So in the last few videos, we were discussing a lot about business model canvas.
And that's why in this video I'm going to talk about what exactly is business model canvas?
Why do we need it?
How are we going to implement business model Canvas?
And finally, I'm going to give you a couple of example.
And you can also complete one assignment.
If you want to implement the learning from this specific video.
Let's start with business model Canvas.
So a business model canvas is made up of these nine different building blocks.
And these building blocks can help you understand how exactly a business work.
So if you wanted to hire a new employee or let's say if you're talking to these different investors
or to your friend, you can simply show them a business model canvas.
It's a single page document.
You just have to fill all the details in these nine different building blocks and you can answer all
these questions like What is your customer segment, which all marketing channels are you using?
How are you building customer relationship?
What's your value proposition?
And you can mention other details like all your key activities, your key partners, your resources,
and finally, your cost structure and revenue stream.
Now, there are multiple reasons why we need a business model canvas instead of a business plan.
The number one reason is focus.
In a business plan, you will normally have 40 to 50 page document.
Business model canvas is just a single diagram and then you can show this diagram to your new hire.
They can quickly understand what all is going on in your business.
The second reason is fast.
You can quickly create a business model canvas within like one or 2 hours.
On the other side, you have to invest at least one week if you wanted to create a business plan.
The third reason is flexibility.
If you wanted to change something in your business model canvas, you can quickly do that because it's
a single page document and you can quickly change anything you want.
So it is much more flexible.
The fourth reason is transparency.
If you wanted to communicate some ideas or some changes in your business, you can quickly change all
of those things in this business model canvas and then you can share this with your team members.
They can quickly go through it and they can quickly realize that this is what the team is planning to
change in the business.
And that's the advantage of using business model, canvas or business plan.
Now, let's understand about all these nine different building blocks that are there in a business model
canvas.
So we will move step by step.
We will first start filling in the customer segment.
Then we will write about the value proposition, then all the marketing channels or sales channels we
have in our business.
Then we will talk about how exactly we are building relationship with our customer.
Then we will talk about all the revenue streams we have in our business.
Then we will talk about all the key resources that we need to run this business.
Then we will talk about all the partnership or collaboration we are doing with different people or companies
to run the business.
And then we will talk about a couple of key activities that we need to focus in order to make this business
successful.
And in the end, we will summarize all of this information and then we will talk about the cost structure
that is there in this business.
And after filling all of these details, your business model canvas will look something like this.
So let's start with customer segment.
So the customer segment will be the starting point of your business model canvas.
Before you provide any solution to anyone, you first have to select a very small customer segment.
Now you can choose your customer segment based on the kind of needs they have, the kind of behavior
they have, or let's say, a specific demographic profile or some interest areas.
There are multiple ways by which you can choose a customer segment.
If I talk about Amazon, when Amazon was starting out, the main customer segment was all the people
who are interested in buying books online.
So those people need to be tech savvy.
They are interested in buying books online, so they should be somewhere in the age group of 25 years
to 35 years, because at that time only people in that specific age group were having access to Internet.
Second is your value proposition.
And this value proposition will help other people understand how exactly you are bundling up different
product or services to provide value to that specific customer segment.
So in case of Amazon, all the people who are interested in reading books, but they don't want to go
out and look out for these books and these different bookstore, that's their value proposition.
The third one is channel.
So you have to mention all the channels that you will be using to reach these customer segment and communicate
with them.
So back then, Amazon was using Internet as a channel to acquire customer.
Other companies are also using some offline store in order to communicate with customer, but it all
depends on your business.
The fourth one is your customer relationship.
So you have to mention how exactly will you build a strong relationship with your customer?
So things like social media, engagement, influencer marketing, all of these is a part of customer
relationship.
Then we have key partnership and you need to describe the network of suppliers and partners that will
make the business model work.
So when Amazon started its e-commerce business, they were not having a very deeper penetration of their
logistic network.
And that's why they had partnership with multiple companies so that they can distribute these books
to the end consumer.
Then we have key activities, and key activities are the most important actions a company must take
in order to operate successfully.
When Amazon was starting out, they had three important key activities.
The first one is obviously making sure that their website is up and running and accepting order.
The second key activity was they need to accept payment from the end consumer.
Third one is that they need to make sure that they are able to successfully deliver all these books
to the customer doorstep.
Then we have revenue stream.
So if a customer is the heart of the business, revenue stream are the arteries.
So revenue stream will help you understand all the different areas by which your company generating
money and revenue.
So in nineties Amazon had just one revenue stream.
That is their e-commerce platform.
But today in 2023, Amazon have multiple revenue streams like they generate a massive amount of revenue
from their cloud computing service that is AWS.
They also generate huge revenue from their e commerce ad and they also have few other revenue streams.
In the end, we have cost structure and in this specific building block, you have to mention all the
cost incurred to operate this specific business model.