Are you looking for an alternative to the business plan? Consider a business model canvas for startups


By Rieva Lesonsky

Is the thought of writing a business plan holding you back from starting a business? If you’re eager to bring your business idea to life, without having to create a large document first, a business model canvas for startups might be right for you.

What is a business model canvas for startups?

A business model canvas is a quick-start alternative to a business plan. It helps you think through the most important aspects of getting started, such as your product or service, your target market, and the resources you’ll need for the launch, in the form of a brief chart.

When to use a business model canvas

Why might you use a business model canvas instead of a traditional business plan? Here are some situations where a business model canvas might be appropriate:

  • You suddenly have an opportunity you want to act on. Perhaps a restaurant space is up for rent in the exact area where you dream of launching your restaurant. Maybe you are lucky enough to form a partnership with someone who has a lot of resources you need to start a business. Using a business model canvas can allow you to act quickly before the opportunity slips away.
  • You want to beat the competition. If you have an innovative business idea, such as a software application or invention, using the business model canvas can help you be first to market. In a highly competitive space, other startups are likely planning launches similar to yours; the business model canvas can help you take the leap.
  • You don’t need outside financing. If you are trying to get a bank loan, angel capital, or venture capital, you will need a traditional business plan ready to show the source of funding. But if you have enough start-up capital, there’s no law requiring you to follow the traditional business plan format.
  • You want to quickly assess the viability of your idea. Writing a traditional business plan will reveal the flaws in your idea. however, a business model canvas can help you identify problems more quickly. Using a business model canvas, you can immediately decide if your idea is going to fly or if you should revise it or scrap it and move on to another concept.

Of course, some people just prefer the speed of a business model canvas and don’t want to spend weeks or months crafting a long, traditional business plan. If that’s you, go ahead and try the business model canvas. Just keep in mind that this format is no excuse to overlook the details of planning your startup.

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What’s Included in a Business Model Canvas for Startups

The Business Model Canvas for Startups takes a broad view of your business idea and focuses on the key elements you’ll need to make it viable. Developed by Alexander Osterwalder, this is a one-page, tabular document that covers the nine “building blocks” that help start your money-making business.

  1. Key partners: Who are the buyers, suppliers, partners and other alliances that can help you accomplish your main business activities?
  2. Key activities: What are the most important actions you need to take to realize your value propositions, strengthen customer relationships, secure distribution channels and maximize revenue streams?
  3. Key Resources: What critical resources are needed to launch and run your business and create value for your customers?
  4. Unique Value Proposition: What products and services do you plan to offer? What customer needs do they meet? How do they differentiate your business from your competitors?
  5. Customer segments: What customer groups will your business serve? Identify the customer personas where your business provides value.
  6. Customer relationship: What relationships will you build with your customer segments? What type of relationship does each customer segment expect?
  7. Channels: What distribution methods will you use to deliver your products or services to your target market?
  8. The cost structure: How much will it cost to start and sustain your business? Which resources and activities will be the most expensive?
  9. Income stream: How will your business make money? How will you price your products and services? Are there other potential sources of income?

You can create a business model canvas on paper or on a whiteboard. There are also several apps you can use to create your business model canvas; they allow you to embed additional information, easily save and share the business model canvas, and more.

Where to get help with the business model canvas

There are several places to get help creating your business model canvas. You can start by watching this SCORE webinar on using the Business Model Canvas. Then visit Strategyzer, Canvanizer, and Xtensio to find a business model canvas tool you can use. You’ll also find sample business model canvases, resources, and training to help you.

The traditional business plan and business model canvas can help start-up entrepreneurs evaluate their ideas and make important decisions about launching their startup.

Of course, you can use both methods if you wish. Many entrepreneurs start with a business model canvas to give them a “quick start” and then develop a traditional business plan later.

(Disclosure: SCORE is a client of my company.)

I’m CEO of GrowBiz Media, a media and custom content company focused on small business and entrepreneurship. Email me at rieva@smallbizdaily.comfollow me on twitter @Rievaand visit my site to get the inside scoop on trading trends and sign up for my free TrendCast reports. Read all of Articles by Rieva Lesonsky.

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This article was originally published on AllCompany.

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