15 Minute Business Plan for Startups | Business Model Canvas Made Easy

by David Gaudreault, Serial Entrepreneur, Online Marketer and Personal Branding Passionate

Disclosure: Some of the links below are affiliate links, which means that at no extra cost to you, I earn a small commission if you click and make a purchase. Please note that to ensure my impartiality, I first make my recommendations and then, I check the possibility of an affiliation. I do it with the sole purpose of financing the costs associated with the creation of more valuable content for this blog. Thanks for your support and understanding.

In this article, I briefly introduce the long business plan and explain why this type of business plan is not the perfect tool at an early stage of your startup.

Then I cover the 15-minute alternative in details. The Business Model Canvas made easy. I explain all nine blocks supported by examples to help you understand the fundamentals and make your Business Model Canvas in no time.

As you may know, the Business Model Canvas created by Alexander Osterwalder and Yves Pigneur in their best-seller book Business Model Generation: A Handbook for Visionaries, Games Changers, and Challengers, is being adopted worldwide by many companies (small, medium and large) and is winning unprecedented popularity.

As mentioned in this article: “the main reason […] for the adoption of the Business Model Canvas is that it provides a common language for strategy and innovation, thus optimizing strategic discussions and ideas.”

After presenting the Business Model Canvas essentials, I will develop a practical business case using the Business Model Canvas for a digital product, more specifically an online course.

I will dissect each bloc on a step-by-step basis, and explain various models and strategies you can put in place to market your online course with success.

You may also be interested in this post: 11 Common and Counterintuitive Business Mistakes

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15-minute business plan for startups - Business Model Canvas Made Easy. All 9 blocs explained with examples. #businessmodelcanvas #businessplan #businessmodels #businessplanning #businessmodelcanvasstartups #businessmodelcanvasexamples #businessmodelcanvastutorial #businessmodelcanvaspresentation #businessmodelcanvastemplate

Long (and Laborious) Business Plan

You’ve just got a great business idea, you’re super excited and you can’t help but start your journey as soon as you can.

You talk to your family and friends and they tell you to drive over to your local business center for help on how to start your business on the right track.

You get there super confident (because your idea is terrific!) and you pitch your idea for the first time! You are very enthusiastic, you do a pretty good job and then comes the Q&A.

The first question they ask… you don’t know the answer. The second question… you don’t know the answer either. The third question… you don’t know the answer …

Obviously, you just got the idea! You didn’t think about your product in details, you certainly didn’t think about your potential competitors, your market, your distribution channels, etc.

To fill those gaps, your local business center will probably recommend to make a laborious 50-60 page business plan and to be honest you will be tempted to run away!

But what if there would be a much more fun, interesting and faster alternative?

First, let’s see what a business plan is all about, why it is not the perfect tool at early stages of startups and then we will cover the 15-minute alternative.

A business plan is used to present your strategies, your goals, your financial forecasts and many other elements related to the planning of your business.

It is used in all companies and at all stages, and it is essential to

  1. draw the big picture of your business and
  2. think in details about all the elements of your business.

It helps you understand your own business better, get a clear understanding of where you are heading and get answers to most questions that potential investors, collaborators, partners, mentors may ask you in a near future.

Topics Covered in a Long Business Plan

  1. Company’s Long-Term Mission
  2. List of the key people in the company with their records of success, accomplishments, and experiences
  3. A market analysis covering the past, present, and future in terms of market shares, leadership, players, pricing and competitions.
  4. Opportunities identified in your market or unaddressed problems that you will be solving
  5. What makes your business apart? A description of your strategy, your approach, your concept or innovation.
  6. Deep analysis of the competition put into perspective with your competitive advantages
  7. 5-year measurable goals and objectives. It can be financial objectives (revenues, profits) or market share acquisition. Describe how you will pursue these objectives.
  8. Pricing strategy and financial forecast. You define a 3-year base financial model including your different assumptions.
  9. A list of all the resources required to ensure a healthy operation of your business. It covers the personnel, technology, finances, distribution, promotion, products & services.
  10. Make a risk analysis including the level of risk versus the potential rewards.
  11. When looking for financing, you may have to identify current or potential dangers, issues that need to be addressed, your resolution strategy and possibility consequences of a postponement.

As you can see, most of the information included in a long business plan is either not available or not top of priority upon starting, at a time when you don’t even know if your business model is viable or not!

At a time when you haven’t even talked to a single customer yet to validate your ideas and assumptions.

You will need a long business plan at a later stage of your business, but at the beginning of the process, the business plan is not the right tool.

If you make a long business plan too early, a large portion of your plan will be composed of unverified assumptions that will be of no help whatsoever for your business planning and development.

In other words, it will be a waste of your valuable time building a plan that will only be supported by suppositions and most of the time, these suppositions will turn out to be false assumptions.

You may also be interested in this post: 11 Common and Counterintuitive Business Mistakes

Business Model Canvas –  The 15 Minute Alternative

The business model canvas was initially proposed by Alexander Osterwalder and has rapidly been adopted worldwide by startups, but also by large companies in need of rapidly changing their business models to adapt to a constantly evolving world.

If you are interested to read Alexander Osterwalder’s best seller book co-written by Yves Pigneur called Business Model Generation: A Handbook for Visionaries, Games Changers, and Challengers you can get it here.

This book was co-created by 470 Business Model Canvas practitioners from 45 countries and provide valuable information that you can apply to your own business case.

What is the Business Model Canvas?

The business model canvas is a 1-page visual diagram that covers the essentials of a business model.

  • Your offering: the value proposition that you will be offering to your customers.
  • Your company’s infrastructure: Your key activities, your key partners and key resources needed to produce and deliver your value proposition to your customers.
  • Your customers: the target audience that will be interested and willing to pay for your value proposition
  • Your finances: You cost structure versus your selling price.

