9 Building Blocks of Business Model Canvas - Animas Marketing (2022)

9 Building Blocks of Business Model Canvas - Animas Marketing (1)

by Tyler Rice

9 Building Blocks of Business Model Canvas - Animas Marketing (2)

Last updated Feb. 21, 2020

9 Building Blocks of Business Model Canvas - Animas Marketing (3)The business model canvas can be a daunting task for any new entrepreneur.

There are so many aspects to consider when starting a new business but take it from someone who has been through the process.

It may seem difficult, but the business model template is a great way to get you started and to get those creative juices flowing.

The 9 Building Blocks for the Business Model are:

  1. Customer Segments – The target audiences that you plan to offer value with your products or services.
  2. Value Propositions – This value proposition is built to explain how your customer segments will value from your unique offer and differentiate it from the competition.
  3. Channels – What channels will your value proposition be delivered through?
  4. Customer Relationships – How do you plan on keeping solid relationships with your consumer segments?
  5. Revenue Streams – How will your value propositions bring in revenues from each target audience?
  6. Key Resources – These are the assets available to the business that allows you to run your operations effectively.
  7. Key Activities – What operations are essential to the success of your business?
  8. Key Partnerships – These partnerships are obtained through networking with the people that can help with your business success.
  9. Cost Structure – All of the costs associated with a business.

While this article is built to give you a good understanding of each principle of the business model canvas, we found it extremely beneficial to our business having the Business Model Generation book by John Wiley. We recommend having this book as a reference and guide as you build your business and can be found right on Amazon.

Let’s discuss each section of the business model to help you create more value for both your business and your target audiences.

1. Customer Segments

The first building block of a business model iscustomer segments.

9 Building Blocks of Business Model Canvas - Animas Marketing (4)

This defines the different groups of people or organizations that a business plans to reach.

Without profitable customers, how can any business succeed?

When looking at customer segments, it is important to group people into multiple segments to better satisfy their needs. The groups could be small or large depending on their common needs, behaviors, location, or attributes.

With these groups, you can better understand how tocommunicateproperly with them and find out what works best for each target audience.

9 Building Blocks of Business Model Canvas - Animas Marketing (5)

While most businesses know their audience’s geographic locations and demographics, they too often skip out on the essential psychographic attributes of their customers.

What are their interests? What challenges do they face? What goals do they seek? What are their pain points?

These crucial points are addressed in the most detailed customer segment worksheet we created to aid you in business success.

(Video) Business Model Canvas Explained

Once you have a clear idea of who you are providing a service for, you can make the steps towards creating value for them.

2. Value Propositions

The second building block is based on how your company bundles products and services to meet each customer segment’s needs.

9 Building Blocks of Business Model Canvas - Animas Marketing (6)

AValue Propositioncreates a unique value for customers through a mix of elements that could be qualitative or quantitative. This could include price, speed, design, or customer experience.

What value do we deliver to the customer?

What makes a person choose AT&T over Verizon Wireless or Sprint? Perhaps they decide to choose Virgin Mobile. Now, think about how each company offers value to their customer segments.

Verizon might offer value to customers that are looking for the best cell service at an affordable price. They could also offer a great bundled deal with DISH network for a user that doesn’t want to pay two different bills.

How about the customer that lives in the city with great coverage and is looking for the best price? That could be exactly what Virgin Mobile offers with a low cost and no contract involved.

It is due to the value proposition that a person might want to choose one service over another.

Don’t just try to offer what everyone else is with lower prices, think outside the box. It is often due toinnovationanddisruptionthat new businesses succeed.

Think about how you can fill the gaps of customer needs and problems that other companies in your industry are not fulfilling.

3. Channels

Thechannelsbuilding block is how your company will communicate with each customer segment, delivering them your value proposition.

9 Building Blocks of Business Model Canvas - Animas Marketing (7)

These channels can include social media, websites, newspaper advertisements, search engines, and word of mouth.

Evaluate how you communicate which each customer segment and how you can either improve or change that communication. Also, consider which methods of communication are the most cost-efficient.

It is this brainstorming that will improve how you reach each customer and aid in building a relationship with them.

To help with your brainstorm session, here are 5 channel phases to build upon:

Awareness

How do we raise company awareness and build upon our brand?

Evaluation

How do we reach customers to have them evaluate our value proposition?

