Chapter 4

Building Business Models

 Learning Objectives:
The learners shall be able to:

• Understand the concept of a business model;

• Design a business model canvas for a startup;
• Select the network of key partners;
• Choose key activities essential to the value
proposition;
• Formulate a good customer value proposition;
•Recommend the relationship the startup should
form with the customer segments;
•Select the customer segment/s to serve;
• Propose for the channels to use to communicates
with customer segments; and,
• Prepare a lean canvas for a startup.
“The more you drive positive change, the more
enhanced your business model."
• Anand Mahindra
 Introduction
• A business model makes the difference between
success in the laboratory and success in the
marketplace.
• The business model involves the product or service
offering, the targeted customers, and the economic
engine that will enable a business to meet its
profitability and growth objectives.
What is a Business Model?
According to management guru Peter Drucker: "a
business model is supposed to answer who your
customer is, what value you can create /add for the
customer and how you can do that at reasonable costs".
Simply, a business model defines the foundation of
its company's core value proposition, targeting
customers, key resources, and assumed revenue
streams and overcoming challenges.
 Traditional Types of Business Models

1.Manufacturer - A manufacturer is a person or a

registered company which makes finished
products from raw materials in an effort to make
a profit.
Examples of manufacturers in the Philippines :
Ajinomoto Philippines, Alaska Milk and Century
Pacific Foods, among others.
2. Distributor-an entity or a company that
purchases noncompeting products or product lines,
stores them in warehouses, and resells them to
retailers or directly to the customers.
• Auto dealers are examples of distributors.
• Unilever spends its major part of revenue in
maintaining a proper distribution.
3. Retailer - a person or business that purchases
goods from the wholesaler or directly from the
manufacturer.
• They purchase goods to sell those goods in small
quantities to end consumers. Online retailer giants
include Best Buy, Wal-Mart and Target.
4. Franchise - A franchisor provides access to his
business' proprietary knowledge, processes, business
system and a brand's trademark or trade name in order
to let the franchisee to sell a product or provide a service
under his business's name.
• A franchisee pays a royalty and often an initial fee for
the right to do business under the franchisor's name and
system.
• In the Philippines, Jollibee ,McDonald's and Pizza Hut
are some examples of retailing businesses. McDonalds's
though is the best example which has 93% of its
franchised restaurants worldwide.
5. Brick-and-mortar - It is a model that refers to the
old-fashioned street-side business that sells
products and services to its customers face-to-face in
an office or store that the business owns or rents.
• Grocery stores, dentists, gas stations, local grocery
and walk-in banks are examples of brick-and-mortar
businesses.
6. Bricks-and-clicks - It is a model where a
company combines its online and a physical
presence. Customers may place their orders
online and then pick up the products from the
physical stores.
• These day, most businesses selling apparel and
shoes items in Divisoria use this model.
7. Direct Sales - In this model, products are directly
sold to the customers.
• Selling could be in the form of a face-to-face
conversation or small gathering. The former
Tupperware used to have house parties to sell its
products. The salesperson gets a commission of
every sale.
• Avon, Boardwalk, Dakki, Fern and Forever Living.
These companies choose to always be in personal
touch with its customers.
8. High Touch - This model uses a lot of human
interaction and involvement
• Hair salons and auto dealers make use of this
model.
9. Family-owned - This is a family that is owned
and operated by a family.
• The decision making are controlled by family
members.
• Some examples of this type of model are the
National Bookstore, ShoeMart, Jollibee, and
Robinsons.
 Some Basic Types of Modern Business Models

