- The nine building blocks
- The catch: left side, right side, and which way round to fill it
- The nine blocks, using Shopify's coffee roaster example
- How to fill in a business model canvas
- Why use one page instead of a long document
- Where I come in
- My verdict on the business model canvas
- Frequently asked questions
A business model canvas is a one-page visual that shows how a business works in nine building blocks: who it serves, what it offers, how it delivers, what it costs and what it earns. The blocks are arranged so you can see how each part depends on the others.
Alex Osterwalder and Yves Pigneur developed the original canvas in their 2009 book Business Model Generation. As Shopify reports it, they describe the canvas as showing the logic of how a company plans to earn its revenue. Strategyzer, the company behind it, calls it the most used tool in the world for innovation and entrepreneurship.
The nine building blocks
CFI and Shopify list the same nine blocks. The question column is my plain-English shorthand for each one:
| Block | Side of the canvas | The question it answers |
|---|---|---|
| Key partners | Left (efficiency) | Who do we rely on? |
| Key activities | Left | What must we do well? |
| Key resources | Left | What do we need to do it? |
| Cost structure | Left | What does it cost? |
| Value propositions | Centre | What value do we give? |
| Customer segments | Right (value) | Who do we serve? |
| Customer relationships | Right | How do we keep them? |
| Channels | Right | How do we reach them and deliver? |
| Revenue streams | Right | How do we earn? |
The catch: left side, right side, and which way round to fill it
Shopify explains the layout. The left side, with key partners, key activities, key resources and cost structure, is about efficiency. The right side, with customer segments, customer relationships, channels and revenue streams, is about value. The value proposition sits in the middle.
Strategyzer adds the part that changes how you use it. The right side is the market, and the left side is what it takes to serve that market. Move a customer segment and the channels, activities and costs all have to move with it. Cost structure and revenue streams only hold if the seven blocks above them are right. So Strategyzer says to treat the canvas as a claim, not a plan: fill it once for one business model, not the whole company, then date it, version it and redraw it as evidence comes in.
The nine blocks, using Shopify's coffee roaster example
Shopify walks through every block using Propeller Coffee in Toronto. It's the clearest way to see the canvas working:
- Customer segments. Three of them: cafe customers drinking on site, restaurants buying wholesale beans, and online shoppers buying smaller bags to brew at home. Shopify says it's fine to have just one segment.
- Value propositions. Wholesale customers get help with every part of starting a coffee programme, from choosing equipment to barista training. Retail and online customers value the quality of the coffee and supporting a local business. You can have a different proposition for each segment.
- Channels. Marketing, sales and distribution channels. Individuals buy online or in the cafes, while wholesale clients use a separate, password-protected website.
- Customer relationships. An online buyer gets automated order and shipping emails. A wholesale customer may get a site visit and staff training.
- Revenue streams. Shopify says that before March 2020, 80% to 85% of Propeller's revenue came from wholesale partners, mainly restaurants. When restaurants closed during the pandemic, the business pivoted towards selling direct online, including coffee subscriptions.
- Key resources. Physical, human, intellectual and financial. For Propeller that's green coffee beans, roasting equipment, its locations and its staff.
- Key activities. The canvas creators group these as production, problem-solving and platform or network. Propeller is mostly production, with some problem-solving for wholesale clients.
- Key partners. Suppliers such as the farms that grow the beans, and strategic partners such as the book retailer Indigo, which hosts Propeller cafes in its stores.
- Cost structure. Production costs, running the online store and running the retail cafes.
The revenue story is the lesson. A canvas drawn before the change would have looked healthy, with one segment carrying most of the income. Redrawn afterwards, almost every block moved. That's exactly why Strategyzer says to date and version the canvas.
How to fill in a business model canvas
- Pick one business model, not the whole company, and put today's date on the canvas.
- Start with customer segments and the value proposition for each one.
- Add channels, customer relationships and revenue streams.
- Add key activities, key resources, key partners and cost structure.
- Test each block with evidence, and redraw the canvas as you learn.
If you're unsure who belongs in the customer segments box, build a few buyer personas first. Segments built on real customers make every other block easier.
Why use one page instead of a long document
Shopify gives three reasons. First, visualisation: you could write a long document covering every part of your model, but stakeholders may not read it, and a one-page canvas breaks it into digestible chunks. Second, comparison: because the format is standard, you'll find the cost structure in the same place on every canvas, which makes it easy to compare models side by side. Third, development: you can tweak any of the nine blocks of an existing canvas to generate a new model instead of starting from scratch.
CFI's examples cover an automobile company focused on safety, reliability, style and mass appeal, and Amazon, which shows the canvas works for anything from a niche business to a mass-market one. Shopify suggests using it when you're developing a new model, improving an existing one or sharing an idea with others. Once it's done, the next step is turning it into a business plan.
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Where I come in
The canvas puts the value proposition at the centre, and that's where I spend most of my time with SaaS marketing teams and small businesses: working out which segment you serve best, what you promise them and which channels reach them. You can see how I work on my work with me page.
My verdict on the business model canvas
Start on the right, with who you serve and why they'd choose you, not with your costs. Draw one canvas per model, date it and expect to redraw it. A canvas that hasn't changed in a year is probably describing the business you planned, not the one you're running.
The canvas asks what makes your offer different, and competitive advantage explained explains how that difference holds up against rivals.
Frequently asked questions
What are the 9 elements of a business model canvas?
Key partners, key activities, key resources, value propositions, customer relationships, channels, customer segments, cost structure and revenue streams.
Who created the business model canvas?
Alex Osterwalder and Yves Pigneur, who set out the original canvas in their 2009 book Business Model Generation.
What is the difference between the left and right side of the canvas?
Shopify says the left side, covering partners, activities, resources and costs, highlights efficiency, while the right side, covering segments, relationships, channels and revenue, highlights value.
Should I make one canvas for my whole company?
No. Strategyzer says to fill it once for one business model, not for the whole company, and to date and version it as evidence comes in.
