Planning is the very first and the most important step before you start any work, activity, project or business. Planning is important for both personally and professionally. Military says –
“If you Fail To Plan, You Plan to Fail”
Planning helps in effective decision making, and also help to anticipate problems so that we can find solutions to cope up with it.It gives a sense of direction to whatever you do. As we have our objectives predefined it becomes easy to focus on and work. Similarly we need to plan before we start to build a business /start up.
What is a Business Plan?
The process to plan and put on paper your business focus, establish future executions, define resources and various entities involved in the process execution is nothing but your business plan.
What is the Business Model Canvas (BMC)? Why do we use it?
Business Model Canvas is a strategic management tool that helps to visualize various fundamental elements of the product/service you are planning on to build.
Before you start a company, firm, organization, or any business you should have a predefined plan of execution. You need to know the answers to the questions listed below:
- What is the market need?
- Who are your customers?
- How much investment do you need to get expected returns?
- What expertise you will need?
- What are and will be your future milestones?
- Backup plan
- What will be your go-to-market strategies? and many more.
A BMC strategic management tool that quickly explains-
- To quickly draw a brief picture of what your service/product is about.
- It makes easy for anyone to understand your services without direct communication.
- Who are your target audience / what age group/gender/geography will your business be targeting?
- What kind of expertise you will need to run the business?
If you don’t plan before you start your business you are likely to face consequences. What if the service/product you provide has the best facilities but still out of market need. Or it may also happen so that you have a good service but you are targeting the wrong audience/customer age group.
In such a scenario you will face loss. And to avoid this loss business model canvas is a must.
Business Model Canvas (BMC) is divided into various fundamental modules based on what different aspects that are required to know for sustainable development of any business idea – from technical to managerial perspective.
Let us have a look at every fundamental module of BMC:
Entities that utilize or depend on your business key activities to build their service/product are your key partners. These can be other business, organizations, consumers, or suppliers that help your business to work
For example, if you have a manufacturing company, you will have suppliers as one of your key partners. The supplier is one who provides you with raw material and indirectly will help you to run the business.
Activities that include marketing, production, administration, problem-solving within your business are the key activities of your business.
To know what are your key activities try answering the following questions.
- What values preposition your business will provide to the customer?
- What resources are used/required?
- What expertise is required?
- Strategies used (example: go to market strategy)
- What tasks are required to carry out to achieve value exchange?
- Web development
The Value Proposition is the foundation of your business model. Answer to – why the client/customer will choose your service /product states your value proposition.Good questions to find out what value proposition you provide are:
Ask yourself –
- What is the problem I am solving?
- Is it the market need?
- How large the crowd will be benefited?
- What difference do I serve from the existing services in the market?
This is a very basic unit for your business plan. It defines how you interact with your customer/clients. Do you interact with them in person or you have online communication. This fundamental unit plays a very important role to identify opportunities. Communication with the customer helps you to identify their needs. This will then be a helpful step in customer retention.
Ask questions, get feedback, try to figure out what they expect from the market, and then come up with a service/product that will meet their expectations.
This will be beneficial for customer retention.
Customer Segment is dividing a customer into groups based on different criteria’s like- age, gender, interests, etc as per business need.
Things to consider when determining your Customer Segments:
- Who is your target audience you are solving the problem for?
- What age group will value my service/product?
- Is my service/product gender specific?
- What are the characteristics of the people who are looking for my value proposition?
You can learn about the customer segment from the customer relationship.
Channels are a medium through which your customer comes in contact with your business. Like we see ads on social media, click the link and view the product/service details. So here social media is the channel through which the customer reaches our service. This generally comes under marketing plans.
Examples of channels:
- Social media
- Public speaking
- Electronic mail (email marketing)
- SEO (Search Engine Optimisation)
- Sales and promotions for commissions
- Content marketing
- Community building
- Offline advertising etc.
Apart from the technical expertise what practical resources you need come under key resources. Let’s make it simpler what things are needed to do business-
- Office space
- Hosting/ Internet connection
- Car/bike (Transportation)
- Oven/water filter/tea maker
This unit is very simple to understand. Answer to the question – what amount you charge/apply as the monetary cost of operating as a business. Now, this can be both a fixed cost and variable cost.
Fixed Costs – Costs that remain unchanged e.g. employee salary.
Variable Costs – Costs that vary depending upon various factors like festivals, pandemic, etc. this is because the change in the market creates a need for services. This is where the variable cost comes into role.
How business converts your Value Proposition into financial gain. Simply ask one question – how do you gain revenue?
There are many different models of revenue generation-
- Pay per product (pay per view)
- Fee for service
- Freemium model
- Equity gain etc.
Business plan comprise of answers to questions regarding organizing, staffing, leading, finance, controlling, designing and various other processes that help an business to run with an ease. If you follow all the guidelines mentioned in the above article it will surely help you to build a perfect business plan . Hope you find this article useful.
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Thank You For Reading !