... where visionaries, game changers, and challengers discuss business models
I am currently brainstorming some small business ideas however am unsure when and how to apply the Business Model concepts.
I have read from others here that the Business Model canvas can be effective for small businesses, especially those that have already started. What about those still to start?
When do you start using the canvas? For example, we have three ideas we wish to evaluate. Is now too soon? Would we benefit from using another approach to evaluating and early testing out ideas?
I'd suggest using the BMC as early as you can. You can really capture as "high level" or as detailed information as you want and as is appropriate so I would imagine that creating a BMC for each of your ideas would be an hour very well spent. I really don't want to come across as promoting my business website but you might find it helpful to take a look at the list of free resources / videos etc of Alexander and Steve Blank etc athttp://www.unconsultancy.com/resources-help-a-business/
Hope that helps.
As Tim suggests, the Customer Development Model provides a very supportive process for launching new businesses. In its simplest expression CDM separates the search for a repeatable and scalable model (startup) from the execution of that model (ongoing business).
The startups' biggest challenge is discovery and understanding. This is where people like Blank and the whole lean startup movement are trying to move people away from the tradition plan based launching of a business. There are a lot of unknowns (market, pricing, value prop) so it is very important to identify where you may be making guesses about how the business would work and test those ideas.
This is where the business model canvas ad the BMG approach is so important. It allows one to think about the important areas of a business model and structure your validation of the guesses you are making about the new business.
Like Tim, I would strongly suggest you take a look at the use of the canvas within the context of the customer development model.
Thanks for the responses. Having looked at the CDM I am a little confused as I don't think it simplifies things - it just adds another dimension.
Would you utilise the BMC and CDM during an early startup evaluation session? Would elements of the BMS in isolation be as useful?
It actually depends on your startup’s product or service offers. For instance, if you are an online media startup or focusing on software and web services, the typical business model choice will be advertising or direct monetization.
One advantage of building a lean startup using direct monetization model is that you can self-fund your customer acquisition because your business works at small scale. It only needs an effective arbitrage strategy to have a sustainable build of customer base since your start.
Okay. Maybe some examples would help.
So if I have an idea (a website to sell widgets) - can I use the canvas? Then speak to potential customers etc to fill in the gaps and evaluate if the idea has any value?
If I don't have an idea, but have identified a problem (people hate lining up for train tickets) - can I use the canvas?
I guess I am asking is how much of a brainstorm do you have to do until you can use the canvas? Or do you use the canvas to brainstorm your ideas/problem/product concept?
discalimer - this is a very cursory explanation of a process with many steps
The use of the canvas is really contingent upon how clear you are on what you want to do.
The first challenge you have to face is often identified as the problem solution fit. I don't like that term as it is limited in its perspective of solving problems. You could also look at it from the perspective of - who out there has a job that my concept/service/product could help them complete. The importance of this stage is to gage whether there are people out there who would see what you want to do as a value to them. (this is the customer discovery stage of the customer development model - CDM)
Once you have confirmed there is a set of customers for your business idea, you could begin to populate one or more canvases on how you could possibly build the customer-value proposition in to a viable business. Prototyping different approaches is a critical step.
When you have identified a likely to succeed business model, you should then identify what are the core, and most critical hypotheses inherent in the business model. These 'guesses' have to be tested with real customers; i.e. get out of the building and talk to your customers. It is here one could take advantage of the minimal viable product to test specific hypotheses (this is the customer validation stage of the CDM).
Creating and testing the elements of the business model allows you to make judgement calls on the parts that will work and those that need to be re-visited; e.g. your pricing model doesn't work, or the channel strategy is too complicated. If something isn't working well or producing the results you expect you go back and change or re-consider the product or the business model (this is the pivot of the CDM).
Ater these iterations you will have a product/service and a business model for which people are willing to pay; known as the product-market fit. You are now ready to cross the chasm into executing the business model and begin to address scaling the business and the organization.
As to your last question, how much brainstorming do you do before you use the canvas, there is no set answer. Some people use it to help clarify the vision and modify iy as they go along. Others use tools like the lean canvas or value mapping, empathy maps or customer-value maps to help them clarify what the vision of the business is.
For a practical example of how the canvas is used in a startup environment, have a look at Steve Blank's Lean Launchpad course at Stanford