Aaron Rodriguez explains how to define a business model using the Canvas method

WebWire
Sunday, December 4, 2022 at 2:47am UTC

To start your own business, you need to define a business plan that will serve as a guide to take the first steps. However, there are other tools that can help you graphically capture the basic principles of your SME. Aaron Rodriguez, an expert in business optimization, talks about the business model Canvas, which condenses fundamental principles for the operation of a business into a single sheet of paper divided into nine boxes. This scheme serves to specify in a descriptive way how an organization creates and delivers products and services, capturing its own value in the process.

The Canvas model is a powerful tool that allows you to unpack fundamental aspects of any business to visualize them both individually and as a whole. In order to provide a clear explanation, Rodriguez divides this model into nine niches.

The first is customer segmentation. “Although it is a desirable goal, attracting 100% of the market to our business is materially impossible. Therefore, we must determine to which group of people we will be able to offer our products or services. In short, we will have to define our target audience,” explains the specialist.

For the second point, value proposition, it is necessary to ask certain questions first. What does your SME offer? What is its differential value compared to the competition? What makes you unique? Why should your customers come to you and not to others? Having a clear idea of what your company offers is fundamental to establishing the distinguishing factor and, based on it, building the communication strategy.

Then there are the channels. Rodriguez explains that it is essential to establish communication channels through which your target audience will get to know your value proposition. “At this point, we will have to determine how we generate our brand awareness, the purchasing process, the delivery of the product or service, and also the after-sales services,” he adds.

The relationship with the customer is the fourth point. It may or may not be direct. In this section, it is necessary to determine whether in your business model there will be direct interaction (a neighborhood store, for example) or whether, on the contrary, you will enable self-service so that the customer manages everything himself. A third option is an intermediate point, that of automating some services.

Revenue sources should also be considered. Fundamental to any business, establish how revenue (which, in the end, should be profit) will be generated. Whether through a one-time payment or a recurring payment, there are several ways to earn revenue: from the typical sale to pay-per-use. Another possibility is the establishment of subscriptions.

The sixth niche belongs to key resources. In this block, you will have to write down everything that will be necessary for your business model to work completely. Rodriguez refers to physical resources (buildings, machinery, etc.), intellectual resources (brands, image rights), human resources (workers, collaborators, suppliers) and financial resources (cash, credits, etc.).

Key activities should not be overlooked. “In relation to the value proposition, we must determine which are the most important processes for the performance of our company's activity,” Rodriguez explains. “In this case, we will have to think about the whole chain: from product creation to delivery to the customer.”

The eighth would be key partners. It is common for companies not to perform all the necessary processes themselves, but to interact with each other and become suppliers or partners to ensure the survival of the business model.

And lastly, the key structure must be taken into account. Practically any operation of your business model will have different types of costs associated with it. In this box you should think about whether it is possible to eliminate some expenses or, if not, design an efficient cost model that guarantees the sustainability of your SME.

About Aaron Rodriguez

Aaron Rodriguez is an expert eCommerce consultant in Latin America. He helps businesses throughout the region optimize all of their eCommerce operations to increase sales and retain customers, and also has extensive experience in the development of strategic and external alliances to promote departmental and organizational objectives. He has traveled extensively throughout Latin America to assist a number of companies and, when he's not traveling, he dedicates all of his available time to his wife and children.

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