5 Key benefits of a business model canvas for Startups

When starting a new business, the #1 objective is to discover a sustainable and scalable business model—in other words, how your company can create value for its target customers.

Creating a strong business model is complicated as it involves many interconnected building blocks. There are infinite possibilities for defining your customer segments, custom problems, unique value propositions, etc., and even more ways to combine them.

If you do not follow a structured approach, your chances of success will significantly decrease down to pure luck and gut feeling. One way to provide structure to your entrepreneurial journey is to use the Business Model Canvas (BMC) to express and capture your business idea and continuously iterate over it until you find the winning combination.

How Entrepreneurs can Benefit from using Business Model Canvas

The Business Model Canvas is a great starting point for capturing and socializing your idea with stakeholders. It’s also a living document that changes and evolves as your business evolves.

The early days of a new business, which are highly turbulent, will impose many changes to the original idea and force you to adapt it. Keeping the canvas up to date will help you with those iterations and be a reliable tool for revisiting and reevaluating your business.

The business model canvas is a key asset when:

• Looking for new investments
• Building new key partnerships
• Finding first customers
• Onboarding team members

1. Quick Visualization of Business Ideas

One of the main advantages of the BMC is that it allows you to bring all aspects of your business together. Additionally, using a well-known format, you can easily present the canvas to a stakeholder, and they will know exactly what to expect and how to find the information they need.

Consider how complex Spotify's business is. It creates a marketplace for listeners, artists, music producers, and others. Using the Business Model Canvas, we can easily visualize the business idea on a single page.

2. Enhanced Understanding of Business Connections

Bringing all components together prompts us to think about how different elements interact. For example, the customer problem must be relevant to a given customer segment and addressed by the unique value proposition.

The order in which the canvas is filled in is specifically designed to build incrementally on the previous components. The value proposition is tied to customer segments, the value proposition is communicated through distribution channels, etc. The specific order of completing the canvas is:

1. Customer Segments
2. Value Proposition
3. Channels
4. Customer Relationships
5. Revenue Streams
6. Key Resources
7. Key Activities
8. Key Partners
9. Cost Structure

3. Focus on Customer Needs

Most of the Business Model Canvas components are strongly related to the customer. The four components in the top right corner explore the desirability of the product from the point of view of the customer:

• Customer Segment,
• Value Proposition,
• Channel,
• Customer Relationships.

This serves as a good reminder that companies exist to create value for customers.

Being customer-centric is one of the key principles of the lean business model, which reduces the time to market and the risk associated with launching new products and cuts the implementation costs. Using proven methodologies like the BMC and Lean Business Model significantly increases the chances of entrepreneurs getting successful products.

The top left of the canvas (key activities, key partners, and key resources) focuses on the feasibility of the business or whether you are in a position to build it. The bottom two components (cost structure and revenue) explore the idea's viability.

4. Reduced Risk of Failure

Entrepreneurs face a staggering 90% failure rate when starting a new business. At the same time, this means there is huge room for improvement. All the small tweaks you can do to increase your chances can result in significant impact.

The business model canvas makes it more likely to succeed by:

• Making sure you are not missing an important aspect of your business
• Providing structure to how you think about your business idea and make progress towards validating it
• Helping in testing assumptions - all ideas have an underlying hypothesis that needs to be verified with real-world data
• Improving the financial planning by nudging to consider revenue streams and cost structure

5. Clear Communication Among Stakeholders

The Business Model Canvas captures the essence of your business in a way that everybody can easily apprehend. Using a standardized format streamlines conversations with stakeholders like team members, customers, partners, or investors to the point.

You often don't have much time when pitching your business idea to investors or potential partners. You need short, crisp, and efficient representation; using a familiar format helps other stakeholders find what they are looking for. It also strengthens your storytelling and ensures you don't miss an important point.

Additionally, it instills confidence in the other party that you are using industry-recognized tools and makes your overall interaction more professional.

From an internal perspective, the Business Model Canvas stimulates collaboration between different teams and departments, bringing together people from different parts of the organization with diverse skills and backgrounds. Such a setup is a strong prerequisite for building a great product or service.

How Can Icanpreneur Help You

The Icanpreneur platform implements a slightly different version of the Business Model Canvas called the Lean Canvas, specifically tailored to new businesses. The platform provides all the needed guidance, examples, and tooling to create a functional Lean Canvas without previous experience.

Icanpreneur also facilitates collaboration between all team members on the Lean Canvas, and getting started is even easier using IVA.

The Icanpreneur Virtual Assistant (IVA) is specifically trained to support entrepreneurs on their path to product-market fit by providing guidance, suggestions, and observations tailored to the specific business idea. Based on a quick ten-minute conversation with IVA, you can quickly create the first draft of your business canvas and start iterating over it based on real-world feedback.