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.
6. KEY ACTIVITIES
So first, we have key activities. So this is now speaking to how exactly do you create the value that you deliver to those customer segments? We defined who your customers are, we defined the value that you create for them. Now the question is, what are the key activities that you need to perform internally behind the scenes to create that value.
In my case, my key activities are really that interaction with clients. So when we get on zoom, and we have our discovery calls, coaching calls, and we have our brand & marketing strategy sessions, that interaction that back and forth, where the client's presenting me with their ideas and business objective to me, I'm giving feedback, I'm asking questions, we're brainstorming together, we're sharing ideas, that's where value is created in my relationships.
7. KEY RESOURCES
Next up we have key resources. Now this is very closely linked to key activities - what are the key resources that you need to be able to perform those key activities effectively?
Now in terms of key resources, what I need to create that value is first of all, I need time on my calendar. And this is very important - I need to block off time in my calendar, where I'm talking to clients, that is the most important thing that I do to create value for my clients. So I need that time blocked off any time on my schedule, I need to make sure that nothing else is getting in the way of spending that time talking to my clients. Which means another key resource that I need to be able to execute on those activities, is support. There are so many moving pieces in my business, not only on the client side, but also on my marketing side. There's me creating Youtube videos, writing LinkedIn articles, Instagram carousels, e-newsletters. And there's all kinds of other moving pieces that are required to keep the gears turning. So I need support to help me keep the marketing side running smoothly, but also to keep the client side running smoothly.
8. KEY PARTNERSHIPS
And then we have key partnerships. Again, you can see how these all fit together : key activities, key resources, key partnerships. Who else do you have in the stable? Who do you have access to? Who do you have relationships with that enable you and facilitate for you to be able to perform those key activities that create value for your customers.
Now in my case, I create most of the value behind my core offering, the branding designs, the website designs, the social media content creation & marketing planning coaching offering, I create that value in-house, it's between me and my support staff where the lion's share of that value is created. But I do bring in partners when it comes to things like website building / programming, copywriting, SEO, video animation etc - there are partners that I bring on to help to execute some of those services that I don't have in-house.
9. COST STRUCTURE
And then finally, all of that comes together in defining what your cost structure is, you've got your key activities, your key resources, and your key partnerships. All of those things cost money. And so here you define what your cost structure is, and how much it costs you to deliver the value that customers pay you for. Now cost structure is typically broken down between fixed and variable costs.
Now in my case, fixed costs would be things like my office space, my salary, my support staff salary, anything that is fixed and does not vary with the amount of work that we do. That's a fixed cost. And then variable costs are costs that we incur in the process of delivering value to customers. So maybe it's a piece of software that we use to facilitate some of the work or maybe we bring on some extra help in a support capacity (like freelance & designers, animator, and programmers etc.) to help with some client deliverables. Those are all examples of variable costs.
So that's the business model canvas in a nutshell. And I want to share with you some of my reflections and having gone through the exercise for myself for my own business and what I got out of it.
The first takeaway is that putting everything about your business on a single sheet of paper is incredibly empowering. Because as a business owner, I don't need to tell you, there are so many moving pieces, there are so many things to keep track of. There's so many things that are on your mind and one of the nagging frustrations that goes through my mind is, am I missing something? And if so, what am I missing? And how do I close that gap. And what this process allows you to do is put all the important stuff on a single sheet of paper. Yes, there will be details missing. Of course, you can't put every single detail about your business on a single sheet of paper. But the important things, the things that make your business model work, the things that make the gears of your business turn and make it profitable, and sustainable and scalable. They're all there on one sheet of paper. And when you get so caught up working in your business, this tool in this exercise really helps you step back and begin to think about working on your business.
The second takeaway is that it forces you to make sure that all the different elements of your business model actually fit together because once you put all this on paper, it's really hard to ignore the pieces that clearly don't fit. I can guarantee you that there will be elements that you put onto the canvas that simply don't belong. They don't mesh with the other elements, maybe it's a value proposition that clearly you can't deliver on. Or maybe it's a customer segment that you clearly can't serve. Or maybe it's a revenue model that the rest of your business is not working to, to further.
The third takeaway is this will uncover opportunities that you did not know existed, again, because you're going to see everything on paper all in front of you, and you're going to be forced to put everything together. You're going to see where there are opportunities to create more value that you didn't otherwise know about. So maybe, you notice that you have a strong presence in a particular customer segment, and you have relationships there, and you might have a revenue model, but there's a value proposition that you never thought of. And adding that value proposition into the mix enhances your ability to create value for those customers, and maybe charge more.
The fourth takeaway is that if you're doing too much, if you have too many disparate moving pieces in your business model, then this process will make that very apparent. You'll be able to see very quickly and very clearly, if you lack focus, if you have too much going on. And if all those things are not clearly contributing to making your business model work, you're gonna see that right in front of you.
Finally, the fifth takeaway is that this will definitely uncover some areas of your business model that you haven't really thought about. I know for me, the key partnerships was one element that I probably haven't thought enough about, I have some relationships with partners that I've been referring work to, and vice versa. It's very organic, and it's very kind of informal and sporadic. But I haven't really thought long and hard about how to establish key partnerships that will further my business interests.
So if you are interested in putting together a Business Model Canvas for your business, you can find it in the first chapter of my free e-book ... Independent Consultants: How To Brand & Sell Your Expertise Online. It's a pdf workbook, where you can fill out the Business Model Canvas as pertaining to your business. I also reveal how we work with our clients in terms of doing branding, design, digital & social-media marketing to set their business up for success.
If you have business partners I do you recommend bring them together in a room schedule a meeting, and fill out the Business Model Canvas together. At the very least I can guarantee you that putting your entire business model on paper, and thinking through each of the nine elements of your business model will be incredibly empowering and will generate all kinds of insights that you can use to improve your business model and improve your business.
Now if you need extra help putting your business model together and need someone to bounce ideas off, then I recommend you purchase my "Find Your Extraordinary" branding package, which I sell for US$4750. This is a 1 hour deep-dive interview where I will get to know everything about your business - where you are, where you've been, and where you want to go - and then I will tell you what your extraordinary brand opportunity is, and what you need to start doing, and stop doing, to own it.
Hi, I'm Denny Kurien.
I'm a Branding & design consultant for experts, and professional service firms that get paid for their thinking. I help experts build extraordinary brands that attract high paying clients.
If you want to take a glimpse of HOW we work with our clients, download my FREE e-book, "How To Brand And Sell Your Expertise Online"