Your business model is an integral part of your innovation process and this is why it is SO important to use the business model canvas as a primary tool to build your business plan.

In fact, great ideas will often not be successful until they are associated with the right business model viable for that specific idea.

Business Model Canvas of Nespresso

Nespresso is a great example. This case study developed by Strategyzer.com and adapted by Michael Lachapelle mentioned that Nespresso introduced the revolutionary idea of “portioned” coffee in 1979, but it is only a decade later under Jean-Paul Gillard leadership that the company found the right business model that led to the success that we know today.

The idea alone was not enough. The keys to successfully propel their idea was to divide the value proposition into two elements, (1) the machine and (2) the consumable pods, and lock both elements together with a patented technology to force customers to buy the pods from Nespresso.

This model is known as the razor and blades model.

Then, they strengthen their model further by building and optimizing two separate distribution channels, making the right partnerships and recently building their retail store inspired by the Apple model.

Visual Graphic of the Business Model Canvas

Your business model is composed of 9 blocs that will visually show the foundations of how your business intends to make money through organizational structures, processes, and system.

It is a way to define your business model and, most importantly, easily consider and evaluate alternatives.

Use it to optimize your model until you reach what appears to be a viable model. A model that will propel your idea and allow it to reach its full potential.

Business Model Canvas - Business Plan Made Easy for Startups

Download this Business Model Canvas Template in pdf.

Business Model Canvas – 9 Bloc Definitions

1- Customer Segments

The customer segment is your target audience, the group of people or organizations that your business will be serving with your value proposition. Customer segments are the first bloc of the Business Model Canvas because a company should arise from customers existing problems, not the other way around.

Larger companies may have multiple customer segments with distinctive attributes, needs, and behaviors. In this case, the various customer segments may require distinct offers, different distribution channels, and different pricing structures.

Most Common Forms of Customer Segments
  • Mass Markets: e.g Apple sell phones to anyone without distinctions.
  • Niche Markets: e.g. Travel agency specialized for the elderly.
  • Segmented Markets: e.g. The National bank offers different services based on customer Geographic, Demographic or financial situations.
  • Diversified Markets: e.g. General Electric serves the Healthcare industry and the Power industry, which are two unrelated segments.
  • Multi-sided Markets: e.g. Facebook serves their users and the advertisers. Both groups are independent segments.

In the case of a startup, it is wise to start with one customer segment, targeting a niche market and addressing a large portion of that niche. The goal is to focus on developing one model that really works.

2- Value Proposition

The value proposition is the reason why your customer will pay for your offer.

It is traditionally a product or a service that is solving a problem or serving a specific need. A need for organization, knowledge, entertainment, socialization, communication, networking etc.

Some value proposition will be completely new and innovative and others will offer new features to address very specific customer needs.

The value often arises from the model itself. Netflix, Uber, Airbnb, Spotify are examples of models offering value. They are all distributing products and services that existed long before such as video rentals, taxis, hotels and radios/music retailers, but they do it in completely new and innovative ways.

Their models, which includes their distribution platforms, their abundance of offers instantly accessible from anywhere, the quality of their products and their freemium or low-cost structures is the true value.

Roots of Value Creation
  • Increased Performance: in mature markets where performance matter such as the motorized vehicle market (cars, airplanes, boats, etc.,) and the computer equipment market (printers, computers, routers, modems, networks), the performance improvement is an important source of differentiation and value creation.Performance usually creates value until it reaches a limit where the increased performance will not better serve the customers anymore. Then, the performance improvement may continue to serve niche markets such as gamers or cars fanatics but has a much lower perceived value for the majority.
  • User Friendliness: The iPod is often used to illustrate a real improvement in convenience and usability, but did you know that, a long time, between 1908 and 1927, 15 million Ford Model T cars were manufactured in Detroit and all these cars couldn’t drive uphill if the tank was low on fuel because there was no fuel pump!The drivers were forced to drive uphill in reverse and use gravity to get the fuel to the engine. Imagine the value creation brought up by the first car with a fuel pump integrated! This example falls into two categories, convenience, and design improvement.
  • Accessibility: Internet provided to remote people a privileged access to a large variety of services such as online courses, cloud applications, international media coverage, expertise and more. In other sectors, shared base models provide access to high-end products and services to people with limited financial resources. Shared vehicles or shared properties are examples. Mutual funds are also an example where people get access to a well-diversified portfolio that couldn’t be accessible to people with a modest wealth.
  • New Arising Industry: New industries often arises from new technologies. For example, a complete industry is currently arising around smart sensors and the Internet of Things (IoT). Indeed, in most industrial sectors, companies realized that constantly monitoring industrial equipment provided various benefits such as optimized operation, extended life cycle, just-in-time maintenance, etc. New industries also arise from newly implemented regulations or newly created market, such as the carbon market.
  • Customization: For a long time, customization meant low scale production, generally manufactured expressly for one person. Haute couture is one example. Nowadays, technology offers flexibility that allows highly customized low or large scale production.For example, Computer Numerical Control (CNC) Machining allows for customized machining of small or large customized product batches. Online printing web apps allow users to get their own custom design printed on a variety of products. 3D printing is also about to revolutionize the industry of customized manufacturing.
  • Price Reduction: Price reduction can be obtained with cost optimization, redesign or revised services and features. Some people accept to make concessions on the service or features to save on price. Youth Hostels offering dormitories is a good example where backpackers on a budget will accept to share a room to save on their stay.
  • Cost Optimization: In all businesses, cost management is very important, but in mature markets cost optimization is critical. Engineers constantly work on reducing costs by optimizing designs, supply chains, processes, etc. Some business such as Customer Relationship Management software developers or Consulting firms made a business out of helping businesses reduce their costs.
  • Design Improvement: I have a very specific and very technical example for this category! EMA Electro Mecanica is a company in Argentina and they manufacture a circuit breaker apparatus with an integrated grounding switch.Circuit breakers and grounding switches are very common equipment and have been used for decades in electrical substations. However, merging these two pieces of equipment together was smart because it eliminates the need for Grounding Transformers on wind farm collection systems. It means hundred thousands of dollars of savings, sometimes millions of dollars of savings for larger farms.Now, EMA is spec-in in most wind farm developer specifications and they virtually own this niche market.
  • Brand Awareness: In terms of brands, the first well-known brands that come to mind are Coca-Cola, Disney, Nike, Apple, MacDonald, Google, Amazon and many more. These brands are among the most valuable brands in the world and people will pay a premium to get their products and services.Some brands are so strong that people will pay an exponential amount to get them, such as Rolex, Montblanc, Bentley, etc., much higher than the actual value of the non-branded product.These companies invested millions of dollars to build those brands.That said, nowadays social media make brands creation more accessible. Many businesses or people built their brands with relatively low investments.
  • Risk Reduction: Many B2C models involve risk reduction for the customers such as free trials, rental with purchasing options, 90-day money back guarantees, service guarantees. In B2B models, risk management is often dealt with legal agreements and a supplier with a higher resilience to risks can be favored in a bid process. Liquidated damages, indemnity, limitation of liability, warranty, force majeure, cancellation are some examples of clauses that cover the risks between the clients and the suppliers in a commercial agreement (terms and conditions).
3- Channels

