Business simulation using the canvas method is not a very widespread one. Nevertheless, it’s a viable approach. Canvas contains nine blocks, each of which characterizes a certain element of the business process.
Consumer is the initial element of canvas. A definition of the main consumer is given here. Having defined the target audience, the value of the market offer is determined. After, it’s necessary to describe the distribution channels, through which the product is brought to the consumer. Relations with the consumers make up the fourth part of the canvas.
All the above-mentioned processes form the opportunity to receive money, i.e. incoming cash flows. To do this, it is necessary to consider the segments of key resources and key activities that create the basis of production.
Another very important section of the canvas is the research of the potential partners, which make the production of goods and services possible. The structure of expenses that are inevitable for any business is the last block.
The fundamentals of canvas
Focusing on the customer
Canvas is based on the paradigm of solving a client’s problem, on which the production is focused. Some supporters of the classic business models criticize the business canvas for being a too product-oriented approach, but this is precisely what matters. Positioning this method for business planning as a tool for evaluating and analyzing the very idea, the producers become more involved in the process and this is the main purpose of the canvas.
Every manufacturer in the world wants to talk about his solution. So, you need to pay a close attention to this.
Concentrating on innovations
The canvas has a section called Solution, which is one of the smallest sections of the document. It is not because the development of an excellent solution is not important, but because the development of the solution is only part of the true startup product. It is the business model, not the solution itself, which is your true product.
While startups fill the canvas with their ideas, they quickly begin to realize that the crystal clear idea in their head is not so crystal at all. Moreover, most of the failures of startups happen not due to the inability to create the product they intended to, but due to the inability to understand and create the product that consumers really need.
A deep understanding of your customers’ needs is a necessary prerequisite for creating an ideal product.
Simple to understand
Creating the most simple and intuitive canvas structure to fill in is one of the key tasks of its development. It makes no good to offer startups the creation of a business model, in which they will have to read descriptions of users, products, technologies considering the fact that most of them do not use business planning at all.
Remember the main rule for any innovative product:
“Before you ask the customer to use your product, you must understand you are asking them to reject the alternative one.”
The canvas version has been refined and improved during thousands of hours of testing directly with startups. Apart from using it in colleges and universities, it has been recently admitted in several higher educational establishments. It was even successfully tested in a group of 9-12-year-old children during the event which is an analogue to Startup Weekend.
Searching support versus direct implementation
At the early stages of creating a product, everything seems possible and it’s difficult to capture all the features in the business plan. The solution is to create several variations of the business model and oppose them to each other.
Of course, the greatest changes frequently occur during the process of discussing the ideas with other people. When you present a page of canvas to people, they cannot but read it and express their own opinion. This is a real success.
You can use the canvas to receive a quick feedback from your colleagues, mentors or investors. This allows you compare all thoughts, find logic errors and understand the greatest risks of your model.
Easy and convenient canvas interface allows change the model flexibly and regularly using previous versions to track the evolution of the business model. While the business plan deals with the Plan and Implementation approach, canvas adheres to the more iterative Search and then Implementation approach.
How to build a business canvas in Excel
In order to receive calculations for creating a business canvas, upload a business plan sample to Excel, enter your own figures and receive planned cash flows and financial results. These calculations are enough to present a short business plan in the form of canvas.