Purchase

Through which channels can we direct customers to purchase our products and services?

Delivery

How do we deliver the value proposition to the customers?

(Video) The Business Plan Simplified

After Sales

How do we provide customer support after a purchase?

This may seem like a standard set of phases for you.

Well, that is the point!

These phases are in place to help to build your thinking outwards towards all the possibilities to best serve your customer segments.

4. Customer Relationships

I truly believe that this part of the business model is the most important. If you build personalization into your brand and company, then the sky is the limit!

9 Building Blocks of Business Model Canvas - Animas Marketing (8)

Although this service can be personal or automated, it is crucial to understand which method will best serve your customer’s needs.

There are three driving motives to building relationships with your customers.

  • Lead Generation
  • Customer Retention
  • Upselling

With these motives, rank which goals are more important to your company than the others. From there, decide which issues you might come across with these goals and how to best communicate to your customer segments in each goal.

5. Revenue Streams

This building block measures the earnings a company generates from each customer segment. When targeting each target audience, think about what each group is willing to pay.

When you realize that different groups of customers are willing to pay at different levels, you can come up with different revenue streams to apply to each of these groups.

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A business model includes only two types of revenue streams:

  • Transaction Revenues– This results from customers who make one payment for a product or service.
  • Recurring Revenues– These on-going payments can include a prolonged value proposition or a post-purchase customer service.

When deciding which type of revenue stream fits well in the communication with a customer segment, ask yourself:

How are they currently paying?

How would they prefer to pay?

Does a certain method of revenue contributemore to overall earnings?

6. Key Resources

What are the key resources that can set your business apart from the rest?

What resources are key to offering your value proposition?

9 Building Blocks of Business Model Canvas - Animas Marketing (10)

Key Resourcesare the important assets that are available to you and are required to make your business plan a success. These resources allow you to create your unique value proposition, maintain important relationships with your customers, reach new markets, and create revenue.

(Video) Defining Your Social Impact Business Model with the Mission Model Canvas

These resources can range from physical, financial, intellectual, or human assets.

7. Key Activities

Thekey activitiesbuilding block describes the important process that a business must take part of for a business model to work.

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Much like key resources, these activities are required to maintain customer relationships, reach new markets, create value propositions, and earn revenues.

Key activities can be grouped into three categories:

1. Production

These key activities are the focus of manufacturing firms and relate to designing, creating, and delivering products.

2. Problem Solving

These activities include knowledge management and training. Problem-solving is key to coming up with new solutions to customer problems.

3. Platform/Network

This category includes platform management, service positioning, and platform promotion. This is built around a company that relies on networks, software, and brands that can function as a platform.

8. Key Partnerships

The building block of key partnerships revolves around the network you build. This can include suppliers, partners, or even other businesses or influencers in your industry to create an alliance with.

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There are 4 main categories of partnerships:

1. Strategic Alliances with Non-competitors

2. Strategic Partnerships with Competitors

3. Joint Ventures to create new Businesses

4. Buyer-Supplier Relationships

With these 4 categories of partnerships, we find 3 main motives:

1. Optimization and Economies of Scale

This motive is based on reducing costs and can involve outsourcing or a sharing infrastructure. This optimizes the allocation of resources and activities so your company doesn’t rely on owning all the resources or performing every activity on its own.

(Video) Building "the machine" - InnoVits - 2021 - Business Model Exploration Methodology

2. Reduction of Risk and Uncertainty

This motive is brought on by competitors joining in strategic alliances in one area while remaining competitive in other areas.

3. Acquisition of Resources and Activities

It is rare for any business to have access to all the necessary resources and activities to create the most value to their customers.

It is important to realize which assets are more cost-effective to outsource and to rely on other businesses to bring resources that you could not come up with on your own.

9. Cost Structure

The cost structure building block describes all costs involved in operating a business model.

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When your business defines how to create value, maintain customer relationships, and generate income, it will see costs incurred on each of these levels.

The cost structure of a business can be placed into one of two categories:

1. Cost-driven

This cost structure focuses on minimizing costs wherever possible. This process can include high automation, extensive outsourcing, low price Value Propositions, and the leanest possible cost structure.

2. Value-driven

With the value-driven cost structure, a business focuses on how they create the best value for each customer segment. This can include a highly-personalized service and exclusive services.

That concludes the 9 Building Blocks that go into a Business Model!

