BMC – Reason For The Essential Role In Business

Due to the diversification of business models and issues that have to be solved, the need for innovations in business management is increasing significantly. Business Model Canvas (BMC) exists to resolve the problem.

Business Model Canvas (BMC) is a framework that describes not only new businesses but also existing entrepreneurs from the basis and provides 9 necessary elements on a matrix to surely improve the competitiveness of a business. It plays an important role in concretely visualizing unclear ideas and thoughts, sharing them with the person in charge and partner companies, and then taking action in line with each other.

What is BMC?

Business Model Canvas (BMC) is an essential thing for a new business. How each part means will be explained later, but let’s slightly go through the general canvas. BMC contains 9 main elements:

1. Customer Segment
2. Value Propositions
3. Channels
4. Customer Relationships
5. Revenue Streams
6. Key Resources
7. Key Activities
8. Key Partner
9. Cost Structure

The main axis of a new business is “what to provide to what target”. If the business cannot decide what they provide and who the target consumers are, nothing will start. However, it’s not always easy to instantly create a sustainable and potentially new business.

It is said that each person in charge of the business repeats trial and error in their head while exploring all possibilities, which is a series of crude work. However, even if you keep thinking, without specific keywords, concepts, and numerical values that can be used as a guide, you will not be able to determine a business plan. Therefore, in order to find ideas for developing new services and solving problems, we will fill in the above BMC one by one.

The specific procedure for creating Business Model Canvas (BMC) will be described later, but these nine items are not in independent relationships, but related to each other while being derived in order from the elements that are close to each other. By linking them, we create the whole picture and finally incorporate it into the business plan.

For example, you are presenting a prestigious new business for your company. The points required at that time and the minimum factors that will be pointed out by the CEO and management are “What”, “When”, “Who”, “Where”, “Why”, and “How”, or the “5W1H” model.

It’s a kind of important framework, but it’s still not enough if you want to succeed in a new business. You add the three elements of “Whom”, “How many”, and “How much” or “6W3H”, then it will be more strategically seen. In the other way, filling in the 9 elements BMC is naturally answering to “6W3H”.

Why is BMC so Essential?

To Start a New Business Asap

It is necessary to speed up the creation of a new business and the time to market the product or service. The longer the development time is, the greater the risk of being ahead of the competition will be. However, the volume of conventional business plans sometimes extends to dozens of pages, and it is often too huge to create and a waste of time to read.

Therefore, if the Business Model Canvas (BMC) is used, all the elements necessary for a new business to get on track will be fully revealed in a short period of time, and the labor and cost can also be significantly reduced.

To Scale Up Your Business

Business Model Canvas (BMC) isn’t limited to new businesses; it can also be used when reviewing and brushing up existing businesses.

In a rapidly changing business world, existing businesses can quickly become obsolete and be overtaken by rivals and startups to steal market share. By repeating updates in line with the times and trends in the industry, it is possible to maintain profits and increase market share. Therefore, the Business Model Canvas (BMC) is extremely effective for analyzing the current situation, verifying that there are no oversights for important changes, and even analyzing competing business models.

To Share Visible Information

The “canvas” of the Business Model Canvas (BMC) is the same as the “canvas” of the painting material for drawing. In other words, by visualizing the necessary information like drawing a picture on one side, it becomes easier for all concerned parties to share ideas and methods such as new businesses, points to keep in mind, and issues. This makes it possible to eliminate misunderstandings and temperature differences and increase mobility for development.

9 Elements of BMC

Now let’s take a closer look at each element of BMC.

Customer Segment

Who are you going to offer new services to? We will specify the target, such as whether to target all generations or young people, or a limited number of people such as those in their 50s, and whether to sell by narrowing down attributes such as hobbies, gender, and occupation. This person can be a corporation as well as an individual. Promotions, media, sales channels, cooperating partners, etc. will differ depending on who you decide as the target consumers.

Value Propositions

How much value will a new product or service have for the target? What kind of approach can solve needs and problems such as functionality, convenience, and comfort? If a mismatch occurs here, the significance of the existence of the new business will be shaken from the ground up.

