Business Model and Business Canvas

Business Model and Business Canvas

A business model defines how a company creates and captures value for the customer. This process comes before the business plan and helps to define the various elements that give the company its purpose. The business model enables the viability and profitability of a company – whether already established or just starting out – to be assessed.

What is the Business Model Canvas?

The best-known tool for developing a business model is Alex Osterwalder’s Business Model Canvas. It is primarily used to create new business models or to innovate within existing ones. Using the Business Model Canvas ensures that your business model includes all the relevant elements, makes sense in the market, and is capable of generating profits.
modelo de negocio business model canvas
You can download the official Business Model Canvas template here.

Key elements of a business model

There are nine key elements to creating a business model that makes sense, ensuring both customer satisfaction and company profits. Each of these elements is interrelated, and can be understood as telling a story that begins with an initial problem and ends with a solution. Naturally, the elements outlined here serve as a guide, and each company adapts them as it sees fit.

The key elements of a business model are as follows.

  1. Customer need. What is the potential customer’s situation? What is their problem? What needs do they want to meet? What are their preferences?
  2. Value proposition. What need do we meet? What value do we create for the customer? What sets us apart?
  3. User experience. What is the customer’s ‘customer journey’? How do they feel at each stage?
  4. Distribution channels. How do they discover, purchase and evaluate the services/products?
  5. Key activities. What types of activities are necessary to create value and profits?
  6. Required resources. What resources are needed for the business to operate (intellectual, physical, human, etc.)?
  7. Revenue streams. How will the business generate revenue? What will the revenue streams be?
  8. Cost structure. How are costs structured? Which are fixed costs and which are variable costs?
  9. Partners. What types of organisations can contribute to the business?

Example of a business model

Alex Osterwalder, the creator of the Business Model Canvas, explains how to understand the business model in a very accessible 7-minute video.
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