The channel block defines the bridges required to interact and communicate with your customers at every stage of your product sales process.

Stages of Product Sales Process
  • Awareness: What marketing & communication channels will you use to raise awareness about your product or service?
  • Evaluation: How will you allow your customers to review and evaluate your product or service and communicate their feedback to your company?
  • Purchase: How will your customers be able to purchase your product. How will you process orders and using what payment methods?
  • Delivery: How will you deliver your product to your customer following an order?
  • After Sale Support: How will you support your customers? How will your customers contact you in case of a problem?

You will need to build a bridge to cover every scenario using various channel types; your own (1) direct sales force, (2) website or (3) in-house store, or (4) indirect network of partner/owned retail stores and (5) wholesalers/distributors.

Direct sales involve a higher profit margin, but at the cost of a more limited reach, while indirect partnership usually involves a larger reach by leveraging the partner networks to the cost of profit erosion.

Nowadays, many businesses adopt mix strategies involving selling through their own website and leveraging social media to drive traffic and selling through partner networks or platforms (e.g. Amazon, eBay, Etsy Market Places).

Channel Example: Life Is Good Company

The Life Is Good Company is a good example because the models evolved and shifted following their popular success.

The company was founded in 1994 by Bert and John Jacobs. Initially, the two brothers were selling their t-shirts in the streets of Boston and traveled the East Coast, selling door-to-door in college dormitories.

They were using the simplest channel structure.

They were their own sales force, raising awareness with their stand on the street or showcasing the product door-to-door, getting customer evaluation face to face, collecting cash money upon selling, delivering the product to the customer upon sales in person and no after sales service was involved as they were probably unreachable!

Following their success, their model became more complex as they were selling through their website and through a large network of retailers. Today, their channel structure looks more like this one:

Awareness:

  • Online advertising
  • Search engines presence
  • Marketplaces presence
  • In-store presence
  • Events
Evaluation:

  • Customer Service line
  • Website contact form
  • Marketplace review
  • Retailers feedback
  • Social Media
Purchase:

  • Online sales (American Express, Visa, MasterCard, Discover, and Pay Pal)
  • Marketplace sales – probably linked to their main website
  • Wholesalers sales through accounts (probably net60 payments)
Delivery:

  • Packaging in-house or through third-party service such as Amazon FBA (Fulfillment By Amazon)
  • Shipping USPS, UPS, FedEx or other carriers
  • Distribution Centers for retailers
After Sales:

  • Customer Service line
  • Website contact form
  • Social Media

Awareness:

  • Online advertising
  • Search engines presence
  • Marketplaces presence
  • In-store presence
  • Events

Evaluation:

  • Customer Service line
  • Website contact form
  • Marketplaces review
  • Retailers feedback
  • Social Media

Purchase:

  • Online sales (American Express, Visa, MasterCard, Discover, and Pay Pal)
  • Marketplace sales – probably linked to their main website
  • Wholesalers sales through accounts (probably net60 payments)

Delivery:

  • Packaging in-house or through third-party service such as Amazon FBA (Fulfillment By Amazon)
  • Shipping USPS, UPS, FedEx or other carriers
  • Distribution Centers for retailers

After Sales:

  • Customer Service line
  • Website contact form
  • Social Media
4- Customer Relationship

You should determine your customer relationship strategy in consideration of two elements:

  1. the type of relationship that you customer segments expect you to establish and maintain
  2. the related costs and implication of establishing and maintaining such a strategy.

That is to say, you can only offer the level of customer service and support that you can afford, and maintain a viable business model.

Plan your business right with the Business Model Canvas. Learn more about the Categories of Customer Relationships. #customerrelationships #customerrelationshipsbusiness #businessmodelcanvas #businessplan #businessmodels #businessplanning #businessmodelcanvasstartups #businessmodelcanvasexamples #businessmodelcanvastutorial #businessmodelcanvaspresentation #businessmodelcanvastemplate
Categories of Customer Relationships

Direct Relationships:

  1. Dedicated Assistance: Dedicated assistance is common for big accounts with multi-million dollars annual purchase. For example, large electrical utilities like AEP, National Grid, Duke Energy, etc., have their dedicated account managers inside most of their major suppliers.The account manager (supported by a team of people) is in charge of supporting the utility for anything related to sales, site visits, procurement, meetings, negotiations, blanket contracts, execution, installation and commissioning service and after-sales service.