1. Nickel-and-dime - This model makes use of the

lowest price strategy in selling basic product or
service to the customers.
• Here in the country, Cebu Pacific is the low-cost
carrier which offers the lowest possible price for
the flight tickets and charges fee. However, it
charges fees over extra services such as meal/snack,
beverage and other services.
2. Freemium - This model is a combination of free
and paid services normally used by tech companies
in the Software as a Service (SaaS) or apps
business model.
•Usually the basic services are free but for a limited
time or with limited features.
• Zoom, Spotify and Dropbox are examples of this
model.
3. E-Commerce - This model is an upgradation of
the old-style brick-and-mortar business model.
• It focuses on buying and selling of goods or
services creating a web-store using the internet.
• Online stores like Amazon, Flipkart, Shopify,
Myntra, Ebay, Quikr, Olx and Alibaba are examples
of E-commerce businesses.
4. Subscription - This model offers a long-term
contract to customers by paying a fixed amount
every month or year.
•Netflix, LinkedIn, Amazon Prime, Dollar Shave Club,
are few of its examples.
5. Aggregator - This is a network model, the
company acts as a middleman between two
individual parties.
• The company sells its own brand by creating value
for both demand and supply side.
• It makes profit by through commissions.
• Airbnb, Zillow and Oyo for Hotels; Uber for taxi
service; and Yodlee for financial service are the
right examples for this model.
6. Online Marketplace - In the online marketplace,
there is a collection of different sellers into one
platform.
• The online marketplace earns commission on every
sale carried on its platform.
• Examples of well-known companies using this
model are Amazon and Alibaba.
7. Hidden Revenue - the company offers its services
for free. The company earns revenue streams from
advertisements which are paid for by identified
sponsors when information is shared.
• Users of Google, Facebook, Instagram and
Twitter don't pay for the search engine, but these
companies earn from advertising money spent by
businesses.
8. Data Licensing / Data Selling - The Internet has
given rise to the importance of data.
• Data is the major element in the web technology
where companies need vital information to perform
its operations and gain profit.
• Twitter sells real-time data to third party users
for analysis, advertising, customer insight and
other uses.
9. Agency-Based - This is a partner company that
has specialization in doing non-core business
activities such as advertising, digital marketing, PR,
even janitorial and security.
• Usually, businesses that have no internal know-
how hire agencies to acquire a customizable
solution for their needs.
• Leo Burnett Company is an agency that services
United Airlines, McDonald's, Kellogg's and some of
their notable clients.
10. Affiliate Marketing - This is a commission-based
model where companies make profit by promoting a
partner's product and convince its followers and
users to buy the same.
• In return, the affiliate gains a commission for
every sales opportunity it referred to their
vendor companies.
• The affiliate website oftentimes provides product
review. NerdWallet, Capterra, MoneySaving
Expert.com and and the Wirecutter are examples of
businesses that are into affiliate marketing.
11. Dropshipping - the owner has no ownership of
the product or hold any inventory, but he has an E-
store.
• He has many different suppliers/ wholesalers to
sell their product on the website. When an order is
placed on a business owner's website, the partner
sellers then deliver the products directly to the
customer.
• Few examples of this nature include Doba, Oberlo,
Dropship Direct, and Wholesale 2B.
12. Network Marketing - Often called multi-level
marketing, this model works on direct marketing
and direct selling philosophy.
• There are no retail shops here but the offerings are
sold to the target market directly by the
participants.
• The more people that become part of the pyramid
structure, more money are gained by selling more
goods and getting more people on board.
• This is a commission-based model where
participants earn income through selling and
recruitment of members.
• Avon and Mary Kay are good examples of network
marketing.
13. Crowdsourcing - This is a model that solicits
intellectual information of users on what value-
added concepts be inputted in the product and or
service offering.
14. Blockchain - This is a digital ledger that is
irreversible and decentralized. No one owns and
monitors this digital database but anyone can
contribute to it.
•This model works on peer-to-peer interactions and
document all on a digital decentralized ledger. Many
crypto-currencies such as Bitcoin, Ethereum, and
Litecoin use Blockchain technology-based business
model in their operations.
15. Low Touch - there is minimum human
assistance or intervention in selling a product or
service.
• There is no need to keep a big salesforce although
companies may focus on improving technology to
further lessen human involvement and make the
customer experience better.
• Ikea and SurveyMonkey are good examples.
16. Razor and Blade - one item is sold at a low price
or even given for free in order to intensify the sales
of a complementary good, such as consumable
supplies.
• A good example is the Razor that is sold at a low
price and its partner, the blade is sold at a premium
price. The same situation holds in a printer and
cartridge.
• This model is advisable if the business has a loyal
customer base and has the ability to create some
sort of lock-in situation with customers.
17. Consulting - The consulting business is
composed of experienced and qualified professionals
that offers services based on their line of expertise.
• Most consulting firms charge their clients by the
number of hours they have rendered service or a
percentage of share once a project is completed.
• Mostly accountants, lawyers, educators and
businessmen form their own consulting companies.
• The most popular consulting firms are Mckinsey,
Deloitte and Boston Consulting Group, software or
website development firms
18. Social Enterprise - aims to put up a business
more for creating a positive change but with profit.
• The profit though is intended to be used for
humanitarian works to improve human living
conditions.
• Some of the social enterprises in the Philippines are
Bayani Brew, Coffee for Peace, First Harvest and
Liter of Light.
 The Business Model Canvas
Sample business canvas model for a small bakery that
intends to sell organically baked breads:
Key Partners
1. vendors of organic raw materials
