General, the BMC was developed taking into account the 9 main block that must be considered in the mapping business models. The ninth main block, all encapsulated in one canvas (1 page). This is what also makes BMC excels due to its simplicity which consists only of 1 this page, it was powerful to give an understanding of the business model as a whole.
The ninth block that is in the BMC incorporated in 1 canvas, which represents the key drivers of the success of a business,
- Customer Segments, who are your consumers? What is the description of the problem You want to solve? How their characteristics? What do they think? Feel? Do?
- Value Proposition, what Solutions do you offer to your consumers? What's interesting from your solution? What makes consumers want to choose, buy, and use the value you?
- Channels, How do I so value/solutions to problems you can get into the hands of consumers?
- Customer Relationship, how you interact to maintain consumer loyalty?
- Revenue Streams, how to make money from business value offered?
- Key Activities, is a key competitive strategy or activity conducted business for creating the value proposition?
- Key Resources, what are the resources that should be owned company in order to be competitive in creating value?
- Key Partnership, who are the partners who support to competitive?
- Cost Structure, what factors – factors that make up the costs that must be incurred?
The Benefits and Advantages of Business Model Canvas
BMC became popular not only in the established large companies, but is also popular among young entrepreneur and intrapreneur also in charting, analyzing, validation, and innovate on existing business models. Fundamentally, as a practitioner, I discovered there are 3 key benefits of BMC.- Focus, the one thing I most feel by making Business Model Canvas this is capable of sharp focus and create clarity regarding the proposed business model, rather than make a thick luxurious business plan – page.
- Flexible, BMC is very beneficial because it is easy to be modified with fixed gives a view thoroughly against the business model
- Transparency, as the founder of several businesses, BMC often I use for communicating the vision and business model to the team, and with the BMC team becomes easier to understand what the business model in your organization.
10 steps to use Business Model Canvas
For those of you who have never been altogether using the Business Model Canvas before, here is a short tutorial which I prepared especially for you.
Step 1 : Customer Segments
Customer segments or consumer-targeted segments is the most important thing that must be answered from a Business Model Canvas. Most business models do not give the expected results because the customer segment cannot be clearly defined. To be able to fill out a customer segment, the following are noteworthy:
1. Customer Segment Dimensions (dimensions of consumer Segment)
Note If your business is targeting the consumer single or multi-sided market? The meaning of multi-sided market, for example Facebook that have business models to serve the two sides: the advertiser and the user. multi-sided market generally have a separate segment for each category.
2. Customer Characteristics (Consumer Characteristics)
After mapping the dimensions, then the next segment is the defining character segments in each dimension. For example, if we have a segment of the user, then the user that their characteristics are like what? Some consideration to the characteristics, for example:
- Age and gender
- Passion, habit, hobby
- The level of income
- Level of education
- Targets to be achieved
- Other
3. Customer Problems/Needs (problem/consumer needs)
What is the perceived consumer problems that you have mapped? What is the pain that is being wanted them to heal? What are the targets they want to pursue? What are the needs that they need to achieve their dreams – dreams? One thing you need to do is reduce the assumption what is needed consumers by asking directly to them. Create a field observation or direct interviews that you were getting close to your consumers.
Output: in this section you will generate a list of Your target consumers based on different segments – different, plus an explanation of details about the characteristics of each consumer. If your segment there are many, I suggest to make a priority in serving consumers. Try to ask, "if I could only serve 1 consumers, who would like me to serve?"
Step 2 : Value Propositions
When mapping the customer segment is obvious, then the next we choose which problems or needs of the customers that we want to fill it? In addition, in the value proposition must also consider what the uniqueness/superiority solutions we offer compared to other solutions – solutions?Therefore, prepare your sticky notes and write down as much as – the number value proposition that you prepare as a cure or remedy to address the problem of consumers.
For example, one of the startup I was developed, SignifierGames.com makes the value proposition of providing Serious Games for learning complex concepts in the field of engineering, especially in industrial engineering. This solution was created with the hope of reducing the pain of various educational institutions in Indonesia in a difficult concept to teach participants of his protégé. Some games are games that were developed in the field of operation management, such as Operation Management Game (OMG), the Project Management Game (PMG), and Strategic Sourcing Management Game (SSMG). Value proposition is different because most Serious Games developers do not develop the game to the field – the field of engineering.
Once you find the value proposition, make sure you connect the connection between VP you have with the customer segment you've mapped. An example is like this.
Output: a list of solutions or "drug" competitive or better than the existing one based on a problem or needs of consumers.
Step 3 : Channels
Channels in the BMC is the entity that is used by business organizations to create a value proposition that was made was ' up ' to consumers. I usually use a framework of AIDA (Attention – Interest – Desire – Action) as the initial stage, plus how the process of delivery of the goods or services to consumers.For example, what can be done to attract the attention of consumers against the value proposition being made? A few interesting options, such as:
- Create ads
- Install the FB Ads or Google Adwords
- The two examples above are including channels
Output: a list of the important channel for distributing information and value to the consumer. Typically, different consumer segments will then be different his channel.
