Well, let's go back to my idea for a bit.

I said I wanted to build project management software.

Now, I may think that I know how to start a business around this idea, but

in reality, I've probably just scratched the surface from using some of

the products out there.

While that gives me good insight on the pain points and

what's lacking from existing solutions,

I need to understand the business before starting my own venture.

By this, I don't mean that we spend a lot of time reading, planning and

accounting for every scenario.

No.

We want to spend just a bit of time planning and

more time actually doing things.

A perfect tool for our needs is the Business Model Canvas,

developed by Alexander Osterwalder and his team.

As described on their site,

the Business Model Canvas is a strategic management and entrepreneurial tool.

It allows to you to describe, design, challenge, invent and

pivot your business model.

If that sounds complicated, don't worry.

We're going to walk through each part.

The Business Model Canvas takes an idea, whether it's a new business or

even a re-imagining of an existing model, and

breaks it down into nine different sections.

We then ask some important questions in each section to help us

understand our model.

This is what the canvas looks like.

First up, we have our value proposition.

[SOUND] Here, we talk about our [SOUND] idea.

What makes it unique?

What problems does it solve?

In our next [SOUND] section, customer segments,

we're going to paint a picture of what our different customer segments look like.

[SOUND] Next, we have our channels.

How do we deliver our product or service?

Channels connect our value proposition to our various customer segments.

There can be multiple channels for

a single business model and it's important to know the characteristics of each one.

[SOUND] Customer relationships.

In this section, we explore our interactions with our customers.

[SOUND] How do we communicate with them, make them aware of our product and

keep them happy?

What activities [SOUND] are absolutely essential to running our business?

This section lists our key activities.

[SOUND] Similarly, we have key resources.

What resources do we need to make sure we complete these key activities?

[SOUND] We also have [SOUND] key partners.

Are there any parts of our business model that others can do [SOUND] better?

If so, who are these key partners and what can they do for us?

The bottom sections are quite important.

[SOUND] First, we start with revenue.

How do we make money?

What kind of revenue model should we explore, and

what pricing scheme should we [SOUND] implement?

And last, we have our costs.

[SOUND] What will it take to run this company that we're proposing?

[SOUND] That is the basic canvas and covers all aspects of our business model.

I'm also going to insert one more section to this list, and

that's an industry analysis.

There are a lot of players in this space and

we can learn from what they've done and what they're doing wrong.

Now, the authors of the book highly recommend using a large

physical canvas and a bunch of post-it notes to work through your business model.

Each point that you come up with is jotted down on a post-it note and

added to the relevant section.

This exercise serves a very useful purpose, but

we won't get into that just yet.

In the following videos, you may see or

me someone else running around sticking post-it notes on a canvas.

If you are working through an idea yourself, do this too.

I'll explain it all in due time.

There's another crucial point I want to highlight about the Business Model Canvas

before we move on.

Traditionally, when you prepare a business model,

it is with the intention of using it as your operating model.

The document, the business model that you write, serves as your North Star,

your guide as you run your business.

That is not what this business model is about.

When you start a company,

contrary to traditional advice You have no idea what you're really getting into.

The Business Model Canvas helps you search for

a viable business model that is known to produce results.

Once this business model is known, then we can convert the model into a plan.

What we're going to write down is nothing but a set of hypotheses or assumptions.

We then test these assumptions and

validate until we find a business model that's repeatable and scalable.

Keywords, scalable and repeatable.

A strategy that gains you a few customers once in a while isn't a winning strategy.

We're going to keep discovering, testing and

validating until we have a working model.

All right.

Let's start right away by digging into the value proposition.