2. packaging suppliers
3. retail partners
Key Activities
1. introduce organically produced bread
2. marketing and sales
3. branding
4. consumer education
Key Resources
1. team cooperation
2. raw materials
3. social media
4. retail network
Key Propositions
1. freshly baked breads
2. specialized in organic bread
3. breads of constant quality
4. breads are served quickly
5. competitive priced breads
6. Halal certified
7. The "Finsbury bread" of Manila
Customer Relationships
1. Hotline number
2. E-mail for questions
3. Facebook page
4. Loyalty discounts
Channels
1. social media
2. rider delivery
3. on call delivery
4. direct selling using own website
5. physical store
6. events planner
Customer Segments
1. neighborhood communities
2. healthy life stylist
3. neighborhood supermarkets
4. neighborhood bakeries
Cost Structure
1. equipment and facilities
2. staff salaries
3. product ingredients
Revenue Streams
1. volume sales from supermarkets
2. sales to consumers
3. sales to events such as weddings, birthdays,
anniversaries, etc.
Business Model Canvas of Osterwalder
 Key Partners
• Key partners are the network of suppliers and
partners that may provide the business model more
effective.
• The entrepreneur could partner with other
business, governmental, or non-consumer entities
that can help the business model works.
 Types of Partnerships
1. Strategic alliances - This partnership is an arrangement
between non-competitors to help each other do an equally
advantageous task but retaining their independence.
For instance, a new cafeteria business could partner with
several suppliers of coffee beans.
2. Coopetition - This partnership is an agreement between
competitors to help share the risk that these companies
may take.
Companies could be partners in forming awareness for
their shared industry, to gain new users.
3. Joint-ventures - This is when two businesses
because of their mutual interest agreed to for a
completely different company.
• A new market or a new geographic area could be
the reasons for combining their resources in a joint
venture. For example, a cheese company may opt
to form a joint venture with a milk manufacturer for
a cheese manufacturing in another place.
4. Buyer-supplier relationships - These are the
most usual type of partnerships in businesses. Such
relationships make certain that there will be a
dependable spring of supplies coming in.
On the part of the supplier this means a stable
established customer for their product.
Key Activities
• Key activities are the most essential activities in
achieving a company's value proposition and to
operate successfully.
 Categories of Key Activities:
1. Marketing - Adding value by promoting products
and/or services such as advertising a product to
create awareness and hence demand
2. Sales - This concerns selling a product and/or
service.
For instance, personal selling includes creating
customer relationships, discovering solutions to the
customer's problem and closing sales.
3. Design - This is about forming designs of various
items.
For example, an apparel company creates design of
its lines of clothing for presentation to the
outsourced manufacturers.
4. Development - This is adding value through
developing products and services.
In the case of software company, it develops a
software product which could probably be
customized based on the need of the customer.
5. Operations - The manufacturing of products
and delivery of services.
• Designing, manufacturing, and delivering a product
in big quantities and certainly of highest quality are
some of the activities under this.
6. Distribution - This is about reaching out to the
customers to sell to them and delivering the items to
them.
7. Customer experience - Customer service,
consulting and customer support are some of the
activities involve here.
Key Resources
• Key resources describes the most important assets
required to make a business model work.
1. Physical - These are physical assets which are
considered tangible resources that a company
make use of to form its value proposition.
• These could include equipment, machines,
inventory, buildings, vehicles, manufacturing
plants and distribution networks that allow the
business to function.
2. Intellectual - These are non-physical, intangible
resources such as brand, patents, proprietary
knowledge, copyrights, and even partnerships.
• Customer lists, customer knowledge, and even
the company's own people, are also form of
intellectual resources.
3. Human - Employees are the biggest and most vital
resources of any company but are often overlooked.
• In service-oriented companies which require great
deal of creativity and extensive knowledge, human
resource is very vital.
• Customer service representatives, software
engineers or scientists are good examples.
4. Financial - Cash, lines of credit and the ability
to have stock option plans for employees are some
examples of financial resources.
Customer Value Proposition
• Customer value proposition (CVP) is a business's
way of generating value in their product or service
when targeting potential customers.
• A value proposition is a statement consisting of
the reason/s someone should do business with the
company.
• This is computed through adding all the benefits
that the product could provide to the customers.
 Factors considered in the development of the
customer value proposition
1. Functional value - The product and or service
offers the solution to a particular problem.
• Said solution is convenient, better version, easier
to use and more complete compared to others.
• Examples of functional benefits consist of the phone
competence offered by an iPhone, the thirst-
quenching benefit by a bottle of water and the
warmness given by a wool sweater.
2. Emotional value - The product and or service is
pleasant to look at or attractive.
• Here the customer is fond of this offering because
of sentimental reasons, based from tradition or the
advice of people attached to the customer.
• Nowadays, purchasing locally produced or
organic brands carries emotional benefits
especially for those enthusiasts.
3. Economic value - The product and or service offers a
financial advantage, promotes energy conservation,
saves time or is innovative.
4. Symbolic value - For the customer the product and or
service is valuable because of a certain type of status
given to the customer. This status can be a social
responsibility orientation or based from the brand.
• It may include the sophistication and the feeling of being
casual coming from Apple products, the manliness
projected by the Italian Ducati motorcycle brand or the
extravagance exhibited when carrying a cup of
Starbucks coffee.
 Different Types of CVPs