    They are facilitators, making sure that everything goes smoothly between their client and the different departments involved at each step of the customer relationship (sales, bid management, legal, execution, service, etc.).

  2. Personal Assistance: Personal assistance involve human interactions between the customers and the sales or technical support representatives. It is very common in most small and medium businesses to have a personal assistant to welcome customers, provide first level customer service and refer the client for upper-level support.Larger companies have entire customer service department to provide customer support either in person, on the phone, on chat or by email.
  3. Automated Services: Automated services can involve personalized recommendations based on customers behaviors and preferences. It can also be provided by artificial intelligence chatbots.AI chatbots have the ability to learn from a large database of real interactions between customer representative and real customers, learn from these conversations and then use this knowledge to provide automated customer service.
  4. Self-Service:  Involve no human interaction. The company provides Q& A, instruction manuals, tutorials, policies etc., and let the customers help themselves.

Indirect Relationships:

  1. Co-creation: Some companies provide a platform to independent vendors or content creators to provide their products, services, and content. In this scenario, a large part of the customer relationship is between the customers and the independent vendors or creators.Examples are YouTube, Facebook, and marketplaces such as Envato, Etsy, Eventbrite, etc. In addition, an increasing amount of startups following the lean startup approach involve the customers at various stage of the development to test/review the MVP, product features or services and provide feedback.
  2. Communities: Some companies like Facebook with the Help Community Star Contributor Program, encourage their users to engage and solve each other’s problem. They usually provide a platform to facilitate connections between community members and let them share their knowledge and expertise.
Customer Relationships Example: Google Ads

If you have been in business for sometimes and used Google Ads (formally Google Adwords), you are probably aware that Google customer relationships shifted over time.

They used to have a strong monopoly in the online advertising sector and they treated their advertisers very badly.

All their efforts were concentrated on aggressively acquiring advertisers and then, they expected the advertisers to read, understand and apply their restrictive policies all by themselves (Self-service).

When they did not, Google was suspending advertisers’ accounts without notice and explanations. Then the only way to reach to them was a contact form with a poor response time.

As mentioned by Micah Solomon, a Forbes contributor, in this article: “approximate, slow-motion, sullen customer support has historically been the price a business pays to advertise on Google AdWords”.

Around 2014, when social media platforms started to take shares of the online advertising market, Google completely shifted their approach to a customer-centric approach, providing a direct line,  great customer service, great support to their advertisers (with a video option) and concentrating their efforts on customer retention.

As presented in the above-cited Forbes article, their efforts drastically improved customer satisfaction with stunning numbers:

  • A doubling of their customer satisfaction scores: from 44% to a current [2014], 90%.
  • An increase in the number of customer support interactions that are done in real time: from 11% to 75% – 80%, with a queuing, /wait time generally less than 30 seconds.
  • A video calling support option.
5- Revenue Streams

You should have minimally, one revenue stream by value proposition and by customer segment, but you could develop more complex revenue streams.

Types of Revenue Streams
  1. One-time payments: one-time purchase of your products or services
    • Asset Sale: e.g. sales of any products
    • Usage fee: e.g. email automation software like Mailchimp charges their clients based on the number of emails sent on a monthly basis, hosting companies charges based on the used bandwidth, etc.
    • Licensing: e.g. Creators sell permissions (licenses) to use their intellectual property on their created fonts, stock images, audio jingles, etc. The right to use a patented technology can also be granted in exchange of license fee.
    • Brokerage Fees: e.g. credit card providers, Paypal, hosted shopping carts software providers like Shopify
    • Advertising: e.g. Google Ads, Facebook ads, blogs and website using Google Adsense, Medias
  2. Recurring payments: membership style model or monthly based service (e.g. Internet access)
    • Subscription fees: e.g. Hosting providers like Siteground, hosted shopping carts software providers like Shopify, telecom service providers
    • Lending: e.g. Private lender, bank, mortgage lender
    • Renting/Leasing: e.g. rental properties
    • Licensing: e.g. patented technology granted in exchange for a recurring license fee
    • Brokerage Fees: revenue derives from a recurring transaction between two parties
Types of Pricing Mechanisms
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  1. Fixed price lists: e.g. Manufacturers/Distributors often establish annual price list to simplify the ordering process. A company like Cardinal Health, specialized in the distribution of pharmaceuticals and medical products, will often have fixed price lists with their wholesalers and fixed price lists with their retailers.These lists are revised on a timely basis. Fixed prices are sometimes customer segment dependent, meaning that for strategic, geographic, commercial or legal reasons, some customer segments will benefit from better pricing.Fixed prices can also be feature dependent meaning the prices will vary based on the number of features offered in the value proposition.
  2. Bargaining: e.g. In North America, B2C bargaining is not really common, unless on larger item purchase such as cars and houses (car dealers or real estate agents expect a negotiation).Bargaining is more common in B2B where the bargain is not only on price but also in terms of contracts.In some cultures, B2C bargaining is very common such as in most countries in Asia, South America, and North Africa.
  3. Auctioning: e.g Art Dealers, liquidators, Marketplaces, Stock Exchanges.There are various types of auctions; the main ones being the forward auction (demand) where a number of buyers bid for an item being sold (e.g. eBay), the reverse auction (supply) where a number of sellers offer an item that a buyer can buy (e.g. Amazon), the double auction (exchange) where a number of buyers bid to buy goods from a number of sellers (e.g. NASDAQ).In general, auctioning is used when a limited number of products available. Only one copy of a painting is original, only a certain amount of shares are available for one public company, etc.
  4. Market dependent: e.g. currencies, metal, energy, commodities, shares, bonds, crypto, ETFs, etc. The prices of all of those are market dependent, which means they are determined on the basis of supply and demand.
  5. Volume dependent: e.g. the price of most products is affected by the production volume because the volume is closely related to cost savings. If Delta Air Lines purchase ten C-Series aircraft from Airbus versus if they purchase 100 units, the price will definitely be improved in the latter.
  6. Yield management: The goal of yield management is to maximize revenue from a fixed, time-limited resource. It is applicable to any industries that have products or services that expire. e.g. hotel rooms, airline or bus seats, rental cars, concert tickets.