These building blocks are put together to create a handy tool for your business known as theBusiness Model Canvas.

This model is meant to be a hands-on tool for your whole business team to add and take away items when needed.

To print out a poster-sized canvas, feel free to download our Free Business Model Canvas.

I will leave you with three last instructions to help build your business model:

1. Print it out on a poster!

2. Place the poster on the wall!

3. Sketch out your business model!

Now It’s Your Turn

Now that you have a solid understanding of the elements that go into the business model canvas, it’s time to start brainstorming.

Download the business model canvas below and either print it out for the office or fill out the information directly on the PDF file to your local computer.

We may use links and other promotional material that provide us with a commission for driving sales. Each product that has an affiliate link has been tried and tested on our site and the additional funds help us provide helpful information to you. Thanks for the support!

(Video) Canvas Explainer

FAQs

What are the 9 building blocks of the Business Model Canvas? ›

It can be described through 9 building blocks: Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships & Cost Structure.

Which of the 9 building blocks of the Business Model Canvas speaks to the relationships that business builds with external suppliers? ›

8. Key Partnerships. The building block of key partnerships revolves around the network you build. This can include suppliers, partners, or even other businesses or influencers in your industry to create an alliance with.

Which is the most important block in the Business Model Canvas? ›

Feasibility. The Key Resources Building Block describes the most important assets required to make a business model work Every business model requires Key Resources.

What is Business Model Canvas explain? ›

A business model canvas is a visual representation of a business model, highlighting all key strategic factors. In other words, it is a general, holistic and complete overview of the company's workings, customers, revenue streams and more.

What does building blocks mean in business? ›

A Building Block is therefore simply a package of functionality defined to meet business needs. The way in which functionality, products and custom developments are assembled into building blocks will vary widely between individual architectures.

What do you think are some of the main benefits of presenting your business idea using the Business Model Canvas? ›

"The Business Model Canvas helps visualize what is important and forces users to address key areas,” he says. “It can also be used by a team (employees and/or advisors) to understand relationships and reach agreements."

How can a Business Model Canvas make a business idea stronger? ›

The Business Model Canvas is a better and more reliable tool for startups because it's a representation of how you understand the business at a specific point in time. The Business Model Canvas is designed to be continually updated as you talk to customers, learn, and validate or invalidate your assumptions.

What are the most important assets required to make the business model work? ›

Key resources – the key resources building block describes the most important assets required to make a business model work. These resources allow a company to create value proposition, reach markets, maintain relationships with customers, and earn revenues.

What is your business model answer? ›

A business model should answer important questions about your business and set out a strong vision for the business. The key components of a business model should include relating to your target customers, the market, organization strengths and challenges, essential elements of the product, and how it will be sold.

What is an example of a business model? ›

For instance, direct sales, franchising, advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that combine internet retail with brick-and-mortar stores or with sporting organizations like the NBA.

What is business canvas model PDF? ›

The Business Model Canvas is a visual framework for describing the different elements of how a business works. It illustrates what the business does, for and with whom, the resources it needs to do that and how money flows in and out of the business.

What is the importance of key activities in business model canvas? ›

More about Key Activities

Your business model calls for a number of Key Activities. These are the most important actions your company must perform to operate successfully. Like Key Resources, they are required to create and offer a Value Proposition, reach markets, maintain Customer Relationships, and earn revenues.

What is the purpose of a business model? ›

In its simplest form, a business model provides information about an organization's target market, that market's need, and the role that the business's products or services will play in meeting those needs. Business model innovation, then, describes the process in which an organization adjusts its business model.

Do you know how do you create a business model? ›

A business model design in seven steps
  1. Define the problem you're going to solve. ...
  2. Define the customers for which the problem will be solved for. ...
  3. Define the key customer and the key problem. ...
  4. Define a set of possible solutions. ...
  5. Define a set of possible monetization strategies for that solution. ...
  6. Test and choose.
14 Sept 2022

How do you use building block in a sentence? ›

Examples of 'building block' in a sentence
  1. It was the most important building block of society and therefore above question. ...
  2. It should be the building blocks towards something permanent. ...
  3. It is too important a building block of society to be made the subject of a crass publicity stunt.

What are building blocks Word? ›

Building blocks are pieces of document content or pre-defined items, like tables, lists, headers, and text boxes. They can be used again and again in Word files on your computer.