The “Value propositions” element is located in the center of the canvas and is adjacent to the other 6 items, so it has a strong influence on resources, sales channels, costs and promotions. On the contrary, it can be said that the policies and accuracy of these other items also influence considerably the level of ” Value propositions”.

Channels

We will consider and decide how to bring the appearance of the new service to the target market and what route to deliver it. Announcements and provisions mainly on the Internet and SNS will be experience-based at actual stores. In addition, we will talk about how to collect impressions and reviews when users actually use it, and how to provide after-sales service.

This is closely related to other items such as how to maintain relationships with customers and how to collect more sales.

Customer Relationships

We will delve into whether to attract new customers or to deepen relationships with people who are already connected as customers. This will require analysis of historical data such as the number of customers and sales, and detailed calculations such as differences in estimated sales due to differences in relationships with customers.

Strategies also differ depending on the scope and depth of the target customer relationship, such as guiding new customers to events, building communities through SNS, and maintaining relationships with existing customers by enhancing after-sales services.

Revenue Streams

If you introduce a point system, you should also consider the mechanism and estimate of how to make profits such as leasing and rental, subscription, license fee, installment payment, membership fee, etc.

Since it is an important element for building a BMC, you need to make a severe calculation, and it is also necessary to create a system and develop an application that allows the target to accept payments with the minimum resistance.

Key Resources

Set how and how many people, goods, money, and information resources are collected, distributed, arranged, and provided. Cash, land and buildings, human resources, intellectual property rights, etc., may require loans to receive or external human resources to secure.

Especially these days, it has been pointed out that there is a shortage of domestic IT human resources, so it is not easy to secure engineers who are familiar with advanced technologies such as AI, Metaverse, and blockchain. It is not just an estimate of the number of people, but it will be necessary to thoroughly investigate what level of human resources will be secured from where and how many people as needed.

Key Activities

All activities necessary to promote a new business. From securing the above resources, developing software and applications, promotion and sales activities, to various roots. If you narrow down what to do, the number of people to put in there, skills, cost and time will be clear.

Key Partner

If it is difficult to develop by yourself, it is necessary to actively cooperate with external companies and human resources. There are many ways to do this, from joint ventures to consortia to alliances and even mergers and acquisitions. If you can work with someone who has the same interests as your company, the chances of success in your new business will definitely increase.

Cost Structure

The basis of business is to achieve maximum results at minimum cost. Estimate the cost of building systems, securing resources, promoting, partnering, and all other activities needed to deliver new value. Of course, if it seems to exceed the budget, the cost structure itself needs to be fundamentally reviewed. If this is mistaken, the survival of the new business may be fundamentally jeopardized.

Steps to Build a BMC

There is no specific procedure for creating a BMC. This is because there are various motives and cuts depending on the intended business. The process of filling in part of one item and then part of another related item is realistic.

However, the Business Model Canvas (BMC) is particularly effective when starting a new business from scratch, so basically it is better to determine it from the “Customer segment” and “Value propositions”. In other words, we will solidify the main axis of “What kind of products and services will be delivered to whom”. Once this is decided, the contents of other items such as “What route”, “What to use”, “With whom”, and “How much budget” will be clarified, and each issue will be highlighted.

Again, because new businesses are a daunting task of creating something out of nothing, it will be difficult to create an ideal, complete system for the Business Model Canvas (BMC) at once. It may be a series of writing and never writing again. However, by repeating trial and error over and over again, thinking and discussion will deepen, and each item will be refined, so it must be possible to finally put it into a high-quality business plan.

Summary

While the feasibility is unknown, it is a difficult task to formulate a new business concept from scratch. Therefore, Business Model Canvas (BMC) is highly recommended. With Business Model Canvas (BMC), you can quickly organize your thoughts and visualize them in an easy-to-understand manner, speeding up the formulation of business plans.

At Relipa, we will help you start a new business or review an existing business. We will continue to work with our customers as an offshore strategic partner specializing in Japan, such as software, applications, development, and implementation of various platforms, and blockchain development.

If you have any requests for any services, please feel free to contact us. We are sincerely looking forward to you.