What is the Business Model Canvas (BMC)?

The Business Model Canvas is a strategic tool used for visually developing or displaying a business model. A BMC helps determine and align the key business activities and their relationship to your value proposition.

How to create a business model canvas: 9 key elements

The canvas provides you with nine key business elements to illustrate, summarize, and track. The 9 building blocks of a BCM are:

1. Key partners

List the key partnerships your business leverages or relies upon for success. Include the resources or value your business gets from these partnerships.

2. Key activities

Summarize the key activities that allow your business to provide services and deliver on your value proposition. 

3. Key resources

List the key resources your business relies upon or uses in order to operate and provide services.

4. Key propositions

Summarize the different value propositions that set your business apart from your competition. 

5. Customer relationships

Define and describe the primary relationships you have with your customers, including how you interact with this, how these interactions differ among different types of customers, what different customer needs are, and the level of support the different customers receive.

6. Channels

Detail how your customers are reached, how your services are provided, your different distribution channels and how your value proposition is delivered. 

7. Customer segments

Define the ideal customer personas your value proposition is intended to benefit, then describe the key differences between these segments and potential steps in the customer journey.

8. Cost structure

Identify the primary costs associated with operating your business and providing your services, then detail the relationship between these costs and other business functions.

9. Revenue streams

Describe how your business generates revenue through the delivery of your value proposition. 

When do you create and use the Business Model Canvas?

Business model canvases are not intended to serve in place of a business plan. Instead, the BMC is used to summarize and visually illustrate the most important information of a business model, and to provide centralized ongoing clarity. 

This canvas is appropriate for illustrating existing business models, regardless of if the business is new or not. The BMC is also appropriate for visualizing new business models for startups, as it helps organize and consolidate ideas around your key functions. Keep in mind that the Business Model Canvas should be reviewed periodically, as all the factors listed can change over time.

5 benefits of using a business model canvas

1. Provides a structure for ideation

The Business Model Canvas is extremely useful in structuring your business model visually. This helps at different stages of defining your business model. Many find it easier to visualize a business model in one simplified view.

It can be easy to get distracted by all of the varying factors involved in running a business. The value proposition is at the heart of the entire Business Model Canvas, so you can continually focus on the reason why your business exists. You should use your value proposition as a guiding star to give you direction as you fill out all other parts of the canvas. 

Whether or not your business model is clearly defined or you are testing out different business models, the BMC can be completed quickly and helps you generate new business ideas. This allows for quicker feedback, quicker ideation, and faster iteration.

With the Business Model Canvas, you can see how all of the elements of your business are interrelated and inform or affect each other. This provides you with a better understanding of how your business operates as a system or ecosystem. 

Once you’ve filled out your Business Model Canvas, you can share it widely, get feedback, and make any needed updates. Because the visual presentation is easy to grasp and understand, teams, stakeholders, advisors, and partners should find the canvas to be relatively straightforward and easy to understand.