What is the building block model? ›

The Building Block model considers this and describes two categories of dimensions: 'Results' and 'Determinants. ' 'Results' are the outcome of decisions and actions taken by management in the past. These are captured under the first two dimensions of the model, financial performance and competitiveness.

Why do we need to have a Business Model Canvas when starting a company or startup? ›

It helps communicate to clients why they should do business with you. It helps pull into focus what your business does and how it will continue to do it - successfully - into the future. The Business Model Canvas is an invaluable tool for startups and Fortune 500 staples alike.

What do you understand by the term Business Model Canvas how it is different from business plan? ›

A business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page.

What is the Business Model Canvas and how can it be beneficial to entrepreneurs? ›

Business model canvas is a strategic tool that helps entrepreneurs focus on the business strategy and growth potential of their startup idea. It explores and explains how a business will design, create, offer and monetize Value.

What are the types of Business Model Canvas? ›

The Business Model Canvas proposes that there are three core business types: product, scope, and infrastructure. These tend to have similar types of Key Resources.

What is the most important element of a business model? ›

Your Financial Plan is possibly the most important element of your business plan. This is especially true if the business plan is aimed at investors or lenders. This section includes projections, budgets and goals that are unique to each business.

Which components of the business model canvas should be addressed first? ›

The first block of the Business Canvas Model is about understanding who is the most important customer(s) you're delivering value to.

What are the main elements of business model innovation? ›

Business model innovation does not mean the business has to leapfrog the competition by the product characteristics compared to competitors.
...
Revenue Model
  • Advertising.
  • Razor-blade.
  • Brokerage.
  • Subscription.
  • Freemium.
  • Leasing.
  • Licencing.
  • Asset sales.

What is a successful business model? ›

Other experts define a business model by specifying the main characteristics of a good one. For example, Harvard Business School's Clay Christensen suggests that a business model should consist of four elements: a customer value proposition, a profit formula, key resources, and key processes.

Which of the following best describes a business model? ›

Which of the following best describes a business model? Typically a graphical depiction of the essential business process information.

What is a strategy in business? ›

Put simply, Business strategy is a clear set of plans, actions and goals that outlines how a business will compete in a particular market, or markets, with a product or number of products or services.

How many types of business models are there? ›

Here are 12 common business model options, all of which can be customized for a specific company or industry.
...
Types of business models and examples
  • Retailer model. ...
  • Manufacturer model. ...
  • Fee-for-service model. ...
  • Subscription model. ...
  • Bundling model. ...
  • Product-as-a-service model. ...
  • Leasing model.
14 Jul 2022

How many business types are there? ›

There are 4 main types of business organization: sole proprietorship, partnership, corporation, and Limited Liability Company, or LLC.

What are the 9 building blocks of the business model? ›

A business model describes the rationale of how an organization creates, delivers and captures value. It can be described through 9 building blocks: Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships & Cost Structure.

How do you introduce a Business Model Canvas? ›

Introduction to the Business Model Canvas - YouTube

What questions should I ask a Business Model Canvas? ›

Business Model Canvas: Value Propositions

What value do we deliver to our customers? Which customer needs are we satisfying? Which customer problems are we helping to solve? What bundles of products and services are we offering to each customer segment?

What are the 9 parts of a business plan? ›

9 elements of an effective business plan
  • Executive summary and company description. Explain your company and its mission. ...
  • Solution statement. ...
  • Products and services. ...
  • Business leadership/personnel. ...
  • Market analysis. ...
  • Competitive audit. ...
  • Goals and objectives. ...
  • Financial plan.

Which is the most important component of a Business Model Canvas and why? ›

Perhaps the most important part of your canvas is the customer segments. If you don't know who your business is catering to you'll never be able to sell to them. You need to figure out who your customers are and why they would buy from you.

What factors affect the success of a business? ›

10 factors that contribute to business success
  • Set a business goal. ...
  • Understand Your Customer Needs. ...
  • Research your competition. ...
  • Attract and retain the right talent. ...
  • Be transparent with your team. ...
  • Become a decisive leader. ...
  • Learn to be patient. ...
  • Keep business documents.
5 Oct 2021

What is business model canvas tool? ›

The Business Model Canvas (BMC) is a strategic management tool to quickly and easily define and communicate a business idea or concept. It is a one page document which works through the fundamental elements of a business or product, structuring an idea in a coherent way.

