Developing A Business Model Canvas (BMC)

E.M. Erasmus, MA

FEF, MKB, February 2015

BUSINESS MODEL CANVAS

What we will do next…

• Discuss entrepreneurship (briefly)

• General theory of Business Model

Canvas

• Develop business model canvas for

proposed enterprise concept

Entrepreneurship

Entrepreneur

• Entrepreneur -> Originated from the French word: ‘entreprendre’ (to undertake)

Merriam Webster Dictionary: Entrepreneur is.. “one who organizes, manages, and assumes risk for a business or enterprise”

Classic views on entrepreneurship

• Frank H. Knight (1921) : entrepreneurship is about taking risk.

• The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture.

A different view on

entrepreneurship

Joseph Schumpeter (economist):

Definition of entrepreneurship should be

placed on innovation.

• New products

• New production methods

• New markets

• New forms of organization

A different view on

entrepreneurship

The function of the entrepreneur is

one of combining various input

factors in an innovative manner to

generate value to the customer

with the hope this value will

exceed the cost of the input

factors, thus generating returns

that result in the creation of wealth.

Entrepreneurship

To make it shorter… Entrepreneurship is the process of discovering

new ways of combining resources…

Successful entrepreneurs expand the size of the economic pie for everyone.

Some characteristics… • Motivated by an overwhelming need for

achievement and strong urge to build

• Optimistic in their decision-making processes

• Creative and enthusiastic spirit

• Passionate in what they do

• They take prudent risk

• Persuade others to join and help

• They think and act ‘outside the box’

• They create more than just personal value

Successful

Successful entrepreneurs…

Bill Gates, undergraduate at Harvard developed BASIC for the first microcomputer, went on to help found Microsoft in 1975.

By making software that increases human productivity, Gates expanded our ability to generate output (and income), resulting in a higher standard of living for all.

Successful entrepreneurs…

Sam Walton, the founder of Wal-Mart,

Innovations in distribution warehouse centers.

Shoppers benefit from the low prices and convenient locations that Walton’s Wal-Marts provide.

Successful entrepreneurs…

Fred Smith Fedex

Ted Turner CNN

Henry Ford Ford Automobiles

Ray Kroc McDonald’s

Martha Stewart M.S. Living

Walt Disney Disney

Oprah Winfrey Talk Show Host

Mark Zuckerberg Facebook

Robert Keane Vistaprint

Steve Jobs Apple

So why have they all been so

successful?

The all managed to come up with a

solid and effective business model

SO WHAT’S A BUSINESS

MODEL?

Write down your own definition…

Discuss it with your neighbor…

Which elements did you

mention when you defined

a business model?

What is a business model?

A business model describes the

rationale of how an organization

creates, delivers, and captures

value.

Few companies understand their

existing business model well enough

Business Model Canvas

Business Model Canvas

• BMC provides a simple, intuitive and

flexible tool that can be developed

rapidly and applied ongoing to iterate

and refresh the business strategy.

• In a single page view, the BMC provides

an overview of the business: it’s

offering, infrastructure, market and

finances.

Business Model Canvas

Building Blocks

Customer Segments

The different groups of people or organizations you aim to

reach and serve.

Value Proposition

The products and services that create value for specific

customer segments.

Channels

How you communicate with and reach your customers

segments to deliver a value proposition.

Customer Relationships

The type of relationships you establish with specific customer

segments.

Revenue Streams

The cash you generate from each customers segment

(subtracting costs from revenues to create earnings).

Key Resources

The most important assets and resources (physical,

intellectual, human, financial) required to make your

enterprise work.

Key Activities

The most important things that needs to be done to make the

enterprise work.

Key Partners

The network of suppliers and partners that make the

enterprise work.

Cost Structure

All the costs incurred to operate the enterprise.

Example

Example

Generating a BMC

Choose your business concept!

BMC template

Three significant advantages

1. Focus

2. Speed and agility

3. Common language

Edward M. Erasmus, MA

e.erasmus@fzanv.com

edward.erasmus@ua.aw

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