Your revenue streams are closely related to your value propositions and customer segments in the sense that some value propositions are more adequate to certain types of revenue streams or pricing mechanisms and some customer segments are more inclined to certain types and mechanisms as well.

For example, a car can have multiple revenue streams, multiple pricing mechanisms and multiple customer segments as well.

Car dealers offer various purchasing plans; one-time payment, 5-years rental plans, rental with purchase options, etc.

Even when they close a one-time payment deal they try to cross-sell recuring-revenue-offers like extended warranties and maintenance service plans.

They have various offers to meet the interest of the different customer segments.

The offer of interest will not be the same if the dealer is dealing with a low-income student, who is sensitive to price issues, to a high-end professional who may also be sensitive to the quality of the after-sales service, the car’s design, the reputation of the dealer, etc., or to a mother looking for a spacious and convenient car.

The revenue streams of cars are even more complex because their production is volume dependent and its primary material is market dependent.

Their value also drops significantly at the year-end so they are somewhat time-limited resources that will involve major price drop during the year to liquidate the stocks. The remaining stocks are often liquidated in auctions.

As you can see, one value proposition (in this case a car) can have a very complex revenue stream structure.

In a startup, it is wise to focus on one value proposition and simplify your revenue stream structure. Use the type of revenue stream and the pricing mechanism that will better serve your customer segment of early-adopters. Click To Tweet
6- Key Resources

You need resources to create and offer your value proposition to your customer segments, to build and maintain your customer relationships, and to implement your channels and your revenue streams.

Key resources are physical assets, intellectual properties, human and financial resources, and vary significantly depending on your business model.

One extreme that involves very limited resources would be to run a blog, where the only resources involved are a computer, an internet connection, a hosting provider and the blogger who generate content. We could add to it the branding and copyrights.

A counter-example that involves a significant amount of resources would be the development of an energy company, like a hydroelectric complex that involves the design phase, the civil work phase, the installation phase, the commissioning phase, and the exploitation phase, and all these phases require a lot of physical, intellectual, human and financial resources.

Categories of Key Resources
  1. Physical: Physical assets are facilities, offices, tooling, assembly lines, vehicles, machining, warehouses, equipment, etc.
  2. Intellectual: Intellectual property includes branding, proprietary knowledge, patents, copyrights, and in recent days, data is becoming one very important intellectual resource.
  3. Human: Human resources include the workforces, but even more important is the expertise, the skills, and knowledge. Scientific and technical companies rely heavily on their human resources.
  4. Financial: Financial resources include cash, lines of credit, stock options and liquid assets.
7- Key Activities

The list of activities going on in a startup in limitless, but there are key activities that are absolutely necessary to get your business model to work. These are called your key activities.

These activities are essential to make, and offer your value proposition, reach your customer segments (your niche market), build and maintain customer relationships and earn revenues.

Categories of Key Activities
  1. Production-based activities: when your value proposition is a physical product, you must manufacture your product or source it from a wholesaler, you must coordinate the transportation, storage, and delivery. These activities are all examples of production-based activities.
  2. Service-based activities: engineering firms, law firms, consultancy agencies, marketing agencies or other service-based organizations all imply service-based activities, often call for problem-solving activities as every customer is different and come up with new problems to solve in your organization’s scope of expertise.
  3. Platform/Network-based activities: companies with a platform or network structure as the basis of their business imply platform/network-based activities such as maintaining, improving and growing the platform or network.Key activities in this area involve to platform/network management, service provisioning, and platform promotion. For example, in order for Apple Pay model to work, Apple is currently building a transaction network that accepts the Apple Pay payment method.To a lesser extent, a local amateur hockey league which main activities are to grow their network of hockey players, bring them together, provide a pool of arenas, assist in building teams, planning games, etc., is also built on a network-based model.
8- Key Partners

Partnerships can serve many purposes, such as optimizing your business model, sharing or reducing risks, accessing resources, technology, and expertise, focusing on your core activities and delegating the non-core activities, leveraging sales, marketing, and financial resources, etc.

Type of Business Partnerships
  1. Strategic Alliances Between Non-Competitors: Affiliate marketing is a strategic alliance between a marketer and a company, where the marketer will promote the company’s offer in exchange for a commission on each sale.Two companies addressing the same market may share marketing efforts and related fees. A product manufacturer may partner with a service provider to ensure after-sales service.
  2. Strategic Alliances Between Competitors: It is common for corporations to serve on comities with their competitors, for example, in the energy sectors, to discuss the trends and strategies toward greener energy production.They also collaborate to organize, events, conferences, shows to bring together different actors in their industries.
  3. Joint Ventures: sometimes two complementary businesses will join together into a separate entity, a joint venture, with shared ownership, shared returns and risks, and shared governance.Joint ventures usually benefit both companies by giving them access to a larger (shared) pool of potential customers, to shared technologies or patents, to a more integrated offer.For example, a motor manufacturer may joint with a motor monitoring system company to offer a complete integrated offer of motors with an integrated monitoring system.
  4. Buyer-Supplier Relationships: Probably the most common partnership of all. All businesses need to outsource services and purchase supplies to manufacture their products.
Reasons that Motivate Partnerships
  1. Optimizing resources and activities,
  2. reducing costs with volume purchases (economy of scale),
  3. reaching more customers,
  4. reducing (or sharing) risks,
  5. focusing on your core activities,
  6. extending your capabilities,
  7. accessing new technologies, patents, intellectual properties, etc.
9- Cost Structure

Once you have defined your customer segments, your value proposition, your channels, your customer relationships, your key resources, your key activities, and your key partners, you get a better understanding of business model and you can calculate the costs involved in building and maintaining all these elements and make your model works.

