9 Important Points to Understand About the Canvas Model Business

The business model canvas, also commonly referred to as the business model canvas in Google queries, is an essential framework for any entrepreneur. Its key points are crucial, requiring careful scrutiny.

A business has the opportunity to thrive and grow when it has a clear vision and understands to implement steps with discipline. The presence of the business model canvas aims to map out these aspects, ensuring that you and anyone involved in the business stay on track with its execution.

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But What Exactly is the Business Model Canvas?

Business Model Canvas is a management strategy used to articulate business ideas and concepts into a visually understandable format. It provides a framework that simplifies the understanding of business ideas to make it more effective and efficient.

This framework significantly simplifies the understanding of your business for you and all the people involved. You don’t need to explain lengthy presentations with dozens of slides anymore. Now, all the core and essential points can be delivered in a single clear and detailed display.

Introduced in 2005 by Alexander Osterwalder in his book titled "Business Model Generation," this framework represents a simple yet comprehensive approach to capture the essential elements of a business.

9 Fundamental Elements and Examples in Business

In this concept, there are nine main fundamental elements that need to be addressed. Below is a brief explanation of these nine points, complete with examples for easier understanding.

1. Target Market

The target market or customer segment emphasizes who will be the target audience for your business. Market segmentation is the first component in determining business strategy because it uses perspective on how a brand communicates to bring important points.

Some examples of target markets include final-year college students needing thesis assistance, stay-at-home moms with side hustles, or drivers with daily low income.

2. Consumer Value Propositions

The second point, also known as value propositions, refers to the development of a plan to deliver products with value propositions to the target market. This proposition can be the best way for a business to provide solutions to specific market problems.

For example, a needle product has a clear proposition for the tailoring industry, making it easy to sell. In contrast, smartphones require clear propositions in terms of economics, features, exclusivity, luxury, and more.

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3. Network

After determining propositions, you must have the appropriate marketing delivery channels. Where and who are your target market or customers? What media do they consume daily?

Choosing channels poses its own challenges because the modern era offers many opportunities and challenges from social media. You can analyze marketing through Facebook for its users, TikTok for younger users, or X for users accustomed to consuming detailed explanations.

4. Customer Relationship

In the business model canvas, the fourth point is customer relationship. This point focuses on how a measurable, planned, and conceptual relationship and interaction with customers are carried out to produce the desired impressions.

For example, you can use channels like live chat, customer service, instant messaging like WhatsApp Business, or email. Each provides a different impression and must be chosen carefully.

5. Revenue Sources

Practically, every business you create will be oriented towards profit or revenue. Without a smooth cash inflow, a business will have no profits and clear operations.

The most tangible revenue example is the difference between selling price and expenditure for production and marketing. However, in this digital age, revenue is not the only source, but also comes from other points that can be optimally utilized. Nevertheless, these classic revenue sources must still be maintained as the foundation.

6. Business Core Activities

Key activity in a business is also one of the nine pillars that must be considered in the business model canvas. What activities will you do as your business work every day? This needs to be explained in detail so that everyone knows their tasks.

Starting from product design, product and market research, selection of appropriate media, circulation of owned information, to sales strategies executed on a daily basis, all must be clear and well-planned.

7. Key Resources

The seventh element is key resources or human resources and working partners. This element is related to daily operations, so it must be carefully considered to ensure optimal outcome supported by high quality of human resources.

This segment focuses not only on labor but also on partners and vendors supporting the business. Choosing vendors and good contracts will lead to productive long-term relationships, allowing the business to sustain and grow.

8. Business Collaborations

In the business model canvas, business collaboration will cover suppliers and partners that are suitable for doing business. Not only that, other factors included in this eighth point such as brand ambassadors or KOLs chosen to convey messages to audiences.

For example, you can determine delivery methods and who will be the right figure as the face of the brand to convey the message and value of your business.

9. Cost Structure

The last element of this discussion is the cost structure, which details the costs required to run the business. You will focus on production costs, salaries for your employees, vendor costs, raw material purchases, machine, and facility maintenance.

Benefits of Using Business Model Canvas

There are at least four main benefits of applying the business model canvas in your company. In summary, they are as follows:

Shorten a long explanation. Long-winded explanations are no longer necessary since all the key points can be seen directly on this sheet.
Company focused. Since all the key elements in the business have been explained, each part can work and focus on its portion. What is done has been explained, and instructions for each job have also been clearly written.
More structured business. This business model canvas helps you to have a clear structure in every component of your business. As long as you stay consistent and disciplined, your business ideally can continue to grow.
Minimizes risks. Presenting all the important aspects on a single worksheet makes it easier for people to identify potential issues and risks early on. This way, risks can be minimized from the start.

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Empower Your Business: Choose the Ideal Insurance Coverage to Mitigate Business Risks!

The right insurance can help you in facing various risks, such as business or personal issues. Benefits can be obtained when the conditions meet the agreements in an insurance policy, so the losses don’t worsen.

AXA Insurance Indonesia presents the SmartBusiness Insurance product, which can be the right choice for your business. Insurance benefits will be provided if the following risks occur:

Termination or closure of the business you own due to physical damage of the property caused by any risk except those mentioned in the policy exclusions.
Death or disability caused by an accident.
Suffering from prolonged illness requiring hospitalization for more than twenty days due to any illness except those mentioned in the policy exclusions.

With SmartBusiness Insurance from AXA Insurance Indonesia, you can solidify all the points designed in the existing business model canvas. Plan maximally and get various useful protections from the right business insurance, AXA Insurance Indonesia!

References:

https://www.gramedia.com/best-seller/business-model-canvas/
https://www.ruangkerja.id/blog/contoh-bisnis-model-canvas-dan-manfaatnya-bagi-perusahaan
https://www.jojonomic.com/blog/business-model-canvas/
https://www.mas-software.com/blog/bisnis-model-canvas-pengertian-tujuan-dan-contohnya
https://www.jurnal.id/id/blog/2018-memahami-tentang-bisnis-model-kanvas/