Burn your business plan. Create a business model first, here’s how

4 years ago by in Best of The Web, Grow, Idea To Biz Plan, Launch, Mentors Unplugged, Smart Reads
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create-a-business-modelShared by Misty Gibbs, Founder of Empower Lounge

If you’re thinking about starting a business (or before you write a business plan), the first book on your list should be the Business Model Generation by Alexander Osterwalder. He’s inventor of the Business Model Canvas, a hands-on tool that makes it easy to to describe, design, challenge, invent, and pivot your business model. We use this at RampCorp, a business accelerator for women, with each participant mapping out their business model. It’s always fun to come up with great ideas (I have plenty of them!) but at the end of the day the million-dollar question is:  What is the business model?

The Business Model Canvas breaks the business model into 9 building blocks. Here they are in brief – Wiki does a great job of diving into each one with examples.

  1. Key Activities: The activities necessary to execute a company’s business model.
  2. Key Resources: The resources that are necessary to create value for the customer.
  3. Partner Network: The business alliances which complement other aspects of the business model.
  4. Value Proposition: The products and services a business offers.
  5. Customer Segments: The target audience for a business’ products and services.
  6. Channels: The means by which a company delivers products and services to customers.
  7. Customer Relationship: The links a company establishes between itself and its different customer segments.
  8. Cost Structure: The monetary consequences of the means employed in the business model.
  9. Revenue Streams: The way a company makes money through a variety of revenue flows.

The Business Model Canvas can be printed out on a large surface so groups of people can jointly start sketching and discussing business model elements with post-it note notes or board markers. It is also available on the iPad (for a charge) with other tools to help you test the revenue numbers.

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