Your cost structure is a make-or-break in the sense that, if your costs are too high to be supported by your revenue streams, you have no viable business model! Your business model must be balanced and bring enough value, to generate sufficient revenue to support your cost structure and make profits.

If you are unable to reach that balance your business model will fail, then keep testing other models until you reach profitability and viability.

Plan your business right with the Business Model Canvas. Learn more about the different Cost Structures and Cost Characteristics.  #coststructures #costcharacteristics #businessmodelcanvas #businessplan #businessmodels #businessplanning #businessmodelcanvasstartups #businessmodelcanvasexamples #businessmodelcanvastutorial #businessmodelcanvaspresentation #businessmodelcanvastemplate
Cost Structures:
  1. Cost-Driven: the cost-driven structure is common in highly competitive sectors where the value propositions are equivalent from one competitor to the other.In these cases, the fight is on cost optimization and reduction, and companies try to maintain the leanest possible cost structure to offer the lowest possible prices.They use automation and on-demand outsourcing (reduced staff), optimize designs, negotiate longer payment terms with their suppliers (and short terms with their clients), encourage volume purchase, etc. e.g. Costco
  2. Value-Driven: the value-driven structure is common in companies that focus on branding and value creation. They usually offer high-end products and personalized service. e.g. Apple, luxury hotels, luxury cars, haute couture, etc.
Cost Characteristics:
  1. Fixed Costs: e.g. salaries, rent, utilities, property taxes, interest expenses, insurance, permits, licenses, etc. All those costs are not related to your volume of sales.
  2. Variable Costs: e.g. raw material (to manufacture your product), production supplies, commissions, credit card fees, freight (to deliver your product), etc. All those costs will increase proportionally to your volume of sales.
  3. Economies of Scale: e.g. volume purchases resulting in lower prices, higher asset values resulting in lower interest rates or borrowing power, higher consumption or service use resulting in premium fees, etc. Any advantages related to the scale of the business.
  4. Economies of Scope: e.g. cross-selling, centralized finance or marketing, using the same manufacturing equipment to produce multiple products (e.g 3d printers)

You may also be interested in this post: 11 Common and Counterintuitive Business Mistakes

Business Model Canvas – Complete Example for a Digital Product

Plan your digital product using the Business Model Canvas. Complete real-life example for an online course on how to start and monetize a blog. #onlinecourseplanning #onlinecoursetips, #onlinecoursebusiness, #onlinecourseorganization #onlinecoursemarketing #onlinecoursedevelopment #onlinecourseplatform, #businessmodelcanvas #businessplan #businessmodels #businessplanning #businessmodelcanvasstartups

Examples of digital products are software, graphic designs, audio recording, videos, stock photos, etc. The digital product I chose for this business case is an online course about How to Start and Monetize a Blog.

Online courses are very popular because on one side a lot of people are curious and eager to learn new stuff and on the other side many others have the knowledge to share and the interest to teach.

In addition, nowadays, many companies like Teachable, Thinkific, Udemy, Udacity, Coursera, etc., have built platforms to facilitate the matching between instructors and students.

This business case can be very helpful to you because online courses are a great way to generate a passive income stream. They involve some work at the beginning to create the course, but they have the advantage of requiring very low upfront costs and very little post-launch work.

Furthermore, if you think about it, you don’t need to be a pro to make a course, you need just enough knowledge to teach an introductory course for beginners.

That is to say, making an online course is accessible to most of us. If you are passionate about something, practiced a sport or activity in your life, I’m sure you are knowledgeable enough to make a course!

The business model canvas is a tool to brainstorm on various models in an attempt to find the very best model for our business, that will be viable and provide the highest profitability. That is to say, there are many possible models for an online course and I will have to make choices.

To help you better understand my model, I will share some of my thinking and I will explain the reasons behind my different choices.

Let’s begin with the first bloc…

1-Customer Segments

For whom are we creating the online course? Or more specifically who will be interested to learn how to start and monetize a blog?

Business Model Canvans - Post It Customer Segments

Clearly, the first customer segment that comes to mind is that of stay-at-home moms, because of the high proportion of mom bloggers.

However, the good opportunities are rarely in the obvious directions. Not to mention that this market is crowded with multiple offers specifically targeting moms.

If we think further, a blog is an amazing tool to connect with an audience, meet new people, built relationships with prospects and eventually turn them into customers.

So blogs are powerful tools for startups, small and medium enterprises, and freelancers.

In addition, companies have more financial resources to afford a high-end course, compare to unemployed stay-at-home moms, so that alone may be a good reason to target companies instead of home moms.

As for freelancers, I would consider them in a separate business model and would probably narrow down my niche to artists or photographers, because they would probably be more responsive to my online course than other types of freelancers like, for example, programmers.

For the purpose of this business case, I will remove home moms and freelancers from the list and keep the niche market of startups, and small & medium enterprises.

