Big Red Car here dreary, rainy day. Stay inside and watch the shows this morning.
The Boss up very early taking Perfect Daughter to the airport — no top down this morning — to return to NYC.
Why does anyone voluntarily go to NYC when it was in the 80’s here last week and a blizzard there?
So I get to thinking about how one conceptualizes a business when there is a blank canvas upon which to draw the business’s model?
The basics of the business canvas — 13 questions you have to answer
Well, you have to answer a few very basic questions:
1. What is the basic product or service you intend to supply? Which of the world’s great problems does it solve?
2. Who are the customers? Are there more than one group of customers?
3. How do you reach those customers? What are the channels of distribution?
4. What is the nature of the customer relationship?
5. What are the revenue streams which result from your relationship with the customers?
6. What is the nature of these revenue streams? Are they “one off” sales, membership, subscription, rental?
7. What critical resources or assets must you possess or employ to provide the product or service?
8. What are the critical processes you must master to deliver your product or service?
9. What alliances must be created or maintained in order to serve your customers?
10. What is the expense structure for you to be able to provide goods or services?
11. What is the relationship between revenue and cost over time? Does it scale with decreasing margins with size?
12. How do you intend to fund this enterprise?
13. Who owns the business?
Answer these very basic questions and you are ready to start drawing.
Draw the canvas
It is too easy to say but all you have to do, once you have answered these questions is to draw the canvas.
Put the basic product or service in the middle and describe it fully. Describe the process of developing and delivering the product or service.
Put the customers in the upper left hand corner and define the channels of distribution and nature of the customer relationship between the customers and the business. This is the revenue quadrant. It answers questions #2 through #6.
Put the cost structure in the upper right hand quadrant. This provides the answer to question #11.
Revenue minus cost = operating income. How does this scale over time. Does revenue increase and cost not increase at the same rate? So margins are increasing?
The rest of it is self explanatory. Just keep adding things until you are finished.
Continue developing the model by adding a bit more detail — about 5 more iterations should get you where you need to be.
Each time add more and more detail until the business is fully described.
Take a look at the finished product.
You have answered the 13 critical questions and you have an excellent graphical representation of your new startup. Congratulations.
Go reward yourself by having breakfast at the Waffle House. Have some cheese scrambled eggs, country ham, raisin toast, grits and hash browns with jalapenos.
Who says that startup businesses are not rewarding?