Types of CVPs include all-benefits, points of

difference, and resonating focus.
 Different Types of CVPs
1. All Benefits - The company in this type of CVP just list all
the benefits or solutions that a product and/or service
offering can deliver and serve to target customers.
2. Favorable Points of Difference - The company using this
CVP tries to differentiate their solution by conveying its
point of difference compared to the customer's next-best
alternative.
• Here, there must be a complete understanding of customer's
requirements and preferences, and what it is worth to fulfill
them.
3. Resonating Focus - The company making use of
this CVP identifies the one or two points of
difference between its solution and its
competitors that provide the best value to the
target customers.
• Companies that use resonating focus value
propositions are able to create tailored-fit value
propositions for different customer segments.
Customer Relationships
Customer relationships are the types of relationship
a company forms with its particular customer
segments.
Some types of customer relationships
1. Personal assistance - Founded on human
collaboration, the customer can communicate with a
real salesperson to provide help during and after the
sales process.
• Ways of communication may include onsite at the point
of sale, using call centers and even emails, among others.
2. Dedicated personal assistance - This is the deepest
and most intimate type of relationship that involves
assigning a salesperson to an individual customer.
3. Self-service - Basically there is no direct
relationship that exists here, although all the
essential things to assist customers help themselves
are given.
4. Automated services - This is a combination of
customer self-service and automated processes.
• For instance, automated services are able to
identify individual customers and their
characteristics, hence they can be given information
about their orders.
5. Communities - User communities can be used by
companies to be more close and connected with their
current and potential customers.
• Tsikot.com is the leading automotive website and
community in the Philippines. It offers auto
classifieds, forums, reviews, galleries and a lot more.
It has a user-friendly interface, location based search
with map and mobile responsiveness. Tsikot is the
most popular car users community in the country.
6. Co-creation - Here customers have the chance to co-create
value with the company such as in designing and
innovating products.
• Writing reviews and soliciting ideas from customers are
examples of engaging customers to become co-creators.
• A good example is IKEA, a Swedish furniture and home
goods retailer. In 2018, it launched "Co-Create IKEA", a
digital platform that promotes the participation of
customers and fans to design new products. There are even
cash rewards whose ideas are chosen. IKEA also opted to
provide test labs and prototype shops so that customers
may hone their suggestions.
Customer Segments
• Shared needs, behaviors and other traits can be the
bases for customer segmentation.
• A customer segment refers to demographics such
as age, ethnicity, profession and/or gender; or
psychographic factors which include spending
behavior, interests, and motivations.
Various Types of Customer Segments
1. Mass - This is basically an unsegmented market in
which products with mass appeal products such as
aspirin, orange juice, soft drinks, paperback
romances, and the like are offered to every customer.
• The customer value proposition for this segment must
be for a big number of people who has similar
problem or need requirements.
• Refrigerator manufacturers should target the mass
market because there is little differentiation needed
by customers who are interested to buy a refrigerator.
2. Niche - This market speaks of a customer segment
with very distinct characteristics and extremely
specific needs.
• This segment necessitates a highly customized
product, custom made to fit their needs. Hence, the
customer value proposition for this segment should be
strictly defined based on the preferences of this specific
customer segment.
• This type of market is common amongst automobile
parts suppliers who are really reliant on automobile
manufacturers for sale of their products.
3. Segmented - There are businesses that select to
offer products and/or services to customer segments
that have very small differences in their need
requirements.
• In this segment, the company forms various
customer value propositions based on these
small differences in the customer segments.
• In retail banking for instance, the distinction lies
on the net worth of customers, which is small yet
substantial.
4. Diversified - Some companies often select
differentiated customer segments.
• Basically, these customer segments have very
diverse needs and wants. One of the diversified
companies in the Philippines is San Miguel
Corporation.
5. Multi-sided platforms - This type of customer
segment is used when customer segments are
reliant with each other, which makes it a necessity
to serve both sides of the balance.
• This is true with credit cards. It is vital for
customers to use their credit cards. At the same
time, it is also important that stores accept
these credit cards of customers for transaction.
Channels
Channels are the touch points through which a company
communicates with its target customers.
1. Awareness - This is the marketing and advertising phase.
• Said phase entails educating the target customers about the
features of the products and/or services and how these
offerings shall be of value to them.
• Google and other search engines plus YouTube, Instagram,
Facebook are good examples.
2. Evaluation - In this phase, the customer evaluates, reads
about or uses the product or avails of the service in order to
formulate an honest opinion about it.
3. Purchase - This phase is the actual sales process.
• Here the customers buy their chosen product and/or service.
• The sales process represents the exchange of a particular
product and/or service for money. Stripe and Paypal can be
used for purchase.
4. Delivery - Also known as the fulfillment stage of the process;
this is the phase when the promised value proposition has
reached the customers.
• Simply, the way the offerings shall reach the customers to
solve their problems.
• Postage/ Mail such as UPS, FedEx and USPS are good examples.
5. After Sales - This phase centers in giving
customer care and support after purchase.
• It offers the customers to call when they have a
problem or make queries about the product.
• Email service providers and Chat platforms like
Facebook messenger can be utilized.
Types of Channel
1. Direct channels - those that the entrepreneur owns or
has control over.
This could be his physical store, website, or salesforce.
2. Indirect channel - Also known as partner channels,
the company makes use of intermediary and places its
products or makes the service obtainable at the partner
store.
• Wholesalers are considered partner channels.
• Winegrowers partner with wholesalers in various
countries to sell their wines.
 Value Proposition Canvas

