Whether you are in the idea phase or currently own a business, the Business Model Canvas is an essential tool for success. It is designed to help you gain clarity on the purpose of your business, uncover your target customer, hone your marketing and ensure you are set up financially and logistically.
Testing Your Idea
The first section of the business canvas is all about “testing” your concept or business from customer to product. This is the part a lot of business owners skip and later come to regret neglecting. Let’s dive into the 5 elements of testing your idea.
Know Your Customer
Without customers you have no revenue and without revenue your business will go under. So first things first, figure out who your customers are. From demographics to their interests and where they hang out, you need to get super clear on who your business serves. Spend time getting specific on your ideal customer (ie. busy moms, weekend warrior athletes).
“We help _____ …”
Know Your Customer’s Problem
Successful businesses solve a problem. That problem can be summed up as the elimination of pain and/or pursuit of pleasure . Whether your customer is struggling to get healthy or find the perfect treat for a special occasion, make sure you are very clear on the problem they are experiencing. When you know the customer’s problem you can position your business as the solution.
“We help ____ who struggle with ____…”
Create a Solution (aka “Minimal Viable Product”)
This is the foundation of what you do – solve your customer’s problem. From helping your customer lose weight to giving them the special occasion treat that makes their event memorable, your purpose is being the solution.
When you create a product or service it’s essential that you start with a pilot or beta version aka “minimal viable product”. A MVP allows you to test your assumptions about your businesses and make improvements before a big investment and launching. We talked about this in our post “5 Ways to Know If You Have a Great Business Idea”, so be sure to head to that post to learn more!
Know the Alternative Solutions
The truth is you most likely aren’t the first one to create what you are selling. There aren’t many one of a kind ideas out there (if you’re one of them, rock on). So with that said, you NEED to know the alternative ways your customer is solving their problem. This comes in the form of doing competitive research. Knowing what other solutions exist to solve your customers’ problems helps you figure out what sets you apart.
Have a Solid Value Proposition
What sets you apart from your competitors is a solid value proposition. What does your product/service offer that is different? This could include things like amazing customer service, satisfaction guarantees, unique features and more.
“We help ____ do ____ by _____.”
That’s the crux of the Test It section of the Business Model Canvas. We recommend ALL businesses at all stages regularly use this section to ensure they have a solid idea that’s going to bring in customers and revenue.
Creating a solid foundation
The Business Model Canvas doesn’t stop there. Once you run your idea through the concept section, it’s time to get into the nitty gritty of creating your solid foundation.
Master Marketing & Sales
Once you know who your customers are, you need to create a plan to reach them. That’s where marketing comes in. New business owners often glaze over this section or just think throwing up a few social media posts is marketing, but there is more to it than that. Marketing is all about getting your customers attention, reaching your sales goals and creating a reputation. Be sure to spend time mapping out your goals and creating a marketing plan.
Map out Distribution
How are you going to get your product or service to customers? At first this may seem obvious depending on your business, but it’s definitely something you want to map out. Taking time to figure out your distribution allows you to foresee issues, create a customer journey, improve production schedules and more.
Create a solid Team
Success will hinge on who you surround yourself with. Be sure to create a professional team and support network that helps you stay on track, fills any gaps in skills and provides trusted advice. This can come in the form of lawyers, accountants, mentors and community support.
Keep your eye on Metrics
The dreaded numbers game…it’s an unavoidable part of running a healthy business. Whether you like math and numbers or not, you can’t ignore them. Setting up the essential metrics you need to track will be key to your success and growth. From Profit and Loss statements to sales reports – numbers will help you make smart business decisions.
Making money is one of the main reasons you are in business (not including your deeper why) so nailing down things like revenue streams, pricing and financials are essential to profitability and success.
Raising Startup Funds
Every business has different startup funding needs. Some businesses can be bootstrapped and others need lending to get access to more capital. No matter your funding needs, be sure to outline your startup costs and explore all your funding options.
You gotta spend money to make money. Running a lean business is crucial to your success. This means you need to know your expenses, costs of goods sold and all the ongoing costs in order to keep your business out of the red.
Alright that is the Business Canvas in a nutshell. It might seem overwhelming at first, but luckily you don’t have to figure this out alone. Your accountant and lawyer can help you through some of this, a mentor can guide you through concept stuff and there are resources right here in our region that can help you run through this whole process. You can get guidance from Business Advisors here at The Biz Foundry, Tennessee Small Business Development Center and Tennessee Tech Center for Rural Innovation.
Plus, our upcoming Start Up Your Startup program runs 2-3 times per year and will take you through all of this and more!
Don’t forget to download a copy of our Business Model Canvas so you can start running your idea and business through this process.