It is the most appealing to me, at least before doing the customer development stage.

2-Value Proposition

What value does our online course will deliver to startups and S&M companies? Which ones of their problems is our course solving? What will be included in the course?

Problems: From my experience, many startups and S&M Enterprises lack regularity & consistency with their blog, lack knowledge on how to produce and structure actionable content that generates traffic and how to convert their traffic into customers.

Value:

  1. Build an organizational framework that will ensure regular publishing
  2. Give companies tools to ensure consistency among their authors/collaborators
  3. Teach the companies’ collaborators the anatomy of the perfect actionable blog post
  4. Cover the fundamentals of SEO to generate organic traffic
  5. Introduce social media essentials to promote blog posts
  6. Provide proven techniques to convert traffic into prospects, clients, and sales.

Bonuses:

A very effective sales technique for selling digital products is to offer bonuses. Ideally, you should offer enough value for your bonus to justify your selling price alone. I will, therefore, add bonuses to our main offer in prevision of my launch.

  1. Free access to the Support Facebook group
  2. 1 hour of on-demand personal coaching
  3. Adobe Photoshop design course
  4. Adobe Premiere Pro Video editing course
  5. Bundle of free resources (e.g. free stock photos, free audio jungle, email templates, etc.)

3-Channels

Through which channels will startups and S&M enterprises reach our online course? Which ones are most suitable for companies? Which ones are most cost-efficient?

Business Model Canvas - Post it _ Channels

There are various platforms to distribute online courses. Below are a few possible options:

Udemy: One of the biggest marketplace with more than 12 million students and more than 20,000 instructors. Clearly, a tempting option, considering that instructors can post their courses for free, but with major drawbacks.

Udemy takes 50% per sale, limit your pricing to $199 and control your branding. Selling on Udemy is like selling a product on Amazon, you do it to take benefit from their high traffic, but at the end of the day, your profitability is very low, especially at the beginning when you have no good ranking, no reviews, and no testimonials.

Thinkific & Teachable: These platforms are quite comparable. First, they are not marketplaces, so you need to self-promote your course as you will not benefit from the marketplace traffic.

On these platforms, you get a standalone site hosted on a subdomain like mybusiness.thinkific.com or you can use CNAME DNS setup to have a custom domain. On both platforms, you have full control over your pricing and get access to your students’ email address which is a real advantage.

Both platforms offer similar pricing and features, but Thinkific has a free plan (with 10% transaction fee), Teachable doesn’t. In additions, on the lowest $39/mo plan of Teachable, payouts are processed once a month and the only way around it is to enroll in their higher $99/mo plan. Thinkific plans provide instant payouts.

Thinkific is also very easy to use and for this reason, I would favor Thinkific over Teachable.

Which Thinkific plan is right for you?

Self-Hosted WordPress with Plugins:

The big PRO of using WordPress.org is that you are in control of everything and managing everything from your WordPress dashboard.

You own your website, you own your data, you own your processes and all your marketing efforts pay back to you by generating traffic on YOUR website, improving YOUR search engine ranking, building YOUR branding and YOUR authority (this last part is also applicable to Thinkific and Teachable if you use a custom domain).

However, it also means that you are in charge when something goes wrong. When you have a bug, an incompatibility between plugins or with your theme.

To sell courses on your blog, you will need to add a plugin that will let you build your course and charge your users for either your digital products (transaction-based) or a membership access (recurring) to your course, or it could be both options working together.

  • Paid Memberships Pro: This plugin will turn your site into a membership site. It means your member will pay you a monthly or annual fee to access your courses. Memberships make your offer more accessible offering smaller monthly payments, and it provides recurring revenue.
  • Learnpress Pro Bundle: This plugin will allow you to sell your online courses and also provides you with a structure to easily organize your course into subsections.

The best long-term option, in my opinion, is the self-hosted WordPress option or Thinkific using a custom domain, especially for anyone like me who owns a blog already.

So, I will build the course using WordPress plugins as plan A and, as a plan B, I will also keep the Thinkific option just in case the WordPress plugins wouldn’t meet the expectations from a technical point of you.

In additions, if some of you are not comfortable with WordPress, a Thinkific website could be a better and simpler option.

4-Customer Relationships

Which customer relationships do we want to establish with our students?

Business Model Canvas - Post it _ Customer Relationship

Besides offering great value with my online course and my bonuses, it will be crucial for me to engage with my students and build a close relationship with them. I want my students to be fully satisfied, feel supported, and provide positive testimonials.

In order to properly support my students and engage with them, I need to put processes in place:

  • Email support
  • Private Facebook Group
  • Weekly YouTube live Q&A sessions
  • On-demand Personal coaching sessions

That said, online courses have the benefit of providing “passive” income, so I need to find the right balance between providing sufficient support and still be free of my time. A great success may involve hiring employees to provide support.

In this case, all my support methods can be offered at no cost, except if the support requires employees at a later time.

5-Revenue Streams

Online courses can provide transaction revenues or recurring revenues.

Business Model Canvas - Post it - Revenue Streams

If I planned on providing a 2 hours courses at $49, the transaction revenue type would definitely be the right option.

However, I like recurring revenues because it is predictable. So if I can convince my students to become a member of my site instead of just paying once for the course, I will.

I will, therefore, offer both options:

Option 1:

A 1-time fee of $997 for the entire value proposition including:

Main offer:

  • Online Course on How to start and monetize a blog – Special Edition for Startups and S&M Enterprises ($997)

Bonus:

  • Free access to the Support Facebook group (value of $97)
  • 1-hour of on-demand personal coaching (value of $195)
  • Adobe Photoshop design course (value of $299)
  • Adobe Premiere Pro video editing course (value of $299)
  • Bundle of free resources and templates (value of $99)

I get a total value for the bonuses of $989, which is about the same value as the main course.

