5 advantages you will enjoy with a clear business model

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But, her idea didn’t work out. Her frustration reached a point where she thought she would never make any headway and resigned herself to the old job she held for many years. What was Cristina missing? She lacked a clear business model.

Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?

Luke 14:28

Developing a clear business model is key to the success of any enterprise, whether it be commercial, such as a restaurant or an antique store, or a non-profit one, such as a school or church.

Fortunately, there exists a simple way to “first sit down to estimate cost” before building the tower. The answer is the canvas provided by Alexander Osterwalder in his book Business Model Generation. The canvas provides 5 advantages you will enjoy with a clear business model and allows you to analyze the feasibility of your enterprise before reaching the point of frustration.

The Canvas

I have used the Business Model Generation canvas on various occasions. I used it, for example, during the initial stages of this blog, and I am using it for the launch of new enterprises, of which, you will soon have news.

It is comprised of nine areas that you need to determine before you set about your project, as you can see in the following figure:

The nine areas are:

• Value proposition
• Customer Relationships
• Channels
• Customer Segments
• Key Activities
• Key Resources
• Key Partners
• Cost Structure
• Revenue Streams

These areas are listed in the order in which they are meant to be developed, beginning with the value proposition. The activities to the right of the canvas are activities which generate revenue while the ones on the left are activities which generate expenses. Your enterprise must generate sufficient revenue to be sustainable in the medium and long term.

The canvas has the following 5 advantages:

It allows you to define a concise value proposition

Your value proposition should answer the following question: how will my idea make the world a better place? Your value proposition should focus on the end result and ways in which people will benefit from the value you are adding to their environment.

For example, if you are planting a congregation, answer: what difference will this church make in this community? Or, if you are creating a new service: What problem am I going to solve? Or, what need am I going to address? And, what is my value added?

It allows you the define your detailed target audience

MI like to fill out my business model generation canvas in each line by beginning with the phrase: “My ideal customer…” This makes the model oriented toward my target audience. With the canvas, you can define who your potential customers are, how you are going to relate to them, and what their specific needs are.

For example, within the context of a church, you can define the group of people on whom you will focus your ministry, and within that group, what subgroups (or segments) exist. Then you can define strategies that you are going to use to reach and maintain a close relationship with them.

It allows you to define the resources you will need

All trees require a seed. All enterprises require an initial seed of talent, time and treasure for this to grow. The talent that you have will determine the activities that you can carry out, or not, while time will allow you to schedule the activities needed to make your idea become a reality.

This is dependent upon certain resources, some of your own, and some others complemented by key partners. It is very important to make a full inventory of human, physical, and technological resources. For example, if you are going to launch a web site, you will need to evaluate your technical abilities to know if you will be able to do it, or if you need to partner up with someone who has the abilities you lack.

It allows you to conduct a cost analysis

Talent, time, and treasure, whether your own or that of key partners, are not free. That is where many endeavors fail by failing to do calculate, or produce an insufficient cost analysis, as is expressed in Luke 14:28 in the aforementioned passage.

Within the cost structure, you can define cost priorities by order of importance, frequency and amount. That way, you will know what things you can dispense of if necessary.

It allows you to conduct a revenue analysis

The purpose of any enterprise is to be productive so that your revenue may allow you to deliver your value proposition to the beneficiaries; greater value to the greatest possible number of people. Without revenue, your model will cease to be sustainable.

What will be your revenue sources? How will you increase these sources? How can you facilitate the movement of money so that you may receive it quicker, or more frequently, without hurdles? Explore all possible sources, be it through the payment of products or donation. Consider these corporate donations from patron organization to which you may be affiliated.

At the end of your model, consider if delivery of your value proposition to your target audience with the resources outlined, will tip the revenue scale in your favor. If so, then you have a feasible model. If not, adjust your model until you succeed. When your model is ready, put it into play.

If you wish to learn more, remember to acquire the book:

Comment on these concepts in the blog or on social media. You can begin by answering:

How about you, do you have a new idea you would like to move forward? What model are you using to plan your new enterprise?