What Is the Business Model Canvas?

The business model canvas is type of visual tool that aids in the process of creating a viable model or structure of operation for a new business or refining the model of an established business. Considered a simple but effect strategic management tool, the business model canvas is a visual system used to lay out the organization of a company and identify how to go about enhancing that organization to reduce waste and expenses while also increasing overall productivity. In a sense, this type of canvas is a visual aid that helps making the process of refining or reorganization a business operation easier to envision.

A workable business model canvas may be a literal canvas or paper that is laid out over a conference room table and used as the basis for incrementally adding the different components necessary to create a viable business operation. For example, the focus of the model may be on arranging the flow of activity from the front office through the manufacturing plant and on to the shipping and receiving area of the operation. With other types of companies, the business model canvas may focus more on the arrangement of departments, starting with the executive branches, following through to areas of sales, marketing, development, and production, and ultimately to customer care and order processing and delivery.

There is no single ideal for a business model canvas that completely answers the needs of every business. Using the tool to create or refine the business model requires understanding what goals the company holds, the processes necessary to attain those goals, and the resources in terms of personnel, equipment, and technology that are available to create a viable business operation. The combination and balance of resources required will be different for a locally owned grocery store versus the mixture of elements that would be necessary to create a workable model for an international textile firm.

Since a business model is essentially how a business operates by creating, delivering, and capturing value with the goods and services it offers, using a business model canvas or a virtual tool like business model canvas software can make it much easier to see how all the components of the company work in tandem to achieve the goals. Creating a workable canvas can aid in making changes to placement of facilities, improve communication between departments, and identify redundancies in the operation that drive up costs without providing any real benefits. From this perspective, the business model canvas enhances the ability to make the most responsible use of all available resources, and increases the chances for earning the highest level of profit possible.