Option 2:

All the above-mentioned offer for $49/mo ($399 if billed annually) plus a privileged access to new courses, premium access to the 1-blogging-tip per day coaching club. No contract – cancel anytime.

As you can see, option 2 represents a 60% reduction, but if I provide enough value throughout the year this $399 will become recurrent and may ensure a recurring revenue for many years to come.

6-Key Resources

What key resources are required to build the course, promote it, make it accessible to students, and support it.

Business Model Canvas - Post it - Key Resources

Assets to build the course:

  1. Camera (I use the Canon EOS 80D DSLR camera with Lens 18-135mm)
  2. Microphone (I use the Sennheiser ME 2 Lavalier – 130$ with the Zoom H4N Audio Recorder)
  3. Lights (I use the 4-Socket Light Bank Professional Lighting Kit)
  4. Computer
  5. Video editing software (I use Adobe Premiere)
  6. Open space (room, studio, etc.)

Assets to promote the course: 

  1. Lead Magnets + MailChimp Account
  2. Social Media Accounts (Facebook, Linkedin, Pinterest, Twitter, Instagram)
  3. Facebook Ads account
  4. Google Ads account

Assets to distribute the course: 

  1. Hosted WordPress Blog (I Siteground and the GrowBig plan, and I recommend using the best selling theme Avada)
  2. Plugins Paid Memberships Pro and/or Learnpress Pro Bundle
  3. or Thinkific Account.

Assets to support students: 

  1. Email account – provided with Siteground hosting
  2. Facebook Group
  3. YouTube Account for Live Q&A
  4. Skype for coaching

The only human resources required is my time and the financial resources to purchases the assets (costing described in Cost Structure Bloc).

7-Key Activities

What are the key activities essential to make the model work?

Business Model Canvas - Post it - Key Activities
  1. Build lead magnets with opt-in forms to collect emails
  2. Build communities in social media platforms
  3. Provide free valuable content to followers to build your authority
  4. Build the course
  5. Build the bonuses
  6. Build the sales funnel pages
  7. Build an automated email launch sequence
  8. Build an affiliate program and recruit affiliates
  9. Launch the course to your email list
  10. Advertise the course in Facebook and Google
  11. Provide your free coaching sessions to subscribers
  12. Provide support (email and Facebook group)

8-Key Partnerships

What are the key partnerships essential to make the model work?

  1. All service providers
    • Siteground,
    • Mailchimp,
    • Social Media platforms,
    • Advertising platforms,
    • Thinkific or WordPress
  2. Affiliates

9-Cost Structure

What are the most important cost inherent to the making and promotion of an online course?

Business Model Canvas - Post it - Cost Structure (2 options)

The cost of making an online course is mainly related to the acquisition of production equipment and the service provider costs for hosting and promoting your course.

For those of you without any equipment, on a budget, and with limited space, I made a special selection for you. It is the best value for money that will allow you to make a high-quality course at a low cost.

  1. Use your phone or buy the Canon EOS Rebel ($319)
  2. Use a Rode VMGO microphone ($75)
  3. Use a ring light ($90) – ring lights are convenient in smaller rooms
  4. Use the free trial of Adobe Premiere Pro
  5. Host with Siteground Startup Plan ($3.95/mo)
  6. Use a free WordPress theme
  7. Launch with Thinkific free plan

Total Asset Price: $530 (Assuming you have a computer)

For promotion, there are ways to promote your course for free. For example, you can build a list of emails using free magnets and Mailchimp opt-in forms, or you can use social media to build a community.

If you want to boost your sales through Facebook and Google advertising, you may need to budget advertising money.

On paper, you should have a conversion rate that will cover your advertising fees. However, in practice, in the beginning, you must refine the pages of your sales funnel to get the appropriate conversion.

This means that you will pay more money than you will earn in sales. With this in mind, keeping an advertising budget is a wise idea.

Advertising budget: $500 (optional)

Business Model Canvas – Completed

Business Model Canvas with filled in sections

Conclusion

This article explained in details the business model canvas and provided a complete example on how to use the canvas for a digital product (online course).

If you want to learn more about this topic, I strongly recommend the best-seller book Business Model Generation: A Handbook for Visionaries, Games Changers, and Challengers by Alexander Osterwalder and Yves Pigneur.

In addition to covering the business model canvas in details, this book provides a tone of examples and patterns, design techniques and tools, and strategies interpretation through the lens of the Business Model Canvas.

Also, if you want to learn more about how to create and sell online courses, check out this free training from Thinkific.

Did you find this article helpful? Did I miss anything? Please let me know in the comments below.

Keep learning: 11 Common and Counterintuitive Business Mistakes

If you want to review one or more section of this article, please use this navigation menu.

Who is David Gaudreault?

David Gaudreault Bio - David's Way

I'm an entrepreneur, a maker, an online marketer...and Personal branding passionate.

I help entrepreneurs develop two essentials for building a successful startup: (1) building a strong personal brand and (2) building solid foundations of passive incomes to gain professional freedom.

I also help entrepreneurs find their big ideas, execute them right, impact millions with their businesses, and change the world.

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6. Get a Good Camera and Studio Equipment
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CHAPTER 2: BUILDING YOUR BRAND ASSETS!

12. Build a Website & a Blog
13. Setup Google Analytics
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CHAPTER 3: CREATING ENGAGING CONTENT – BLOG POSTS!

18. Creating Engaging Content – Blog Writing

CHAPTER 4: CREATING ENGAGING CONTENT – PHOTOS & VIDEOS!

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CHAPTER 5: CONTENT MARKETING STRATEGIES!

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