How to get your business model on paper in 15 minutes or less.
Updated: Jul 21, 2021
Many new entrepreneurs come to me wanting a logo design or a website design, or social media content, without fully thinking through how their business should operate in order to make money. Now I'm not here to tell you that you need to put together a 40 page Business Plan / SWOT analysis - the kinda stuff they teach at business schools. What I'm about to show you is a quick & easy way to get your entire business model on paper in 15 minutes or less, so that you can get a full picture of how your business is set up to make money. I will use this nifty tool called the BUSINESS MODEL CANVAS, and I'll be using my own own branding & design consultancy as a example to show you how everything fits together.
So apparently there are nine elements to a business model. That’s right… nine. The number that comes after eight and before ten. I can feel your anxiety on the other side of the screen as you read this. But in my defense, I didn’t make up the rules. Some guy from Switzerland did. Alex Osterwalder built a tool called the BUSINESS MODEL CANVAS to help entrepreneurs map out there business model on a single sheet of paper.
Now most of MY clients are solopreneur consultants, or 1 to 5 people professional service firms who work in industries ranging from real-estate, finance, law, to fitness coaching, interior design, and photography - basically any business that gets paid for their thinking. They're probably just starting their business, or they're coming to me to do a re-brand in which case I still make them do this exercises, which is fill the Business Model Canvas - that puts their entire business on a single piece of paper with gives both them and me an overview of how their entire business works. This is the first step before getting into the brand strategy, design, marketing etc.
So this is what the Business Model Canvas looks like. You can download it from strategyzer.com, or you can download my free e-book, and in the first chapter you can fill it out yourself. So the canvas is split up into nine sections. And each section represents one element of your business model. And this is a very important point. Because up until the Business Model Canvas was released, there was really no shared language to talk about business models. We didn't have a shared set of definitions, no one had really come along and defined for us what a business model entails. Until strategyzer.com came along and said, a business model consists of these nine elements, you have to have these in place, if you don't have any one of the nine in place, then your business model is incomplete.
Now these nine elements can be split up into two sections, there's the front stage, and the backstage, which is exactly what it sounds like the front stage is the part of the business model that's visible to customers and to suppliers and to the public at large is what people see about your business. And the backstage is everything that happens behind the scenes that people don't see.
So let's go through the five elements of the front stage of the business model first. This is the right side of the canvas.
1. CUSTOMER SEGMENTS
The first element is Customer Segments. So this is all about who you serve. Who are your clients, who are the people in the world that your business, your firm, your enterprise is creating value for. So here, you want to list out all the different customer segments that you serve.
So in my case, as a branding & design consultant, my customers are expert solopreneurs, or small boutique professional services firm (1 to 5 people) Typically, in a b2b Consulting environment.
2. VALUE PROPOSITION
The second element is the value proposition. Now that you know who you serve, what value are you creating for each of those customer segments? Now a really important aspect of the business model canvas is that everything has to fit together. So you cannot have or you should not have a bunch of different ideas that aren't connected to each other thrown onto a canvas. Everything has to fit together. So when you look at the value proposition, you don't just throw a value proposition that sits there on it's own in isolation. No, it has to be connected to the customer segments. And it has to be specific to each customer segments. If you have two or three different customer segments that you target, you better have two or three different value propositions mapped to each customer segment.
So how does this pertain to my design business? Well, my customer segments are solopreneur expert practitioners & small professional service consulting firms. They are very good at what they do, but they're not marketers, nor are they designers. They're a small group of people, they don't have a lot of marketing expertise when it comes to growing their firm and taking things to the next level, and generating leads and finding new business. They don't really know what to do. They've done a few things in the past. And some of that's worked. Some of it hasn't worked. But it's very sporadic, very random, and not very strategic. So they need somebody like me to come in, understand how their business works, what makes them different from their competitors, who are their target audience, and make sure they look and sound the part, to attract their ideal target audience. I also guide them through a process of building a marketing plan that makes sense for their firm. And more importantly, they can actually execute. So that's my value proposition - I come in, and I help them with their brand strategy, logo design, website, social media content - and then build a marketing plan that they can execute on their own, to bring in new business for their firm.
3. REVENUE STREAMS
The third element is revenue streams. So now that you know who your customers are, who you're targeting, and you know what value you're creating for them. The next question is, how much and how are they going to pay you? What is the structure of that revenue? What is the structure of the transaction? And how much does it cost?
So for business, I present all my clients with 3 tiers of branding and design packages (where I do their logo, website, social media content etc.) I charge U$10K for Branding & Design for solopreneurs, US$20K for professional service firms, and $60K for firms that want to play in the big leagues. After I've delivered all the digital assets, their website goes live, I've given them the tools to go ahead and execute their plan - our engagement is complete. My other revenue streams are coaching calls where I charge $150 per hour to offer very specific targeted advice. And then there are project works, where I charge on an hourly basis to produce marketing deliverables like social media ads, video ads, brochure designs, microsites etc.
4. CUSTOMER RELATIONSHIPS
The fourth element (and we're still on the front of stage side of the business model canvas) is customer relationships. So this is really interesting because it's something that is quite often overlooked unless you go through an exercise like this. Because this is all about, what kind of relationship are you creating with your customers? Is it a transactional relationship where they buy from you once then they move on? It's kind of a one time deal? Is it a recurring relationship where they buy from you over and over and over again? Is it a subscription relationship where the revenue is automated? And you don't need to do anything in terms of sales? You just kind of keep delivering value? And they keep paying? Or is it something else altogether? So this is where you want to define the nature of that customer relationship, and the nature of the transaction.
Now, in terms of MY customer relationships, there's a few different things happening here. On that first deal, it's very transactional client comes in. They need branding, design, and a marketing plan, and they need me to help them steer their ship in the right direction, so they can go ahead and bring in new business and attract high-paying clients. So that's a very transactional relationship, a one time deal where they pay me a fixed fee ($10K, $20K, $60K depending on what their size & business ambitions are). But some clients will want more support from me. They'll want ongoing coaching to help them through the process of execution. So there I have a coaching program (that I charge $150 per hour), which we can also work on a monthly retainer basis / subscription basis. The third type of customer relationship here, where if a client needs something like brochure design, social media videos, social media ad campaign, or any other kind of deliverable in the marketing realm, then I work with them on an $150 hourly fee basis.
And the fifth and final element in the front of stage section of the business model canvas is channels, which is pretty simple. How do you reach those customers? So the customer segments that you defined earlier? What channels do you have access to, to reach them.
Some of the channels that I use to get in front of my prospective clients are things like LinkedIn, Instagram, I'm a published writer on Medium.com, I get referrals from Clutch.co, and am just in the process of re-booting my YouTube channel, where I will be creating videos offering advice on branding, design, and marketing for solopreneur expert practitioners and professional service firms that get paid for their thinking.
So those are the five elements that make up the front of stage section of the Business model canvas, this is what people see about your business from the outside.
Now, let's look at the remaining four back stage elements of the business model canvas, and I'll define what they are for you first, and then we'll go through and complete it using my design business as an example.