• It was Alexander Osterwalder who developed this

value proposition canvas.
• Simply, the value proposition canvas makes certain
that a product and/or service takes into
consideration the values and needs of the
customers.
• The canvas appears to be a detailed relationship of
the customer segments and value propositions.
• The value proposition canvas consists of two
building blocks namely the customer's profile and a
company's value proposition.
Customer Profile
• The customer profile points to the customer
segment that the company shall serve its product
and/or service offering.
• A customer profile should be created for each
customer segment, as each segment has distinct
gains, pains and jobs.
Customer Gains
• Customer gains include all the expectations and
needs of customers, things that may delight them
and other stuffs that may intensify the possibility of
these customers embracing a value proposition.
Types Customer Gains
1. Required gains - When buying a product or being
provided by a service, these are the very basic
expectations by the customers.
• An individual buying a Smartphone has the least
expectation that his new bought phone can allow
him to make and receive phone calls.
2. Expected gains - These gains are beyond the basic
ones, but even these are not present in the product
and/or service, said offering can still provide its
basic purpose.
• Hence, for a Smartphone, it is expected that it
should be visually attractive and fashionable.
3. Desired gains - These gains are the customer's
preference when it comes to product and/or service.
• These are the most sought-after and cherished
gains by the customer.
• Obtaining these gains can result to the complete
satisfaction of the customers.
• In the case of Smartphone, having no trouble in the
synching the phone with other gadgets is a desired
gain of any user.
4. Unexpected gains - These gains are the potential
benefits of the product and/or service for which the
customer is unaware until these are introduced to
him.
• Although these ideas and innovations are not
articulated by the customer, they are able to
transform the customer's experience with a
product and/or service.
• A touch screen capability of a Smartphone is a type
of an unexpected gain for customers.
Customer Pains
• Customer pains are situations which either avoid
the customer from getting a job done or the
negative experiences, emotions and risks that the
customer experiences before, during or after a job.
Said pains include the following:
1. Productivity pains - These pains include the
inefficiency of the businesses that a customer
experiences.
• Majority of customers practice time management
that they felt annoyed when additional steps would
occur in the buying process.
2. Support pains - These are pains felt by a customer
when he is not assisted during the buying process.
3. Financial pains - These are pains that involve
money in particular that often a customer spends too
much for a product and/or service when his
intention really is to spend less.
4. Process pains - These pains are those that create
friction to buyers because of the substandard
processes of the business.
Customer Jobs/Jobs-to-be-done
• Customer jobs describe the functional, social and
emotional tasks customers are trying to do,
challenges they are attempting to resolve and needs
they desire to satisfy in their personal and
professional lives.
Types of Jobs
1. Functional jobs -These are the regular and particular
jobs that a customer is trying to do and is working
towards.
• These are easy and simple things like cooking a menu,
finishing an essay for the English assignment, eating
balance diet and other similar ones.
2. Social jobs - These consist of the manners a customer
desires to reflect his image in a social environment.
• Some examples include fitting in with a group of friends
or praising a co-employee in his sales presentation.
3. Personal emotional jobs - These include how a
customer works towards feeling a certain way. Some
people feel they can rush from a tough task and then
do another task after like having a gym practice
before dinner time.
4. Supporting jobs - Often customers also purchase
value, hence doing a supporting task. Here are the
three roles of customers that may assist in
supporting jobs:
a. Buyer of value - This task is any purchase of value
that may cover from evaluating choices at hand up to