Step 4 : Customer Relationship
Customer relationship filled part of how we interact to consumers after the transaction occurred, to ensure consumers are satisfied with the value we offer throughout until the end of its life cycle.The airlines, for example, after we use the services of its flights will generally offer a variety of email pitches, giving a special membership, which already includes some of the points will get certain benefits.
Output: an explanation of how the Organization's relationship with consumers who have been ' bought ' value has been created in order to offer loyalty or the transaction back.
Step 5 : Revenue Stream
Revenue streams is the income received by the company or organization that is derived from the value proposition offered. The most important thing is the clear connection must occur between the revenue stream generated from the value proposition, and customer segment where that pay for it.For example, below I took from the BMC Signifiergames.com, where revenue streams derived from the sale of a package of games and books for the academic, and that pay is an educational institution.
Output: a list of revenue streams, which is derived from the value proposition x is offered, with the customer segment of the y as the party that is willing to pay.
Step 6 (out of 10): Key Activities
To create a value proposition and competitive, surely there are various activities for key can generate value porposition as expected. This activity is a key activity in missing or does not exist, then the value proposition of competitive cannot be realized.For example, the SignifierGames.com file a value proposition that is serious games developed by quality expert at the University, and the key activities required is game design & development. An example more clearly can be seen in the figure below.
Output: a list of key activities/key to be able to generate a value proposition that is desired.
Step 7 : Key Resources
Key resources are strategic resources needed to support key activities to go smoothly to produce value proposition as expected. With terpetakannya key resource, expected a business can become more competitive compared to pesainya.As the developer of ' serious games ', SignifierGames.com full of talented HUMAN RESOURCES toward depending or the expert in the field of development of serious games. Multi-talented people then became key resources from SignifierGames.com
Output: a list of the main resource required to support key activities in order to produce the desired value proposition.
Step 8 : Key Partnership
A business organization surely can't rely solely on running himself. Rather than develop and run it all yourself, it's good to collaborate with those who are expert in their fields, respectively.For example, one of the key activities of the SignifierGames.com is to create and print the book. Then, instead of handling everything alone, it's good SignifierGames.com work with publishers who are already poor transverse in the field of book publishing. SignifierGames.com else then just prepare the manuscript alone, for later changed, and in the main layout by the Publisher.
Other key activities in SignifierGames.com, for example, is conducting training for trainers for cadre recruitment. However, because the trainer and facilitator cadre recruitment it long enough, then the SignifierGames.com could team up with experienced professional trainer to become speaker of the seminar or workshop that was presented on how to make a game.
Output: a list of key partners outside your organization who can boost the performance of key activities that can generate value proposition with more competitive again.
Step 9 : Cost Structure
Cost structure is a list of the cost incurred by the Organization in order to create business value proposition to consumers. Typically, the cost structure is ' pulled ' from the key activities. Some important questions to ask when charting the cost:- Whether the costs incurred in order to create value?
- Which type of cost more, fixed cost or variable cost?
- If the business scaled became larger, is nearly linear, exponential, or fixed?
Mapping fee structure needs to be done with more heart – the heart, because it is very important in business organizations want to made in a larger scale than ever before.
Output: a list of the elements in the structure of the costs incurred to finance key activities in creating value proposition.
In the end, the SignifierGames.com have the end result of BMC in a form like this.
How BMC version are you? If you have finished one?
Step 10 : Analysis & Validation of the Business Model
For those of you who have completed the BMC, be pleased first because in fact resolve that initial step that BMC, hehe. Yes, because in fact what we already fill in the BMC (including SignifierGames.com) it is a ' hypothesis ' and ' subjective ' assumption that is considered correct by the business planners. In fact, this hypothesis needs to be tested whether it is true that the planned business model runs as it should.How do I test it? The easiest way is to ask directly to the consumer-targeted, interact directly onto the field and feel instantly perceived what consumers.
At the time I learned directly from Strategyzer, instructor even directly asked us which makes BMC it to exit the building and doing validation directly into our consumer segment. When the time was right, and our workshop – actually asked to leave the building! Wow!
But it's true, direct interaction with consumers it can provide a lot of insight new additions. For example, the SignifierGames.com themselves do some changes to the plan after the business model interact directly with consumers.
For example, once we have the assumption that all educational institutions have difficulties in teaching the difficult concept to learners. So, we assume that Serious Games made this expert will conduct.
But once we learn more, it turns out that a lot more looking for a Serious Gaming it is a private university which indeed are partnering with large campuses such as UI. Thus, the cooperation we try bundling with books, games, and a workshop for the University. Sticky notes green indicates there are some additions/changes from the BMC before.
Already A Valid Business Model Canvas You?
As budding entrepreneurs who want to start a business, creating a business plan doesn't hurt. It's just, it needs to be ascertained first whether the idea is taken to have a valid business model.Business Model Canvas, is a very interesting tools for you to try in order to test your business model. With a business model that has been tested, and then you try to make business planyang more details while then pitching to investors to increase the scale of your business becomes larger.
May be useful to help you realize the business plan that was long You always wanted.