What is value proposition in business model canvas? ›

Your Value Proposition is the reason why customers turn to your company over another. It solves your customer's problem or satisfies your customer's need. Each Value Proposition consists of a selected bundle of products and/or services that caters to the requirements of a specific Customer Segment.

How do you present a business model in slides? ›

However, creating a business model slide can be difficult if you have never created one.
...
The elements of a good business model slide are:
  1. Readability.
  2. Attention-grabbing design elements.
  3. High-quality and relevant images.
  4. Simplicity.
  5. Consistent branding.
21 Jul 2022

How is a business model different from a strategy? ›

A business model describes and explains how a company works and makes money. A business strategy describes and explains how, where and for what purpose and goal a business model will be used. The research seeks to ascertain whether there is any measurable relationship between a strategy and a model.

How many steps are there in business model? ›

Opinions expressed by Entrepreneur contributors are their own. Most technical entrepreneurs focus hard on building an innovative product, but forget that an elegant solution doesn't automatically translate into a successful business.

What is Square's business model? ›

Square is a merchant service company providing sellers with hardware and software tools to run their businesses. The company's CashApp enables money transfers and investments in stocks, ETFs and Bitcoins. The company makes money based on transactions via its payment products and through subscription services.

Why do we use a business model canvas? ›

"The Business Model Canvas helps visualize what is important and forces users to address key areas,” he says. “It can also be used by a team (employees and/or advisors) to understand relationships and reach agreements."

What are the most important assets required to make the business model work? ›

Key resources – the key resources building block describes the most important assets required to make a business model work. These resources allow a company to create value proposition, reach markets, maintain relationships with customers, and earn revenues.

What makes a successful business model? ›

The key components of a business model should include relating to your target customers, the market, organization strengths and challenges, essential elements of the product, and how it will be sold. Establishing this foundation guides the next planning tool — your product roadmap.

How many types of business models are there? ›

Here are 12 common business model options, all of which can be customized for a specific company or industry. A “disruptive business model” innovates on these basic structures. And lots of businesses earn money from multiple revenue streams, meaning their business models include several of these types.

Why is Square successful? ›

Square has been successful in growing its clientele by offering ease of installation and flat rate pricing. Square uses a flat rate of 2.75% for its clients, unless they are keying in transactions in which case the rate is 3.50%.

Can I use Square without a business? ›

If you're not a business, you can state that you're using Square as an individual or you can select a specific business type to best reflect the goods or services you provide. Licensed healthcare providers and pharmacies can accept HSA and FSA cards with Square if the business type is set to Medical.

Can I use Square for 2 businesses? ›

If you have multiple businesses or need individual separate accounts, you have the ability to create multiple accounts and use the same mobile device, reader, and bank account. You can only link one bank account per Square account, but individual Square accounts can share a bank account if needed.

What is business model and why is it important? ›

In its simplest form, a business model provides information about an organization's target market, that market's need, and the role that the business's products or services will play in meeting those needs. Business model innovation, then, describes the process in which an organization adjusts its business model.

How can a business model canvas make a business idea stronger? ›

The Business Model Canvas is a better and more reliable tool for startups because it's a representation of how you understand the business at a specific point in time. The Business Model Canvas is designed to be continually updated as you talk to customers, learn, and validate or invalidate your assumptions.

What is an example of a business model? ›

For instance, direct sales, franchising, advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that combine internet retail with brick-and-mortar stores or with sporting organizations like the NBA.

What is the most important element of a business model? ›

Your Financial Plan is possibly the most important element of your business plan. This is especially true if the business plan is aimed at investors or lenders. This section includes projections, budgets and goals that are unique to each business.

What are the key resources in a business model canvas? ›

Key resources can be physical, financial, intellectual, or human. Key resources can be owned or leased by the company or acquired from key partners.

Videos

1. Defining Your Social Impact Business Model with the Mission Model Canvas
(Carlsen Center)
2. CFA Incubator Support Program Session #1: Business Model Canvas - 1-page Business Plan
(Conservation Finance Alliance)
3. Why Your Business Plan is Missing the Mark (And How You Can Fix It) - Sparrowly Group
(Sparrowly Group)
4. What are the 4 Building Blocks of Every Business
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5. The Extended Business Model Canvas (EBMC @ OOP2021)
(Kydroon)
6. Industry Building Blocks – Business Development
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