paying for the product that had been chosen.
b. Co-creator of value - These are jobs for which a
customer has a direct hand in the manufacture of the
product with the company.
Such jobs include providing ideas for product design,
product testing and giving product and/or service
reviews online.
c. Transferor of value - These are jobs at the end of
the product use such as disposal of product trash or
giving the ownership of the product to another
person because it has no value anymore to the
original owner.
Value Proposition
• After really understand the customers, including
their gains, pains and jobs, then it is time to reflect
on the gain creators, pain relievers and the
products and/or services to offer them.
Gain Creators
• Gain creators explicitly outline how the products
and services may create customer gains and offer
customer added value.
• An entrepreneur may form benefits that a customer
supposes, desires, or may came as a surprise.
• Gain creators may include functional utility, social
gains, positive emotions, and cost savings.
Pain Relievers
• Pain relievers explicitly outline how the products
and/or services lighten, avoid or solve the
particular customer pains.
• An entrepreneur must provide details on how his
offering of product and/or service could lessen or
completely eradicate the annoyance of his
customers before, while, and after they are trying to
get a job done.
Products and Services
• These are the products and/or services which
create gain and relieve pain and built around the
value proposition.
• These offerings may help customers obtain a
functional, social, or emotional job done or just
satisfy the basic needs.
• In addition, these products and/or services could
be in the form of tangible, digital/virtual, intangible
or financial which are essential to the customers.
 The Lean Canvas: A Business Model Canvas Alternative

• The Lean Canvas as proposed by Ash Maurya is a

developed version of the Business Model Generation. It
outlines a more problem-focused approach and
appropriate to use by small entrepreneurs especially
those creating startup businesses.
• The focus is more on customers' needs, on actionable
metrics and offer a fast idea-to-product transformation.
• The Lean Canvas is also primarily meant for
entrepreneurs and not the customers, consultants,
investors or advisors.
Elements of the Lean Canvas Model
1. Problem - In this box, the entrepreneur shall list
the three high priority problems that the customer
segment is experiencing.
2. Solution - Once a problem has been identified, the
next step to look for the effective solution.
• According to Steve Blanks, the Godfather of Lean
Startup, the entrepreneur needs to "get out of the
building". The phrase was coined by Blanks to mean
going out in the streets and interview the customer
segment. The customer should be asked questions
in order to learn from them regarding their
problems.
3. Value Proposition - This block contains a
marketable promise to the target user that the
business will solve their problem.
4. Unfair Advantage - A startup should recognize if it
has the competitive advantage that cannot be copied
and cannot be bought or it has an unfair advantage
over others.
• The entrepreneur needs to think about what the
business has that no one else can buy such as
dream team, expert endorsements and existing
customers.
5. Customer segments - The problem and the
customer segments must be connected.
6. Channels- These are the ways to reach the
customer segments.
• They can be email, social,, blogs, articles, trade
shows, radio and TV plus webinars which are also
the same with the business model canvas.
7. Revenue streams - This is the money matter of the
business just like in business model canvas.
• Getting people to sign up for something for free is
not the same than asking them to pay as they are
more interested in free products.
8. Cost structure - These are the operational costs
that the business needs to pay in bringing the
product to the market such as salaries, cost of the
materials, cost of maintenance.
• The complete variable costs and fixed costs are to
be listed here.
9. Key Metrics - The metrics consist of the
assortment of products and/or services the business
wants to deliver.
• For a startup business though, one metric is good
enough and then just build on it.
• It is important that the correct metric is
recognized.