You have a vague idea of an innovative business, but you don’t know how to start with it? You want to rock? Lucky you, today I will explain step by step a powerful tool that allows you to build a successful business.
In one of our first articles (nostalgia…), we were talking about the business model “canvas” , an as simple as powerful tool helping you to have a global vision of your future business. Indeed, by filling in only 9 boxes, you will examine your business from -almost- all sides. You will find below an empty business model canvas, that we will try to fill in together. Ready? Let’s go!
1) Value Propositions : Why is my product so cool?
This box is about describing all the characteristics of your product (or service) that make it sexy for consumers you want to target. Is it more efficient than a competitor? More beautiful? Cheapest? Is it customizable? Is it simply new? For instance, the value proposition of this startup from Hong-Kong is clearly the malleability of the sunglasses.
2) Customer segments: Who will be crazy about my product?
This is a crucial segment, often very hard to fill in. Who the hell are my clients? Are they young, old, men, women, fat, skinny, single, married, with a particular passion, with a particular fear?
Don’t try to launch a product for everyone in the world, it’ll fail. Facebook started only with campus, don’t forget it! For instance, this start-up from England has a well defined segment : modern and active young parents that want to go the extra mile
3) Channels: How can I deliver my cool product to the people crazy about it?
This box contains 5 steps you have to think about.
1) How make people aware of my product (except going to Pick & Pow)?
2) How can I make my product evaluated (except going to Pick & Pow)?
3) Do people actually buy my product?
4) How can I deliver the product ?
5) What kind of After Sales strategy can I do?
So through these 5 steps, the question you have to ask is, what is the best way to deliver my product? The only answer is: you don’t know. So make a lot of tests, compare hypothesis, figures. Fail and do it again. It’s all about growth hacking. Did you know that Barack Obama raised $60 million by running a simple A/B testing experience?
4) Customer Relationships: How can I make my consumers happy?
Having a good product is not enough at all. You need to be at the service of your consumers – almost – 24 hours a day. If you don’t take this part seriously, you will fail. Call center or After Sales service should be so great that people might invent problems just to speak with a member of your team and have a good time.
Remember that a happy consumer will talk about your startup to 3 persons. An unhappy one, 11. Use a live chat on your website (a free one, better), make your registration or contact form sexy, let your phone number… And be reactive!
5) Key activities: What is concretely my job?
What is the core of my business? In which part do I have to focus? What can I outsource? This is more a concern for brick-and-mortar business, but If you want to apply it with internet businesses, a key activity WON’T be the creation of a proper web hosting. Coding will. For instance, this startup from France outsourced the sneakers fabrication in Peru, but do take care of the design and sale.
6) Key resources: What do I need to make my business work?
You have to define what is essential to your business. What are the human, intellectual & physical resources that you need? For internet businesses, key resources are computers, web hosting, specific skills in computing, specific skills in selling. For a youtuber, the key resource is a camera. Because without it, the business doesn’t exist. Beer is not a key resource. Whatever…
7) Key partners: Who will help me to grow my business?
Key partners are people or companies that will help to make your business the best possible. It could be your suppliers (you are an income stream for them, so they would be better off helping you), or strategic alliances with partners from the same sector, or even competitors. That is called “Coopetition”, and can be more useful than you think!
8) Cost Structure: How much do I owe you?
Take all the elements we’ve just analyzed and try to list all the fix and variable costs needed to start your business and to continue your activity. Of course, try to mainly use free tools but it won’t be easy to avoid some expenses (webhosting, providers, skills…). At Pick & Pow we wanted to have the lowest cost structure possible. To introducing you the most innovative products from startups, we have a WebHosting cost and a skill one (web developer outsourced at the beginning).
9) Revenue Streams: How I will earn my living?
Remember, at the beginning, you won’t be rich. But in order to have a viable business model, your revenue stream should be higher than the cost. For instance, you can’t sell a shoes $10 if you need $15 to produce it. Just to be sure you were aware about that. So in this box, you will decide how you will receive your money from your consumers. Monthly subscriptions? Personalize discount? Freemium model ? Anyway, don’t forget, Less is more. So keep it simple.
I really hope this explanation helps you to build your Canvas business model. Please let me know if you need more help and explanation. I would be happy to help!
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