The Business Model Canvas
Imagine that Ximena and Diego want to open a torta delivery business in their neighborhood. A traditional business plan can run forty pages and take weeks to write. The Business Model Canvas fits on a single sheet and can be redone in one afternoon. That is its appeal: it forces you to say, in just a few words, how a company creates, delivers, and captures value, and it lets you see at a glance whether the pieces fit together. By the end of this page you will know whether Ximena and Diego's business makes sense.
The nine building blocks
What each block covers
Use Ximena and Diego's tortería as an example.
| Block | Question it answers | Example at the tortería |
|---|---|---|
| Value proposition | What problem do I solve or what need do I satisfy? | "A hot torta in 15 minutes" |
| Customer segments | For whom do I create value? | Students and office workers in the neighborhood |
| Channels | How does the proposition reach the customer? | WhatsApp orders and delivery by bicycle |
| Customer relationships | What kind of contact do I have with them? | Direct service and a loyalty card for a free 10th torta |
| Revenue streams | Why and how do they pay me? | Sales of tortas and sodas, \$45 per torta |
| Key resources | What assets of my own do I need? | Kitchen, grill, bicycles, the two partners |
| Key activities | What must I do well? | Prepare food, take orders, and deliver |
| Key partners | Which outsiders help me? | A bakery and a tomato and avocado supplier |
| Cost structure | What expenses does operating generate? | Ingredients, rent for the space, gas |
List the nine building blocks of the Business Model Canvas and explain in one sentence what each one covers.
List the nine building blocks of the Business Model Canvas and explain in one sentence what each one covers.
State which block of the canvas each element of a food delivery company belongs to: premises rent, the ordering app, "home-cooked food in 15 minutes", hired delivery…
State which block of the canvas each element of a food delivery company belongs to: premises rent, the ordering app, "home-cooked food in 15 minutes", hired delivery drivers, subscriber monthly fees, and vegetable suppliers.
The heart of the canvas: the value proposition
The figure shows the Business Model Canvas with its nine blocks. Identify the missing central block, marked with "?", and justify why it is considered the heart of the…
The figure shows the Business Model Canvas with its nine blocks. Identify the missing central block, marked with "?", and justify why it is considered the heart of the canvas: what would happen to the remaining blocks if it were poorly defined?
For a grocery delivery app, we know: value proposition ("groceries delivered home within one hour"), customer segment (busy families), channel (mobile app), and revenue…
For a grocery delivery app, we know: value proposition ("groceries delivered home within one hour"), customer segment (busy families), channel (mobile app), and revenue stream (commission per order). Propose, with reasons, the contents of the other five blocks: key partners, key activities, key resources, customer relationships, and cost structure.
Checking the canvas for consistency
In a company's canvas, these three blocks appear: value proposition "premium handcrafted product", channel "budget supermarkets", and customer relationship "one-to-one…
In a company's canvas, these three blocks appear: value proposition "premium handcrafted product", channel "budget supermarkets", and customer relationship "one-to-one personalised service". Identify two inconsistencies between blocks, explain why they conflict, and correct the canvas to make it consistent.
A traditional language academy with physical classrooms and in-person small group lessons decides to transform into a 100\ % online platform. Its new strategy consists…
A traditional language academy with physical classrooms and in-person small group lessons decides to transform into a 100\ % online platform. Its new strategy consists of replacing in-person classes with pre-recorded courses and live weekly tutoring sessions, reducing the monthly fee from $\$90$ to $\$20$.
- a) Analyze the transformation in the cost structure: identify which fixed costs are eliminated, what new costs appear, and how the academy's operating risk (operating leverage) is altered.
- b) Evaluate the impact of this change on customer relationships and channels. Justify whether this pivot implies targeting a different customer segment or if keeping the current one is viable, reasoning how it will affect the perceived value proposition.
The canvas versus the business plan
The full business plan is still necessary when you need to ask for a bank loan, look for investors, or apply for government support: those situations require detailed financial projections, a market study, and an operating plan. The canvas is the draft; the plan is the formal document.
Explain two advantages of the canvas over a traditional 40-page business plan when an idea is emerging (speed, overview, ease of adapting) and at what stage the full…
Explain two advantages of the canvas over a traditional 40-page business plan when an idea is emerging (speed, overview, ease of adapting) and at what stage the full plan is still required.
Business model patterns
Some business model patterns recur repeatedly: freemium, subscription, multi-sided platform, and long tail. Explain what each consists of and give an example of a real…
Some business model patterns recur repeatedly: freemium, subscription, multi-sided platform, and long tail. Explain what each consists of and give an example of a real or fictional company that applies it.
A bicycle rental company for tourists in a coastal city operates from commercial premises and charges by the hour. Its business suffers from two serious problems: marked…
A bicycle rental company for tourists in a coastal city operates from commercial premises and charges by the hour. Its business suffers from two serious problems: marked seasonality ($75\ %$ of revenue is concentrated in summer) and a new municipal ordinance prohibiting the parking of rental bicycles in public spaces.
- a) Design a redesign of the business model by acting on at least four interconnected blocks of the canvas (value proposition, channels, customer segments, and revenue streams) that allows for deseasonalizing revenue and complying with regulations.
- b) Assume the company decides to incorporate electric bicycles for a B2B segment (last-mile delivery couriers and hotels). Analyze how the key partners network, key activities, and cost structure are transformed compared to the original tourism model.
Summary
Back to the beginning: Ximena and Diego's torta business makes sense if its value proposition (for example, "a hot torta in 15 minutes") fits its segment, its channel, its resources, and its costs, and if revenue exceeds costs. The canvas shows you this on a single sheet.